i^1itiii|ai^!!!!liil|liJI)l!ll!!!t|H]l»i||!ai!lti«iffl CAMPBELL'S ACTUAL ACCOUNTING AN APPRENTICESHIP IN BUSINESS The Modern Method of Instruction in Elemen- tary and Advanced Accounting, Business Forms and Business Customs By THOMAS F. CAMPBELL. A. M. INDIANAPOLIS THE BOBBS-MERRILL COMPANY PUBLISHERS Copyright 1911 Copyright I9I2 By THOMAS F. CAMPBELL. A. M. JUST A WORD Prefatory. — This text-book will be found more practical than many other texts, because it was not primarily "made to sell." It originated in a need of the school room. Further, the author was first a business man, and when called from business to the schoolroom, it was that he might carry out the idea of an enterprising school firm that the teacher of business should be actually familiar with business, should, in fact, be himself a business man. Several times he tried to obtain release from the labor involved in teaching an original course orally, by "trying out" the new texts of the various pub- lishers, but each time failed to find anything that pleased either proprietors, assistant teachers or students. The Author's Ideal as a teacher is so to train a student that he will never meet in business anything more difficult than he has already mastered in the schoolroom, and mastered so thoroughly that it has become a part of his mentality, never to be forgotten. This Text-Book is the result of his efforts to lighten the labor of oral teaching, and to make the work easy for his assistant teachers and more help- ful to his students. He acknowledges with sincere appreciation the hearty endorsement, co-operation, and helpful suggestions of all these assistants through a teaching experience of twenty years, being especially gratified that neither teacher nor student who has known this course has ever preferred any other, though several received their first training from other sources. He w^ould also acknowledge the courtesy and valuable assistance of a number of business firms over the country from the Atlantic to the Pacific who have kindly furnished forms, rendered sample invoices, and extended many help- ful suggestions and criticisms. The Book is Offered to the schools in the belief that in its original appli- cations of established principles ; in its methods of developing the student's originality and self-reliance ; in the freedom that it gives the capable teacher to introduce original work, and to curtail or change the text as he pleases, we are offering the appreciative teacher a course of study that he can adapt to any locality or conditions; a course that will give the utmost freedom in the exercise of his own ideas, with the minimum of labor to him and the maximum of helpfulness to the student, a course that will every day bring a pleasing variety into his life work, never wearying him with a tiresome rou- tine of text-book and key, and will every year broaden him as a teacher and make him a better and more efficient accountant. THE PUBLISHERS. 255946 Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/campbellsactualaOOcamprich CAMPBELLS ACTUAL ACCOUNTING PRELIMINARY PRACTICE Introductory Definitions, illustration and discussion of Entries 1. Business is a general term applied first to merchandising and later to almost any occupa- tion by which one seeks to make money. It is usually applied to some form of trade and dis- tinguished from the professions in which one earns his living by the employment of his mind, chiefly, and from Mechanical Arts in which one's chief asset is manual skill. To the bookkeeper, however, whatever brings in money is Business. 2. Merchandise (abbreviated Mdse.) is anything bought to sell again with a view to profit. 3. Bookkeeping is making a proper record of business transactions. 4. Two methods of recording business transactions are recognized by accountants and termed, respectively. Double Entry Bookkeeping and Single Entry Bookkeeping. The latter will be explained later, when you will understand it better. 5. Double Entry is the method most extensively employed, both because it is the more ac- curate, and because it furnishes a more complete and serviceable record of the transactions of the business. Single Entry will show how much the firm is in debt, and to whom ; how much is owing to the firm and from whom ; how much was invested at the beginning of the year, and how much has been made or lost during the year. Double Entry not only shows all this that is shown by Single Entry, but also shows the cost of running the entire business, or any part of it, in what department, or departments the gains were made and where and how the losses occurred, thus enabling the proprietor to provide against such losses in the future. 6. Double Entry is so called because it consists in a double record of each transaction. If John Smith should buy, on account^, 10 yards of calico at 5c per yard, Single Entry would re- cord that John Smith owes 50c for merchandise, while Double Entry would also record that a value of fifty cents (including the profit) has been taken out of merchandise and that hence, there is that much less (not counting the profit) remaining in stock. 7. The Books Required, originally, were the Day Book, the Journal, and the Ledger, and these still form, theoretically, the foundation of every set of double entry records. Practically, the Day Book and the Journal are consolidated in modern bookkeeping, or else the Journal is entirely eliminated. The Day Book, when used, is a simple, but carefully detailed, statement of the trans- actions, giving date, quantity, kind of goods, and price. It frequently appears in business as the "counter blotter," and as such is often kept by persons quite ignorant of the principles of bookkeep- ing. The work of the bookkeeper would then begin with the transfer of the record from the Day Book to the Journal (if that be used) or directly to the Ledger as is the more general practice. In the Journal, the record of the illustrative transaction used in Section 6 would be resolved into a debit and a credit, as follows : s^ S£> 1. On account means to buy but not to pay for it at the time of purchase, the amount being charged to the purchaser on his account. o t n c, «f/ _ » f'? •*o»«r ■ CAMPBELL'S ACTUAL ACCOUNTING Meaning that John Smith owes (is in debt to, because he has obtained from) the Merchan- dise account, goods to the amount of 50c. The word, Debtor, (always omitted in modern book- keeping), is understood as following the name of the person, or account, to be charged which is always written on the first line used in making the entry and well to the left (close to the date column) of the page, and the word To is understood to precede the name of the person, or account, to be credited, which is always written on the second line of the entry and about an inch to an inch and a half to the right of the preceding debit. But this "sign of the credit" has also disappeared, and the modern entry combining the records of both Day Book and Journal appears, — /d^. so So When the record appears in the above form the book is called the Daybook-Journal. This is the form that will be used by the student in the beginning of his work, as the book of original entry. 8. By the Book of Original Entry we mean the book in which the first record of a transac- tion is made. If a Day Book be kept, it is the book of original entry ; if the first entry be made in journal form with the items of the transaction appended, then this Daybook-Journal is the book of original entry; and if some of the entries be first recorded in one book and others in another, as is the case when all cash is entered in a Cash Book and all sales in a Sales Book, then both of these books as well as the Journal would be known as books of original entry^ 9. The Ledger is the only other book to be considered at present. Into it are copied the debits and credits of the Journal, putting together on one page all items that pertain to one account, and in this way showing at a glance all that John Smith owes and all that he has paid, and in another account all that has been paid out for merchandise and all that has been received from the sale of it; and so on for all the accounts of the business. 10. The Ledger is made up entirely of these accounts and for this reason is called the Book of Accounts. 11. Study of Debits and Credits. When a number of students begin the study of book- keeping together, it will be found very advantageous if the teacher will arrange to teach this subject, as illustrated by the next twelve transactions, orally, reproducing on the blackboard, in blank, the detachable page next following and filling in the amounts as the transactions are dis- cussed, obtaining from the students, by questioning, full directions for filling in the numbers. When this is not convenient, the student will detach the page and keep it with him as he care- fully studies the transactions discussed and journalized in sections 12 to 14. He will take up also C. W. Burke's daybook journal in which to copy the journal entries as he proceeds. (a) To The Student: Study v6ry carefully every step in this introductory practice. It will be possible for you to hurry through it without thought or to do your work exactly like the student next to you, if he be doing the same work ; but you will be cheating yourself. When you come to the actual business transactions that follow, your work will no longer be like that of any other student in the schoolroom. If you have thoroughly studied and understood these illustra- tive transactions, you will be able to go forward without any difficulty, but if not, you will be 1. The books of original entry are the only records of any business that are admissible in court as evidence in an action, and in order that they may be of real value the entries must appear as being made at the time of the transaction and not altered in any wise since. Erasures will invalidate an entry for purposes of evidence. If an error be made and a correction be necessary, it should be made in such a way as to leave the original «itry perfectly legible and to show the entire reason for the change. CAMPBELL'S ACTUAL ACCOUNTING CAMPBELL'S ACTUAL ACCOUNTING tied up and unable to make any progress until in some way you go back over and master the principles presented in this practice, while the student who has mastered this practice thoroughly at the start, will get so far ahead of you that you will never catch up with him. Do not hurry at the beginning. Lay a thorough foundation. Speed will come as you progress, if the foundation be thorough. You should be able easily toward the end of your course to go many times as fast as you can at the beginning. The first half of your course ought to take at least two-thirds of your time in school. 12. C. W. Burke invests $5,000 in a jobbing business, January 2 191 — . When a man invests money in business, even before he buys or sells, or does any business whatever, two accounts in his ledger will be affected and should show records. These are the two accounts represented in the squares marked, A and B at the top and to the left on your detached page of accounts, and entitled. Cash and C. W. Burke, Proprietor. Observe the number marked, i, in red ink in each of these two accounts. You see that it is $5,000, that it appears on the right hand or credit side of C. W. Burke's account and on the left hand or debit side, of the Cash account. This is an accountant's way of stating that Mr. Burke has furnished $5,000 to the business. We always Credit the account that furnishes the value and Debit the account that receives it. Note — It will not take a very great stretch of the imagination to consider your detached page of accounts a sort of checkerboard, whereon every business "move" or transaction is indicated by placing a credit in the square from which the value comes, and a debit in the square into which it moves. The first or original record of such a transaction is made in the principal book of original entry, at the time of the transaction, and should be copied at the head of the first page of Mr. Burke's daybook-journal exactly as follows : ^jS^~^^^^^^^i-i>d<:^Z^.-^^^. Serial IS SIGNEID umber 4499. //2.S //2.S Observe the result of this "move" in business as illustrated on your detached page of accounts by the items numbered 4, in red, in the squares marked C. and /. Compare the journal 1. This form is stamped on the invoice by the receiving clerk with a rubber stamp. It should be approxi- mately uniform in position on all invoices and is sometimes placed on the back. lO CAMPBELL'S ACTUAL ACCOUNTING entry of this transaction with that in 14 and observe that this value comes from the Pillsbury Flour Mills Company, which gets the credit. Copy this entry into the journal omitting two lines as before and observing that the date of entry and the page of the journal appears in the red ink form on the upper right hand corner of the invoice. This invoice is now ready for filing. Place it in your Invoice File, Envelope No. 3. Invoice of the Armour Packing Company^. i2^-^^:^tcE--^-^ Z /^/- /:rr^^ /d-g^ 1. While the separate entries for the respective invoices are the proper form for the student at this stage of his work, an experienced bookkeeper, if he had occasion to make these entries in a journal form would prob- ably combine the three invoices in the one entry as follows: Merchandise Pillsbury Flour Mills Co. Inv. 1-P Net, Cash. Armour and Company, S-A, 1-10 net, 1-2 cash, bal. note 60 das. Pillsbury Flour Mills Co. Inv. S-P 60 das. 2-30 cash. 16 1 125 1 880 5 315 16 What difference would the combined entry make in the figures on your detached page of accounts? 2. If your journal pages are not already numbered turn back and put the page number, 1, on the u^per outside corner of the page that you have just finished and the page number, 2, on the upper outside corner of this page. Be careful to keep your journal pages numbered consecutively. 12 CAMPBELL'S ACTUAL ACCOUNTING Observe that the date, January 7, is written on the blue line at the top of the page and make it a rule of your journalizing to always keep the date at the top of every page. When a change of date occurs in the body of any page it is indicated as shown in the entry for the next transac- tion discussed in 19. Observe the effect of this transaction in the transfer of values in your busi- ness as illustrated on your detached page of accounts by the items numbered 7, in the squares A and C. Make journal entry; then detach from your Prepared Blanks, Forms 5, 6, 7, and the envelope of currency following, observing that they represent the proceeds of the auction, and place them in your cash drawer, Envelope No. i. 18. To make a Bank Deposit fill out a deposit ticket like the one shown herewith, observing: 1. That currency is entered by itself; so also if you have gold or silver, the sum of each class of coin is entered separately. 2. That the check on the Garden "City Bank (in which you deposit) is entered by the name of the maker. 3. That the check on the College City Bank, your own city, is entered by the name of the bank. 4. That the check on the West Baden National Bank of West Baden, Indiana, is listed by the name of the city and bank. (a) From the above, deduce the following principles to apply to all deposits : (i) List gold, silver, and currency, each by itself. (2) List all checks separately. (a) Those on the bank in which you deposit by the names of the makers. (&) Those on other banks in the same city by the names of the bank, (c) Those on banks outside of your city by the name of the bank and the city. This also includes bank drafts. In- dividual drafts will be considered later. I'orm 8 e^^SilTtl^ ^' ^ WITH TH e ^^m ®fe Wmhs^ 3!*5>. College City ' J^^^Z' XQ/^ Currency Gold Silver Ch ECK «; ^ ^^^^'jy'^ o^^/^^'L^f-d. I ^^^^:£2,^y^»*z^^ SjTS ys- /:i^^s- SOC ^^d> y^fo (3) In your school work, list all checks drawn on the bank in which you are depositing, by the makers' names, alphabetically arranged. While no receiving teller will ever reject a de- posit because it is not arranged as directed above, but will, in fact, in a country bank, make out the ticket himself for ignorant people, or those unaccustomed to business^, all bankers will appreciate having deposit tickets made out as above, and you are here to learn how to do business, not how to let others do it for you. The preceding instructions were submit- ted for criticism to a careful bank teller who approved every point in the original manu- script and added the last two words in 18, 4, insisting that one could not be too careful in the description of the items in making a bank deposit. 1. In the large busy banks of our cities, persons who are not able to make out their own deposit tickets will be sent to another window or to a separate room where there is a clerk employed to assist them. CAMPBELL'S ACTUAL ACCOUNTING 13 (b) Detach from your Prepared Blanks, Form 8, observing that it is a blank deposit ticket, similar to the one presented in 18 preceding; then take from your cash drawer the checks and the envelope of currency taken from Prepared Blanks as instructed in 17, and prepare a deposit ticket in exactly the same form as the preceding. Count the currency carefully, observing that the larger pieces represent dollars and the smaller pieces cents. "Paper money" in form and general appear- ance similar to the larger pieces of college currency, is so universally in circulation in all the country outside of California that the student will very readily realize that these pieces are intended to represent dollars ; but only the older teachers or the parents or grandparents of the students will remember the time when "fractional currency," small bills very much of the same general size and shape and in the same denominations as the smaller pieces used as cents in college currency, were in general circulation, hence this word of explanation has been found necessary with many pup'ls. (c) When your deposit ticket is prepared, copy it on the flyleaf (or on the back of the pre- ceding stub) of the check book. In this instance, this is done for you, but you will turn to Mr. Burke's check book and observe closely the manner in which the items of the deposit ticket are copied and the total entered as a deposit. (d) When this is done, take the checks^ and observe that Mr. Burke has endorsed^ each of them For Deposit, signing his name exactly as it appears on the face of the check that is made out in his favor, and as it appears in the former endorsements on the other two. Now take your deposit ticket with the checks and currency and Mr. Burke's pass book to your teacher, who will act as banker in receiving your deposit. 19. January 10. This being the date on which the invoice entered in 15 is due as per the terms of the entry, take th'e invoice (numbered i-P) from the Invoice File, and from C. W. Burke's check book detach the prepared check No. 3. Observe that it is in favor of the Pillsbury Flour Mills Co., and that its effect when delivered will be to transfer cash from your account in the bank to this company. See items numbered, 8, in the squares marked A and / on your detached page of accounts, and, omitting one blank line, enter the new date on the second line and make your journal entry as follows: "10- :^S^:^^*^^.=-^ ^2-*.^^ -^^*:*^ ^^1=^ //26 - //A^y- Deliver the check (after completing your entry as above) to the Pillsbury Flour Mills Co., by placing it in Envelope No. 5, Vouchers for Others. Then take the Invoice i-P, write on the face of it as shown on the form on the following page, Paid i-io by check No. 5 and return it to its place in the Invoice File, Envelope No. 3. In business a "PAID" stamp usually takes the place of this writing. 1. You will observe that one of these checks is made directly in favor of C. W. Burke, while two others are endorsed to him by the "original holders." See the first endorsements on the back of the check for $500 and $400, respectively. The one check made out directly in favor of Mr. Burke by Levin Bros, is probably for the total of Levin Bros.' purchases, but the other checks were probably turned in to pay smaller purchases, the difference being paid to the parties in Cash. 2. Endorse means, literally, to write "on the back." In business it signifies to write on the back for the purpose of transferring the paper to some one else, or for the purpose of guaranteeing payment. Mr. Burke endorses these checks for the purpose of transferring them to the bank, which will place the amount of the checks to his credit the same as the currency. 14 CAMPBELL'S ACTUAL ACCOUNTING Form 2 INVOICE PiLLSBURY Flour Mills Company Tormstliet Cash Jan. 10 Branch. College Center. Y. S..ma.tkstic uldg. RECEIVED B€*'»%^ Jt \9 f: . entered: ^1— rVr.,,/',- NO AND Fire letter ^^ nonNKK PKNNRVL.V wtctirr IN TMr« orgj^iL 12/11 3476 Deo. 11, NAME AND AUURCSS C. W. Barks, College Cliy, T. S. tr^'^. NO CILAIMS ALLOWED AFTE R FULL RECEIPT IS SIGNED Car ProdwcU f«&rmBteMl under tb« Food Act* 225 brls 1906, U. i. S«i>I r umbvr 4499. Plllsbury'e Beat 5.00 1125 20. Take from the invoice file, Envelope No. 3, the voucher numbered 2-A and observe that it is also January loth dating and that payment should be made today. From Mr. Burke's check book, detach on the perforated lines, the prepared check No. 4, observing that both the check which you detach and the stub which remains in the check book are identical with the forms beneath. BALANCE BROUGHT FORWARD DeposHett Ck. No. .^^ Drawn. 19^ /a^l9/^ ■ In -favor of For Amount of Bill, or"l sAS^^J^ Payment to be made J ~' Amount of Check Balance 38iKP ^^a croLiJEGE City. V. s. y^ 10^ -^ Erom his book of note blanks detach the prepared note, No. i, which Mr. Burke has already made out and signed, ready to be forwarded as soon as you have made the entry. Observe that it is identical with the form below. CAMPBELL'S ACTUAL ACCOUNTING 15 Read this note carefully and compare it with the check that you have just detached from the check book. Observe that the amounts are the same but that the check calls for cash as soon as presented at the bank, while the note is a written promise to pay money at a future time, 60 ds. after date. Such a note is called, in Mr. Burke's books, a Bills Payable, and since he is able to use it in part settlement of his account just as he uses cash, we consider that Bills Payable is the source of a part of the value transferred to the Armour Packing Company and the journal entry is as follows : ^-^^^-5»T*^'^'^2S<>^-^ V^^ )^lf5»-::?:^z^^^«-i!Z-^>«^ /rra/d ^^'^aaf ^. ^A^a £7/ Compare the above entry with the illustration presented on your detached page of accounts — items numbered p, in red ink, in the squares marked, K^ /, and A — and note that, as indicated by the credits, one value comes out of the cash account and one out of a new account called Bills Payable. When you fully understand the entry, copy it in the journal. When all has been done as directed, state on the face of this invoice, No. 2-A, how payment was made as you did on invoice i-P, and return it to the invoice file. Place the note and check made out in favor of Armour & Company, in Filing Envelope No. 5, Vouchers for Others. (a) Obtaining a value out of a note or Bills Payable may not be entirely clear to the student at this stage of his work, unless he imagine that the note be given to a bank and the money thus obtained used to pay Armour & Company. Giving the note to the Armour Company will not seem to cancel the debt as indicated by the debit placed in the account of Armour & Com- pany. But so great is the change in the form of indebtedness, the Armour Company now being able to transfer the debt to a banker or broker and actually get the payment in cash, that their account is considered "settled by note," and Mr. Burke is said not to owe them, but to owe the note for that amount, which will be payable to any person who may rightfully own the note when it becomes due, and when paid, the amount will be charged (debited) to Bills Payable in- stead of to Armour & Company. Fix it clearly in your mind also that a Bills Payable is not a bill at all in the common use of the term, but a written promise to pay money at some future time. The term Bills Payable comes down to us from the early commercial history of England. If you do not fully understand this transaction consult your teacher. 21. Taking up now the invoice numbered 3-P, observe that it is a second from the Pillsbury Flour Mills Co., and turning to Mr. Burke's check book detach the Prepared Check No. 5, which, with its stub, appears in form as below: BALANCE BROUGHT FORWARD Deposited_ .19^ Ck. No -f Drawn lA:Z<^^. y^ l9y In fajxir 0] ^ For^2. ^-7^ Amount of Bill, or"l t ^^t^/tna Payment to be made J Discount. -2 % , S xt-gen Amount of Check Balance COLX^GR CITV. V. S.. NO.i£l. i6 CAMPBELL'S ACTUAL ACCOUNTING Observe that this check for $2,450, with the 2% discount allowed him by the terms of the bill, entitles him to a credit of $2,500 on account. In making out his check he computed the amount he desired to remit by discounting $2,500, 2%. You, as bookkeeper, will analyze this check for entry by (theoretically) dividing the $2,450 of the check by 98/100. Practically, you should do the work by a shorter method. Add to the $2,450 2% of itself ($49), then 2% of the $49.00, which is 98c, and if you do not see by this time that the entire sum is $2,500, continue to add to the $4,499.98, 2% of the 98c, which is .0196, or 2c, and the amount of the total credit is known. This method will be found much shorter than the method by division, as it can often be performed mentally and always with but few pencil figures. If the remittance be small^ $2500.00 Total Cr. one computation of discount will be sufficiently accurate. The rule is to con- ^^^^ ^^ ?/ above tinue computation as long as the result gives ic or more. See margin. .02 2% " The entry is as follows : $2450.00 net cash. Jisao ^. (a) Now study the items numbered 10 in the square marked A, Z), and /, on your de- tached page of accounts, and observe that $50.00 of the value that is transferred to the Pillsbury Flour Mills Co. at this time comes out of paying at the end of the first thirty days, or in advance of the full sixty days allowed by the terms of the bill. Money saved by discounting bills, that is, paying them before maturity, is said to come out of Merchandise Discount. When you under- stand this entry, copy it in your journal, leaving the usual two lines between entries, and deliver the check to the Pillsbury Flour Mills Co., by placing it in Envelope No. 5, Vouchers for Others. Next, enter on the face of the invoice (it might be the back if necessary) a memorandum of the payment as follows : 1-10-19. . Remitted by check No. 5, $2,450.00 Credited by Discount, 2% , 50.00 Total to our credit $2,500.00 The invoice, after this record is made, should appear as below, and be returned to its place in the invoice file, Envelope No. 3. INVOICE Pillsbury Flour Mills Compan¥ t«r»a} z% 30d, Uot 60 Branch. College Center, Y, S., ma.testic bldg. NO AND FILE LETTER ^^ Draft wben dQ9>^ OORl^TKR I*KWNBV1.VA^ NAME AND ADDRESS 12/11 3475 Dec.ll^ C. W. Burke. College City. Y. S. 'y^A-^^^^^^^y^ 116 856 464 34^4 l/8bj L/4- Pillsbury 's Beat Plllabury's Best 5.75 6.50 667 4708 5375 — NO CLAIMS ALLOWED AFTE Our Product* guarmnteed uadvr th« Food Act, R FUIl-L PgCEIFtT liina SOlh, IS SIGNEEP Itumber 4499. CAMPBELL'S ACTUAL ACCOUNTING 17 Note. Observe that this account is not settled In full by this transaction, and no note being given as in 19 the balance stands in the account, the credit side of which is still the larger. 22. Detach form 9 from your pad of Prepared Blanks, observing that it is another invoice just received from the Keystone Company, Chicago. Omit two lines between entries and make the journal entry as follows, observing that the date is still January 10: r^-y^^ a^^ ^'^j/r ^^vr" Now observe the effect of this business "move" on your checkerboard of accounts, as illus- trated in the items numbered // in the squares C and L. From what account is the value taken? Into what account is it transferred? Observe that the debit in Merchandise indicates that you possess more goods, and the credit in the Keystone Company's account that you owe that much more debt. The Merchandise shows an increase of resources^ and the Keystone Company's account an increase of liabilities^. As these balance each other, there is as yet no profit appearing from this transaction. Not until these goods are sold will there be a record that will show gain or loss according to the prices at which the sale is made. Turn back to Section 14 and observe that the result of that transaction is the same as this, so far as loss or gain is concerned ; that Mer- chandise shows an increase of resources as in this case, but that instead of a corresponding in- crease in liabilities as in this case, there is a corresponding decrease in resources in another ac- count — the Cash, so that, as in this case, there is no loss or gain. Look at all the entries that you have made except those in 13, 17 and 21 and see if the same thing is not true in every case. Now study 17 and observe that the same stock of merchandise that was bought in 14 was sold in 17 for $80 more than it cost; that the "move" which took $1,500 out of Cash in 14 made possible the "move" that brought in $1,580 in 17 without diminishing^ the real value of any other account for the $80. This shows a gain of that amount. You can put a certain sum into Merchandise and take a larger sum out, and yet leave the same balance as before you put anything in. You cannot do this with Cash? Why? Make the proper filing record in the blank form on the upper right hand corner of the invoice, numbering it 4-K, entering the journal page, and the date, and file in Envelope No. 3. 23. January 11. — Today's mail brings two orders from one of Mr. Burke's traveling salesmen, copies of which are shown on the page following. Detach Forms 10 and 11 from yoYir Prepared Blanks, observing that as they come in, one is completely filled out, prices being entered, exten- sions made and totaled, while in the other, one of the extensions and the total footing is left blank, since it is not possible for a salesman to know the exact weight, in an order for sugar in barrels. Ob- serve that these blanks are filled in Mr. Burke's office, as indicated by the Italics in the copy follow- ing, and fill the blanks in the detached order in the same manner. Leave one blank separating line in your journal preceding the first entry, entering the changed date on the second line, and proceed to copy the journal entries shown below the orders, carefully studying the transactions, as illustrated on your detached page of ledger accounts, by the items numbered 12 and jj, in the squares marked C. M. and A^. 1. Resources. What a man possesses, money or money's worth. 2. Liabilities. What a man owes to others. 3. Merchandise appears to be diminished $1,580.00, but this is only an appearance. If an inventory were taken at this time, all the goods bought would still be found to be on hand, except the A. R. K. stock, bought at $1,500. Hence the fact is that this stock sold for $1,580.00, a gain of $80.00. i8 CAMPBELL'S ACTUAL ACCOUNTING (a) Form 10 (b) Form 11 "« /^ ORDER BLANK Ordered of C. W. BURKE Terms tj'.gfa^.C^^ /fe^.^^ ArfH,,...Z2g,a,^^.^^.H«^> e>-^^ ^ t^ Salesman^/: ^^^g'^^^^^^e^V ORDER BLANK Ordered of C. W. BURKE «;^yi,Y,~^ "^V^:^^^ J^^^-^^,^^ ^2,^,^/.?C<>^ ^s' ^L2. /jr<^ ^ 7^^ , ^ ^ .^ ..^^ ..^ ^ 7i'ii^t<^,^!r,-tr^ ^^ //?g^. ^^r^ ., ^-^r^: S'aa* .a^ -^^^^ ^ %^'^:^. y^^* ..9^ ^^^>^y^ '^ /^-^xr .^O • ^^fCf-t-r-, /r^y^ .^Ki M^r ,^^^ ^i^^ // 191 Saif^mam (/t^ '^^A^4, sold rr. ^^^^^^ZyJ ^^J^ ^'<^'>^-^:^^.A4^^ '^l^^^rg-^V^^^g^^^^ g-.^.z^ ■\^^M>^ yS'^^i:r^.^i-i4--^2^--^r!^^i^:Z^^ y(5.e^2>t^..,-^^^>^^ 2^^ ^^,r.^^$^^^-^^..^-^^jV i^-T^ ^ZC^^^^ ^^^^/^f- -f^ £2 ~^^^^^^^^ (gV-;*^^ >^7^ivg^^,^^ Ae^^ y :2.^p^ ^cir^c/ .^^- .-^Z^^^-r^-^^ /)/-?:j€Au^ ;:;^^>^>^<>.g^^-.=7^-^ ^^.^ .Z^ /^^ Footnotes to Forms on Preceding Page. 2. The address of a customer must show in his account in the Ledger. There is no better way of cer- tainly getting his address to the Ledger than that It be made a part of the Journal entry when his first order is received. In loose-leaf accounting, it ordinarily appears with every order. 3. The initials of the salesman who took the order. In the loose-leaf bookkeeping of wholesale houses the invoice and loose-leaf salesbook record are made on the typewriter at the same time, and before the sheet is fastened into the binder it goes to a clerk who takes off a record of the amount to the credit of the salesman, whose name or initials appear as above. 20 CAMPBELL'S ACTUAL ACCOUNTING Form 13 ALL CLAIMS FOR SHORTAGE QR OAMACC MUST BE MAOC WITHIN TWO OAVS rROM RECCIPT^OF.SHIPMENT RCFCR TO ORDER NUMBER Chester W. Mxht JOBBER IN GROCERIES AND GROCERS SUNDRIES COLLEGE CITY Y S ESMAN^2£^^k. SOLO Tof/ 1^ X^^^^^^^T?;^-^?.^^ YIQ^ ^ ^i^^''^7^ // 191 _ Salesman s^^^^ — ^ -^=^ A^ --^ -J^^^ ■ -P^yy 3^'^^ ^-rry^ y^^pr^XX •3^/^^^ .JLl. 2jL .Ac ^^^ yy ^^ .^/L. ^^^^ ^^^~^:^^. Jk^^c j2X- JL. -^^^^.A^^ ^ ^K"^^^ ..^ /^r7i^ J2/1. .jy^ ^]^>^g^, •r^yt-.c^^^ Z^^sz^ y^y>xf ,yyr} _^£ ^ •• " 'gf^^^^^^^ '^<^<^A(. , yy^ ^^ .^^^^ ^^^^^^ ^^ -"Qji^^^^^ ^^^^j^ ^^;g^..^^^ ..^ ^/'>5: -,2^ :>.3/a j?^^^ Form 14 MORGL^^N Ebai« Y. S... Ja^^^//, y^ 19. NO.. 7^^ OF Morgan HuOh Pay to ^~^ ^^^^^ ~y<^^^-^^^^^ or B^sffet',^^^^.?^ IN COLLEGE CURRENCY. Form 15 S/^ f^ ?-^ MORGAN HUJU Y . S. \^t^^-?^,^Y^rrr, "yi^ Zi-19- .^*=a^=Z> after dat e ^^.g^^^v^ p romise to pay to the order oL- ^T^^^^ ^7^^^^^. V4^^ .at The Peoples National Bank, OF MORGAN BlUU ' In g«le ^oo tm of the United States of the present standard value, toitli interest from ^■-zf^nZ^cSy a.t. the rate of _^^,^j^g^ ' per cent, per annum, lvalue received, ■without any relief whatever from Valuation or Appraisement Laws. ^./Ls^-^z^cyre^^ >^^^^ f^tf flt». Botbx-fkmtt U,Jit^'^i'''s^^z^--t^-^^^ -^-iz^ ~ '^.^-ZJ'^Z-*^^^^ ^-^i '/paa- ^*!^i>tL^, :^ip^^y^2,t?^^ ^^^s^*^<^ ^^2? :^37^ /^ ys^aa- //-2^ /^/^ /^ ^3y^-~ CAMPBELL'S ACTUAL ACCOUNTING 23 [/'-^z^'^-z^^i^Ot^^'^t^ y, /^/ — ^^^eZ-tfi^^ -/O- P^^w!^^^^«^jf..c<^ ^^^a-^-cA^ y^^-^t^^^^ "^^^^ ^^^^^^^-^'^^-Z-^s'^^J'i-^ V^ >^!-*5'-^>i^^ "^^S^^^i^iC^^^'ii^ ^2^^^.^*::.^ '^^U- -II- '&^z^ft.0^*-^^y^^^ ^.^^^.^^.^.^j^^ -15- P- 7/ _^«r^ 2^fZ'//< /2fJ or 2£> Because this calls for Cash, turn to the second account in your ledger which is marked. Cash, and because the figures, 5,000, are in the left hand money column of the journal, write them in the left hand money column of the ledger account on the first blue line below the double red lines at the head of the account. In the next column to the left in the ledger account — the refer- ence column — write the page of your journal from which this item is taken, and in the columns 1. The Customer's Ledger is that subdivision of the Ledger (usually a separate book) in which are ar- ranged the accounts of those owing us — called also our Accounts Receivable; and the Creditor's Ledger is that subdivision of the Ledger (usually a separate book, also) in which are arranged the accounts of those whom we owe, called also our Accounts Payable. 2. Right here it may be well to give a reason for the use of the letter blotter as a cover for one-half of an entry while posting the other half. The author in his experience with students has found that he obtains the most accurate results in posting by requiring the student to give no thought whatever to the meaning of the entry but to consider each half of each journal entry by itself, turn to the account named in the entry and imme- diately write the figures in the right or left ledger column according as he finds them in the right or left of the two columns of his journal. The object, then, in using the blotter as a cover for one-half the entry while posting the other, is that the eye may not become confused by seeing the same figures in both the right and left journal columns while trying to decide in which ledger column they should be written. 26 CAMPBELL'S ACTUAL ACCOUNTING at the extreme left, enter the date of the transaction, January 2, writing the year date above at the head of the column. The Cash account, with this entry correctly posted, will then appear as in the form below. ^aoo As soon as this is done, blot^ the record you have just made in your ledger and then write the number of the ledger page on which cash is found (2) in the column to the left of the jour- nal page directly opposite the word "Cash," in the first entry, where the asterisk appears in the form above. This marks that half of that entry as posted and your first journal entry should now appear as in the form below: 2- ^r^^ '■y^.^-i^^L^^^^ ^^^^^^.^L-^^^-eS^^ J"^?«^^J3 cT^^ij? 30. You might now change your blotter so as to expose only the lower half of the first entry, ^and post it as you have just posted the upper half, except that it would go to C. W. Burke's account (the first on page i) and to the right side of it; but it has been found to be the better practice for the student, with a view to promoting care and accuracy as well as to econo- mizing time, to take all the cash on two opposite journal pages or even to take all in the entire journal, while his ledger is open at Cash, checking each item posted, with the ledger page num- ber, so that no matter when he may need to stop his work, he will know just what is done and where to commence when he returns. The objection to consecutive posting, besides the turn- ing of ledger pages for each item, is the tendency in the student to omit inserting the posting check number as each half entry is posted. If these posting checks are omitted and the book- keeper is called away from his work, he must hunt through his ledger to find what is the last posted item; or if observing that he has been omitting the posting check, he hastily writes in several at once, he has no assurance that all those items are really posted as he thinks they are. 31. Proceeding with the posting along the line indicated (that is taking all the cash while at cash) the next cash item is found in the second entry and is the latter half of it. Place the blotter this time so as to cover the first half of the entry. The uncovered half reads. '^^-^^<:^WC' /^^ which you observe is in the second or right hand money column of your journal, hence, you will write it in the right hand money column of the Cash account in your ledger on the first blue line. Then write the journal .page, i, in the reference column (the first column to the left) and lastly the date in the date column on the extreme left. Check the item in your journal by writing the page of the ledger to which the item is posted (2) opposite the word Cash in the journal, where the asterisk appears in the journal form above. Now the cash account appears, — 1. A convenient posting blotter for blotting purposes, (the idea of a railway accountant) is easily made by folding a common letter blotter four-ply and attaching it to the wrist of the right hand by a light rubber band so that about half of the folded blotter extends under the heel of the hand. It will be found agreeable, since it takes up the perspiration and prevents soiling the books, and a time saver, since it is always in place. Without even picking it up, it is just where you want it to blot the record that you have made in your ledger before you turn the page. CAMPBELL'S ACTUAL ACCOUNTING 27 ^ ^a£>0 2- / -^o 32. Proceed in like manner until all the cash items of your journal are posted, watching carefully for the change of date as indicated by the figures in the center of your journal pages, and for the change of page when entering the journal page in the reference column of the ledger. Do the work without assistance and without reference to the detached page of ledger accounts, relying entirely on the printed instructions until you have finished posting the entire journal, in order that you may master the principles involved. As a partial key to make you feel sure that you have interpreted the instructions correctly, the Cash account as it should appear when fully posted is presented below. Accept no other assistance until you have completed the work. You must learn to rely on yourself. /^A / 7 /s J^&5?^ a^ /^/ - 2- 2- /o /a //2.5 2V^C ar (a) The student has observed that, in writing numbers which consist of an even number of dollars, the author's method is to fill the cent's places with a dash instead of leaving them blank (as is done by some accountants) or filling them with naughts. Leaving these places blank when there are no cents tends to carelessness and the omission of the cents when present, while filling them with naughts makes rapid, accurate addition of the columns much more difficult. (b) In comparing his posting of cash with the key above, the student will notice that the figures for the date and the journal page are always written even when they might be indicated by ditto marks or might be omitted. The latter practice is common with many bookkeepers. The reason for the author's practice is that leaving either the date or reference column blank, because the figure is already expressed above, tends to the omission of these figures when the date changes and they should be expressed. While the expert bookkeeper may follow the prac- tice of omitting and be certain that he has omitted no change of date, the author believes that this certainty will be best developed by the student's forming, while in school, the habit of writing the date numbers and, hence, always noting them as they are passed over. Then, if omitted in his later practice, they will be omitted purposely, and not carelessly. There is no objec- tion to the omission of the name of the month when it is the same as in a previous posting, for there is no reasonable possibility of neglecting to note when it changes. The chief objection to the use of ditto marks is a question of neatness. 33. When Cash is correctly posted as above, turn back to the first entry in your journal and as you pass down the page, take up the first unchecked item. This is the second half of the first entry, and when the first half is covered by the blotter, the exposed line reads: ^~7^-^<^.c^^i^^ dTtPtyA — 28 CAMPBELL'S ACTUAL ACCOUNTING Turn to C. W. Burke's account as proprietor (he has no other account in this ledger at present, though he might have) and in the right hand money column on the first blue line write the figures, 5,000. — In the reference column write the journal page, i, as before; in the wide column in which you have as yet written nothing, write. Investment, in the date column, write the date as before, remembering to write the year date at the top of the column^. Then this item is posted. Check it in the journal by placing the number of the ledger page, i, in the journal in the posting column where the asterisk appears in the form above. Mr. Burke's account in the ledger now appears as follows : i s::^^if-^'^^^-i^i^^^i^i'^^-t^ / ^CPCXP (a) The student will observe that a word of explanation is written in the wide or explana- tion column in this account while that column in the cash account was left entirely blank. An old form was to write in each ledger column the name of the account that contained the other half of the entry, a memorandum that proved in most cases to be of little or no use. The en- deavor in modern bookkeeping is to record only such memoranda as will probably be of some future advantage. It is, therefore, difficult to state a definite rule, but the careful student will, by observing the illustrations given and the comments made from time to time as he proceeds with his work, be able to formulate for himself certain rules which he will develop into habits and modify by circumstances when he goes into business, 34. The next unposted item in the journal is in the second entry and when the blotter is placed to cover the posted half, it appears, plainly, — ¥: /So Turn to the account in the ledger, above which you have written the title. Expense, and in the left hand money column, on the first blue line, write the figures, 150. — , being careful to use the proper unit columns, and to fill the cents column with a short dash line. Enter the page of the journal in the reference column as before ; in the wide column write the memorandum. Rent, January; enter the date in the date column, being careful to place the year date at the top of the column, and the posting of this item is completed. Check the item in the journal by plac- ing the page of the ledger, 4, opposite the journal item where the asterisk appears in the form above. The finished ledger record appears : ^^.that if the terms quoted be uniform succeeding invoices would only require the invoice number, and If the Invoices be filed alphabetically instead of numerically no explanation may be necessary unless some credit occurs that is not an invoice of merchandise. On the debit the expected item is cash and, therefore, were it not for such items as $50.00 discount in 36, (d), or the note in 37, (b), no explanation would be neces- sary. None is needed in any case where the debit is plain cash. If your creditor draws on you (see Section (56) it would be well to say, "Draft," in explanation, or if you had occasion to return merchandise, the expla- nation would be "Mdse. returned." But in most cases the wide column in a creditor's account is left blank. This will, with slight modification, apply also to the debtor's (customer's) accounts, as the same principles of explanation apply to all personal accounts in the same line of business. 3© CAMPBELL'S ACTUAL ACCOUNTING :^S^^..:^.^ ^2^^.^ J^^:.^ ^:^ y>^*i^^Z^^i..i!>-^tC^f ^ y^/ /^ /^ ^-y^ ■^^.-p/(piz^r^^^^^3-ij:^ 2. -? 2 so a 2- 2- vrrG?7^ — 37. Turning back to take up the unposted item nearest the first of your journal, you find it in the fifth entry. Placing the blotter over the posted half, it leaves uncovered the credit and the explanation, reading as follows : , . ^^y/: /rr

^---grZ^cA^^r-^^^,t:P-::^^ /fr^/£ which we post the same as the debit in 36 (c) was posted, except explanation and references. Page 2 is entered in the reference column ; in the wide column, A^. $9^0, No. i, i-io, 6ods; in the date column, the full date as it should always appear at the head of an account. See Expense account 34, and, lastly, the journal item is checked by placing the ledger page, 11, in the check- ing column of your journal page where the asterisk appears in the form above. 38. The next unchecked, and hence, unposted item is in the ninth entry and when the other two items of the entry are covered with the blotter, it appears, — ^^ ar' It is posted as the item in 36 (a) except that it is posted to Bills Payable account on page 8 of your ledger. The explanation column should be filled as follows, No. i, Armour & Co., i-io, 6od, meaning that this note is No. i in the bill book, is given to Armour and Company, dated January 10, to run 60 days. 39. The tenth entry furnishes the next unchecked item which appears, when isolated by the blotter, as in the form below : a/^''i--£i^ CAMPBELL'S ACTUAL ACCOUNTING SI This will post as any of the credits of the Cash or Merchandise accounts. Turn to the account marked Mdse. Discount on page 3 of your ledger and post as you posted cash credit in 31- 40. The next unposted item to be considered, as you will observe by looking for the posting checks, is found in the eleventh entry, — 6^s /y Post this item to the credit of The Keystone Company's account on page 11 of your ledger as you posted the credit of Armour and Company, in 37 (a) to their account. Explain, Inv. 4-K. Net 6od. 41. In the twelfth entry we find the next unchecked, hence unposted item. Place your blot- ter to cover the posted part and you have, ^^4<^--<^4^:^ZI.^^^^^.,.,.2^:^^2^.^.2^_ ?^2fez-«2^r^i5<^iS^!ie/^^ ysa Post this item to the left side of the account of the Park Grocery Co., on the ninth page of your ledger, observing that the postofifice address is written under the title, on the tripple line that heads the account, and entering in the wide column when posting, this explanation, S. i, jodas., Dft. Note — You will observe that, in connection with the explanation of the entry in question in the journal there appears the initials of the traveling man who sent in the order. This has no place in the regular posting of entries but is taken (posted if you please to so call it) to a special ledger showing the total amount of business sent in by each representative. A separate record is thus kept with each traveling salesman, so that when taken in connection with his salary and expenses, the firm can tell exactly what it is costing them to get the business. This will appear to better advantage in the loose leaf salesbook, the salesman's record being taken off before the leaf is fastened into the book. 42. The next unposted item is the first half of the thirteenth entry and you will post it to the account of J. C. Dowell & Co., as the item in 42 was posted to the Park Grocery Co., enter- ing in the wide column this explanation, S. 2. 1/2 C, 1/2 N. jod. 6%. When this is done observe that there is another item for this account, a credit in the fourteenth entry. This will be posted to the credit side of the account explaining, N., 1-15, 3od. 6% $1,2^3.08. The ledger account will then appear as follows : ^^.^^^■^^.^ V^ x^%»^*^!^«<-«^ .^^^^iiS^ ^J&f^ 2.sf<: /(> /^/-. Qia^. /.r 1^/-/s: Sa^^^Yo-^^'-^f'^ ^^ :2:rr<^ /^ 43. The last remaining unposted item is the second line of the fourteenth entry, a debit, — /2^3 --^2.»^^.X ^""<^ Amount of BUI, or^ ^ /f^r^^ Paynunt to be made f ^-^^^^ -Diii:omtT'2fsa^de^'% S ^^yg ^ ^ Amount of Check Deposited^ Ck No..^ In favor o) Balance .19. Drawn, jorof ^ For \=^^.^^ ^--^ Amount of Bill, or\ Payment to be made j Discount, -2- ^ Deposited^ Ck. No In fauor of Drawn_ Amount of Check Balance 19 /P_ For Amount of Bill, or\ Paymtnt to be made J Discount, 0. Amount of Check Balance 3fic ^4/'a /6? ^ ^^yi^^^^ JL:;>^^;^^^-4!Z^;>^^ >v:^^ • ^' /^ ^/^>j^^ y-/,^ ^^*^. /S^^a y^ /^y- ^ ^-^/2.^^/^/^y^ ^^ ^//jyg^ CAMPBELL'S ACTUAL ACCOUNTING 37 48 (a). Detach from your Prepared Blanks, Form 16, and fill it out carefully, first working out the entire report on scratch paper that there may be no errors in your report. Then dust your books carefully, and placing your check-book in your ledger at the Cash account, and your ledger in your journal at the place where the trial balance is recorded, submit all books and your filing envelopes to your teacher for approval. While your teacher is approving your report, you will proceed with the following: RULING PRACTICE. (b) One of the important points in neat bookkeeping is neat rulings, and one of the weak- est points in the beginner is in ability to do neat ruling. You have not so far in your work had any occasion for red ink rulings, but in the next closing of your books there will be a number of accounts that will require ruling. That you may be prepared- for this work, take a sheet of ledger paper and practice the following ruling exercise until you have made a perfect page which you will take to your teacher to be filed for reference with your other records of work. As this will be a part of your exhibit when specimens of your work are desired by possible employers, it is unnecessary to emphasize the importance of practicing until the page is perfect. Place your ruler on the paper parallel to your chest, and with the ruling edge up from the paper and away from you. If the ruling edge touches the paper it will take ink from the pen point and blot your work. If there is at any time a great deal of ruling to be done, it will be advantageous to use a drawing (c) 1 z Note. — 1. Addition Lines. 2. Closing Lines. Observe that addition lines cross the money columns only; that the double closing lines cross the entire page except the wide explanation column. 38 CAMPBELL'S ACTUAL ACCOUNTING pen, both in the interest of time and neatness, but since the common pen is most convenient to the bookkeeper and the work usually consists of but one or two lines at a time, the common pen is principally used, and with such a pen you will prepare this page of ruling practice. Hold your pen vertically and with the flat at right angles to the ruler. The single red line should be placed exactly on the light blue line of the paper, and of double lines, the upper should be on the light blue line and the second line about one-thirty-second of an inch lower. To make this second line do not move your ruler, but change the location of your pen point by inclining the top of the holder a little farther from you. (d) When your books and your page of ruled work are approved, copy your report into the form below and submit it to your teacher to be stamped before proceeding with your work. Form 16 Cash Balance in Ledger, $ In Bank, per Check Book, $ Notes received, Number, $ Invoices bought, Number, $ Orders filled, Number, $ Receipts taken. Number, $ Outgoing Papers. Checks paid out. Number, $ Teacher's Bills rendered. Number $ Stamp of Notes given. Number, $ Approval Form 17 iNo \y ORDER BLANK Orderedof C.W. BURKET Tf rmi -^^ \AAt.^^;Lr,^>a^^ 'Zlays-o^.33 ^c^£e_ /^^ v^.^ <^^. Yxx x(,^.^^^iJ^^.^2r. ^£^^ ^^^ jlr 7^A^a^^ ■/^^^ /^^^ .^3 'a :2.Z2^ 49. Detach from your prepared blanks, Form 17, an order for Merchandise from McConnell & Co., Fairfax, as shown below. Make out the bill and make entry as in the sale to J. C. Dowell & Company, section 23 (b), (d), (f). Leave two blank lines between your last journal work and this entry. Place the sales number, j, on the order, on the bill and again in the explanation of the entry, so also, with the terms, ^od. acceptance. The terms of this sale as indicated above mean that the purchaser has agreed to accept your draft at 30 days for the amount of the bill, but the entry of the sale will not diflfer in any respect from that of 23 (d), except the line stating the terms, which will be as above. Make your entry first on scratch paper and submit it to your teacher before entering it in your journal. Deliver this bill by placing it in Envelope No. 5, Vouchers for Others, and file the order in your voucher file, Envelope No. 2. 50. Now give careful attention to the terms of payment expressed above as a 30^/. acceptance. Acceptance in this sense is probably a new term to you. The common meaning of accept is to receive, but it also means to agree to, as, to accept a statement to be true ; hence, in a com- mercial sense : (a) To Accept a Draft (which is an order to pay money) means to agree to pay the money; and the Acceptance of a Draft or Bill of Exchange is writing "Accepted," the date, and your signature, across the face of the draft or bill. This is, in law, your promise to pay accord- ing to the terms of the order. (b) A Draft is an order signed by one person called the Drawer, and addressed to a second person known as the Drawee, instructing him to pay to a third person or to the drawer himself (in either case known as the Payee) the sum of money named in the draft. It may either order CAMPBELL'S ACTUAL ACCOUNTING 39 payment to be made immediately, At Sight, or at a certain number of days after sight as in the form below. The first is called a Sight Draft and the latter a Time Draft. (c) A Bill of Exchange is a draft between different countries usually in duplicate or triplicate. Look up the subject under Drafts, Exchange or Bills in Spencer's Commercial Law, or any other good text-book, or in your Commercial Arithmetic, or in some good Encyclopedic Dic- tionary; or question your teacher until you thoroughly understand this subject before proceeding. (d) The draft which is sent by Mr. Burke to McConnell & Co., for their acceptance is made out exactly as in the form following, and is sent out with the invoice. Study the form carefully that you may recognize it when it is returned, which should be in a few days. /^^..^^^^^^^^^^^Z.^1^^^^ m&/^nm;;(^ '^^^.-r^^^ ^^^Z^^C^^^ ^^^^i^'^^^fii^'^-^^^-^^^ \LUHBtA BOUD . \ -t^^^ Dm Bobhx-HrmM CoJtNiuiiMptii 51. Under the date of February i, McConnell & Co., return the draft referred to in section 50, properly accepted as in the following form. Form 18 ^.^^^^^^^^...£^^^Z^£^.^:^^ %. COLOHBIA BOHD '/J^y/m^ V>## nt Botts-HrmK CiiJiKliiiMfiritu Detach the draft. Form 18, from your pad of Prepared Blanks, and place it before you while you make the entry. Observe that when sent out (see form of draft in 50) it was an order signed by C. W. Burke instructing McConnell & Co., to pay to C. W. Burke, the sum of $648.47, 40 CAMPBELL'S ACTUAL ACCOUNXiNG and that McConnell & Co. have written across the face of this draft, Accepted,^ February i, ipi.., and that their signature to this acceptance constitutes a promise to pay exactly Hke the promise made by signing a note. As a payment for the bill of goods sent out, this acceptance then is like the note received from J. C. Dowell & Co., in 24. Your entry should debit Bills Receivable because the proprietor has received a promise to pay him money, and should credit McConnell & Co., because they fufnish the value that Mr. Burke (or his Bills Receivable account) has just received. The proper explanation of this entry will be, McConnell & Co. ac- cepted our draft at jo days in full for Sale No. j. Make entry in your journal omitting two lines on the second of which in the middle of the page you will write the date February i. See change of dates in Model Journal, January 7, 10, and 15. This will be the same except that the name of the month is added, because the month too has changed. Observation. The use of a draft in this sale is somewhat arbitrary for the purpose of in- troducing a time draft as a Bills Receivable; yet it is not to be considered an uncommon com- mercial custom in receiving settlement for sales. A more frequent commercial use of the draft, is illustrated in 53, but a use very much like the one preceding may be illustrated by a transaction that came under the author's notice in San Jose, California. A manufacturer of fruit graders received an order from an unknown fruit-grower for a large-sized grader to be shipped at once with bill. The would-be buyer had no rating in Bradstreet^ and had neglected to give any business references. As the seller had a right to expect cash under the terms of the order, he shipped the grader and drew at sight through his bank in San Jose for the amount, turning over the bill of lading to the bank as security. The bank immediately presented the draft for collection with the bill of lading which was evidence that the grader had been shipped. Had the buyer refused to pay, the shipper could have notified the R. R. Co., and stopped the delivery of the grader^. 52. Mr. Burke informs you this morning that hereafter you will be authorized to sign the firm name (per your own) in endorsing checks for deposit and in drawing checks in payment of bills that he has "O. K.'d," and he goes with you to the bank to authorize them to accept the firm signature written by you. The bank hands you a signature card, Form 19, which you will now detach from your Prepared Blanks, and fill out as in the form following: Place this card thus filled out in Filing Envelope No. 4 which will signify your having - left it at the bank, then proceed with the day's ^'"•-"^ '■'"'"" °'^^^y ^^~, ^ business as follows: . --1^^ /f yT(^ . . SF^;^^-2^^ii-if^fi^ * ^^f-^^ Estate Company for $150 for February rent. Carefully fill the stub first,* then make out this '~7^^=>?-y;^^^^.>L^ ^1^^^^^ '^t^r/^ check exactly like the one drawn by Mr. Burke ,^'" -^ / / 2. — /^J. — Many authors, in the elementary part of their text-books, charge such bills to Expense, but we see no reason for not teaching a proper classification of the different items from the beginning, and the items of Freight and Cartage on goods received have so direct a bearing on the cost and selling prices of goods, that we believe the student should be trained to consider them separate from the unclassified items of general expense. There might be good reason for having separate accounts, one for Freight and one for Cartage^ but we believe that this first step will suggest the second to the student when his business requires it. Observe that the bill as presented above is receipted, showing that it has been paid. In making the entry, omit two lines as before and debit Freight account because you have put value into it, crediting Cash because that account fur- nished the value. Explain, Paid Expense Bill No. i. You will observe that although we do not charge this item to the general Expense account, it nevertheless belongs to that class of accounts, and the invoice, termed an Expense Bill instead of a Mdse. Invoice, is not filed with the invoices that come in for merchandise, but is placed in a separate file. File this bill so that the figures appear on the outside with the red ink stamp facing you and place it in your voucher file. Envelope No. 2. (e) Next detach from your Prepared Blanks, Form 22, the bill of the Citizens' Water Com- pany, a copy of which appears following, and observe that it is another expense bill and one that goes to the general Expense account. Make your entry as in the item of rent in 13, but explain. Paid Expense Bill No. 2 — Water, January. Observe that the bill is receipted. Enter the filing memoranda in the red stamped form and file in Envelope No. 2. 1. Observe that Cartage on merchandise received may be very properly included in the Freight account, as the distinction is only one of the kind of carrier or of distance, which does not concern the accountant; but that if customers be charged cartage for the transfer of goods sold from your store to the depot or express offlce, that would be an item of accounting that would have no place in the Freight account above, and miglit be very properly kept in an account termed Cartage. CAMPBELL'S ACTUAL ACCOUNTING 43 Form 22 a. 5 E X c-43 lie ^= =^fi *5 «« < e ■O 4) O lip ■u " s <-i. B ♦^ Q.! OS c-^ No. 676. College City^^^^^^l9- OFFICE OF RECEIVED 19. ENTERED NO AND FILE LETTER . Cttt^ens Wnttx Company To W To A Mp. ~t^- .^::^/^ Xr^y^^y ?^^.^^ ' /^ Your name here 'ater for month of L/^^-^7'<'^'f^A^^ rreara,<2;es from — ^2_ — Dr. $2.00 Total Received Payment, *2 00 Collector 53. February 10. — Turn back to Section 23 and observe that on January 11 you sold a bill of merchandise to the Park Grocery Company, Beaconsfield, for $150.00, on 30 days, subject to draft. Turn to the account with the Park Grocery Company in your ledger and observe the record as it stands there, showing a debit of $150.00 in the account. Since no remittance has been received from the grocery company, we are authorized by the terms of the sale to draw on them for the. amount of the bill. Detach from Mr. Burke's Prepared Book of Drafts, the draft that he has drawn on the Park Grocery Company in favor of the Garden City Bank, and make an entry in your journal debiting Cash and crediting the Park Grocery Company^, explaining, Dreix) at sight in favor of Bank. Do not neglect to omit the usual two lines between entries and to write the new date, February 10. A copy of the draft is shown below. Place this draft in your cash drawer, Filing Envelope No. i, until you are instructed lo ue- 1. A sight draft on account is handled as above, usually in case the drawer is certain that it will be honored, and often when the drawer is uncertain on that point, but needs the temporary credit at the bank which the deposit of the draft will give him. In case the draft should not be honored after making an entry like the above, it will be necessary, when the draft is returned, first, to charge again to the customer and credit Cash, and second, to make a deduction of the amount from the balance in your check book. It is a better plan, ordinarily, and one that is very widely followed, to place drafts as above in the bank "for collection," as you did the note of J. C. Dowell & Co. in 46 (a) 3, and to make no journal entry until you receive notice as in 54 that it has been collected and placed to your credit. 44 CAMPBELL'S ACTUAL ACCOUNTING posit it in the bank. When it is deposited, the bank will credit you as for a check and will send the draft to the bank at Beaconsfield to be collected. 54. February 11.— Detach Form 23 from your Prepared Blanks, observing that it is a notice from the Garden City Bank informing you that the note of J. C. Dowell & Co., which you placed in the bank for collection at the time of your' last deposit (See 45^ b), has been collected. A copy_ of this notice is given here that you may have it for future reference. The form of journal entry is given next following the copy of the notice. Observe that your bank has not charged you any fee for collecting the note, placing the entire amount of principal and interest to your credit. Banks usually make a regular charge for collecting, but sometimes, when a customer uniformly maintains a large balance to his credit, the bank considers the size of the account (if they are not paying him interest on daily balances) a sufficient re- muneration for their collection services. Ob- serve that in this entry Cash receives (and is debited for) $1,299.53. That $1,293.08 of this came out of Bills Receivable, and the balance from a new source with which we will open an account called Interest and Discount} Form 23. Garden €ity Bank College Citv, Y. S.,Feb. 11, 191--. Mr. C. W. Burke, College City, Y. S. The no \,e against J. C. Dowell & Co., left bg gou at this bank has been collected as follows: Face of note- -$1Z9Z .08 Interest $ 6 . 45 Total $1399.53 Collection charges $ „____ We credit vour account $1399 . 53 5^ />2-^f s^ ar /^:r If your bank had charged you a collection fee of twenty-five cents the entry would be as in Foot Note 2 below. Now prepare a deposit ticket for the sight draft drawn on the Park Grocery Company in 53 and take it with the draft, the notice of collection just received and your pass-book, to your teacher, asking him to make the proper entry for the banker and to show you how to enter this draft and the note collected on the stub of your check book, provided you cannot make the check book entry yourself after consulting the illustration of your check stubs presented in 66 (b). 1. When a business man is both receiving interest on notes in his favor, and paying interest on notes that he owes, it is sometimes considered best to fceep two interest accounts, one called Interest Receivable, for inter- est in his favor, and one called Interest Payable, for interest that he pays. Both classes of interest may, how- ever, be carried in the same account, the right side showing the interest receivable and the left the interest payable. When the account is so kept, it is usually termed Interest and Discount as above. 2. Had a charge been made for the collection of the note in 54 the entry would have been journalized thus : Cash Collection and Exchange Bills Receivable Interest and Discount Note of J. a D. &Co. Collected through bank. Charges 25c. 1 299 25 08 45 CAMPBELL'S ACTUAL ACCOUNTING 45 55. Detach Form 24 from your Prepared Blanks, observing that it is an order received by mail; that it is not on one of your regular blanks as other orders have been, and that the prices are not extended as in the case of orders sent in by traveling men. The catalog prices referred to are as follows : Y. H. Tea 371^/ less 20%i South Carolina Rice 8c less i2i/^% Pillsbury's Best Flour $6.60 less 121/2% Fill in the prices and make the extensions in the detached form as they are made in pencil (indicated by pen work) in the copy of the form below. Make also the additional notation as to terms, (a) Form 24 anderson & anderson Grogeiues, ALBIA, V. S. February 10, 191_. C. W. Burke, College City. Y. S. Dear Sir: Please send by Burlington Freight the goods listed below at the prices quoted in your catalogue less your regular dis- count to the trade, billing at 50 days^J^^ c^j^/A^ 9p^ 3^^-> 4-^>- 2 hlf. chests ¥• H» Tea-V^''^^-?^/-^^^ -^^ ;^ "^^X.^-^ 4 sks. S. C. Rice e-^^r^i^^^ «pX ^- /^T^"^^ , ^'ZT 50 brls.Pillsbury' s Flour fy /^. ^^^- Q ^ - -^^/^ ^ r^ffi^ Your prompt attention will greatly oblige, yy^ Ande^sop &^toderson» Observe that in the order, Anderson & Anderson ask for 30 days with discounts and that in the copy of the bill you quote S^'^-i ^^ ^^ cash, i^ 10 note sod. 6%. In the quotation of terms the apparent fractions 2^10 cash and I'^io note, etc., are expressions used commercially to signify 2% ofi for cash within 10 days and 1% off for note, etc., within 10 days. Enter sale and file order. See 49. Record sales number and terms and itemize sale carefully. Deliver invoice by placing in envelope No. 5. 1. Trade Discount. Jobbers in some lines of business publish catalogue price lists in which the current retail price is quoted and from which they regularly malte a discount to the trade. This discount is seldom the same for all the items of an invoice and if not, must be deducted from each separately, as in the order above, when making the extensions, although if considered more convenient two or more items that are quoted at the same discount may be discounted in one sum, as in the invoice, 55 (b). A good form for the invoice when all items have the same discount is shown in 60 (c). 46 CAMPBELL'S ACTUAL ACCOUNTING (b) Make out the invoice as in the form below. ALL CLAIMS FOR SHORTAGE OR DAMAGE MUST 8E MADE WITHIN TWO OATS FROM RECEIPT OF SHIPMENT. REFER TO ORDER NUMSEtt Cbester W. iSurk JOBBER IN GROCERIES AND GROCERS' SUNDRIES COLLEGE CITY, Y. S. Order No ■^^ Salesman ^^^;^^^- .ii,^-«ig^-,^ x/ J9I — SOLD TO /^^^^^W,'a'^g<2<^;rg>:?:g^ y^/^^^^W^gz:^,,,^^^^-^^ ^ .^^^.^a^r^ g^^^^g^ y^^ ^^cnry jM. 6obk MANUFACTURER OF RECEIVED lO- ENTERED.. NO AND FR-E LETTER MASON'S AND LIGHTNING FRUIT JARS AND DEALER IN GOBLETS, TUMBLERS, LAMP CHIMNEYS AND GLASSWARE Order No -^^t^I— COLLEGE CENTER ■ ^^^ _ _„ soun TO ^-^^y^^^^Jf^^ .^J2. ^..^i^^:>^<£,^^^-±^ -^ ■£a^ -^ ■^ % .1^ ^^.^y. ^ ^^^^^^^.^ .z^ -2^ ^ ^ .^^J-.P^_>g^ /^ — > n ^ ^ •^ ,i<^i^:Z'<^^.^^^ "^^^ ^ .. ^%c^^ ^ 22--^, -^ S^ *t LZ^^ ^ ^^^£^d^ /^^ 4^ ^ ^^- (a) Mr, Burke instructs you to accept the draft that accompanies this invoice, and that your action may certainly bind him and be accepted as authoritative by the drawer, he hands you a fully executed power of attorney. Form 28, in your Prepared Blanks, which you will now detach and place in your Voucher File for safe keeping. Write the acceptance across the face of the draft in red ink exactly as it appears in the copy of the draft shown below^, but with your Form 27 rsm^ ^%? id 4 r^-Z2_ /i^m^^^m:mw^ ^""^ , ^^^^^^^^ --t^l„^f^^-^ J^y "Z:^^^^>; ;^ ^\' 1^ COLUHPIA BONll .,<;y* 7* Uiihbsflrnill t'^■Jlllfmlla|)l^l 'mJSS33S^SSS!^3^^S^SS53^^S^03S5^ 1. The words, attorney in fact, beneath your signature, constitute an announcement that you hold Mr. Burke's Power of Attorney and are expressly authorized to sign his name on this paper. Any who question your authority further can ask to see the power or for a certified copy of it. For a further study of the powers con- ferred by this document, see Spencer's Modern Business Law, pp. 100 and 101. (See Foot note 1 under 51.) CAMPBELL'S ACTUAL ACCOUNTING 49 name instead of T. H. E. Student in the blank following- the word per. Study 49 and 50 be- fore making entry, but remember that you are promising to pay this draft instead of expect- ing to receive payment; hence, it is a Bills Payable, instead of a Bills Receivable, and is simi- lar to the note given and discussed in 20. For your entry, debit H. M. Goble, because he receives the value represented by the draft, and credit BillsPayable because you are giving the firm's promise to pay. Explain, Accepted H. M. G. dft. jo d. Inv. 5. Observe that this No. 5 is not the number at the head of the invoice ; that is H. M. Coble's sales number. Your number you are to put on the bill in the red ink form as before. (b) Observe that as you credit Bills Payable when you accept this draft, you will debit Bills Payable when you pay it. Do not forget this when the draft matures. It will not be like the entry for payment of the draft in 56; the acceptance makes the difference. Why? 58. February 15. Detach from your pad of Prepared Blanks, Form No. 29, the note of Anderson & Anderson duly signed and returned in payment of the invoice sold them on February II, less one per cent., as per the terms of the bill. The entry for this payment involves a prin- ciple similar to that governing the entry in Section 21. Observe, however, that in the transaction discussed in 21, Mr. Burke made payment in cash less the discount, and the Pillsbury Flour Mills Company was debited for the amount of both cash and discount. This time Mr. Burke receives the payment in the form of a note less the discount and Anderson & Anderson will be credited for the amount of both note and discount. Make your entry, as below, debiting Bills Receivable for $382.88 the face of the note just received and Merchandise Discount for $3.87 the amount of the discount (a loss received), and crediting Anderson & Anderson for the full amount of the bill. Explain, Rec'd of A. & A. their note at jod. for Sales No. 4, less 1%. Place this note in your cash drawer for safe keeping. <7 u?^ 7^ 59. Detach Form 30 from your pad of Prepared Blanks. Observe that it is another invoice from the Keystone Company. Fill in the proper memoranda in the red ink form. Make entry as in 22 and file the invoice in Envelope No. 3. 60. February 20. (a) Detach from Prepared Blanks, Form 31, observing that it is a letter from McConnell & Co., ordering merchandise. Turn to their former order in 49 and note that the flour of their former order was put up in 1/4 brl. sks. and quoted to them at $5.77>^. As they do not specify anything else in this order it is safe to suppose that they would have it filled in the same manner. Our Roman Beauty apples at $2.80 will fill the order in that respect. Fill in the necessary memoranda as to the kind of apples, and the size of the flour sacks, enter the prices, make the extensions, total the order, and note the freight route for shipping, and the terms for billing, all in pencil, on the detached order. Form 31, exactly as indicated by the writing in the copy of Form 31, presented in the text. When the order is filled out as instructed, submit it to your teacher for his stamp of approval and proceed to make out the invoice. A correct form of invoice will be found in 23 (f). Enter shipping instruction on invoice as in 16. File order in Envelope No. 2 and deliver invoice by placing it in Envelope No. 5 together with a copy of C. W. Burke's reply to the letter of McConnell & Company, shown on Page yy. This letter is pre- sented as a specimen of a form letter prepared to accompany outgoing invoices. With the ex- ception of one paragraph which is dictated, it is written by the stenographer "from the form" without any instructions from the proprietor. 50 CAMPBELL'S ACTUAL ACCOUNTING Form 31 (a) I^Mli!^iI^Ji5llmltl^^^^ll1^llll^^^l^vnl^^l.;n^■^^!ll 1lHN'i^l»M»lllllll^lllll^l!ll^lltIlll: McCONNELL & COMPANY — — iM>miiim.ii | i i ,r;iimBniiffii r M t mwni (s) (grocerleiBr, »oot|f, Stf^oegl, ^ ' — m^ enmjmuUajiLm:Llm mmmuimitjJtumiiiuiujiiiiiiiiii n iJiiiiiii « iiiii m iiuimLi]iiiiiiiilii i ii ^ - -•—-■• TBPWII|iMgiUl|i| Mill IWilUMUiWWWIIIIII FAIRFAX. Y. S., Mr. C. W. Burke, College City, Y. S. Dear Sirl- Please send me by first freight, and bill at 30 daysl- 100 brls. "Pillsbury's Best" Flour ^ i^r«*.^ <« ^-7/^ *r//. So 60 " good Apples, "7/^7^*^*<^'^t.-»'a— . CAMPBELL'S ACTUAL ACCOUNTING 51 (b) Next detach Form 32 from Prepared Blanks, observing that it, too, is a letter ordering merchandise. Evidently this order is based on our catalogue quotations and we will bill accord- ingly, as appears in the copy of this order, shown on opposite page. For billing and entering, follow instructions in 55, except that since the discount on all items of this order is the same, it can be deducted from the total as shown in the copy of the invoice following. Compare the detached form 32 with the one shown on opposite page and observe that the pen written part has been filled in in your office. /«LL CLAIMS FOR SHORTAGE OR DAMAGE MUST BE MADE VA/ITHIN TWO DAYS FHOM RECEIPT or SHIPMENT REFER TO ORDER NUMBER Chester W. Mxk JOBBER IN GROCERIES AND GROCERS SUNDRIES COLLEGE CITY Y. S. Order NO 6 February 15, 19 . Salesman Sold to p, H. Bi:rnH , Terms 60d3. Z/lO note 30d g . Girard, Y. 3. ^""""""^"^"'^"'^ 356, .-362, 4 brls. Granulated Sugar, 359, 363, 1440# 5 65 81 46 10 " Ronan Beauty Apples 3 20 32 00 20 " "rillabury's Best" Flour, l/4brl. ska . 6 60 132 00 245 46 Less 12 1/2 % 30 68 $214 78 6i. February 2i. Mr. Burke settles with the Keystone Company in full for the last invoice received, remitting the note of Anderson & Anderson with his own note for the balance and claiming the discount of i%. This is not presented as a usuaP or customary business trans- action, although it is a possible one. It is presented here for the purpose of bringing to- gether into one combined entry several accounts that the student is liable to confuse, and which he must learn to carefully distinguish. Take the note of Anderson & Anderson out of your cash drawer and endorse it across the left end^ for transfer to the Keystone Company, exactly as in the form below, signing Mr. Burke's name, per your own as attorney in fact, as you did to the ac- ceptance in 57. Deliver it by placing it in Envelope No. 5. Vouchers for Others. 1. The usual course of business in this transaction would be to discount the note at your bank and then either give your note for the full amount of the invoice or pay cash for the part now paid by Anderson & Anderson's note securing a 2% discount on that part of the payment. This would not, however, result in bring- ing together into the same entry for comparison and study the pairs of often confused accounts. Bills Receiva- ble with Bills Payable, and Interest and Discount with Merchandise Discount, which is one object in making the transaction as above. 2. Never ''stand on your head" to endorse paper. It is more dignified, and more convenient, for you, and more satisfactory to the banker or broker, or to any person to whom it is transferred, if you do it in the nat- ural way. Lay the paper before you, face up, as if you would read it; take it by the right end, and with your right hand, and turn it over toward you; endorse across the left end just as it lies, and the endorsement is correctly made. It is very inconvenient for a banker to have to turn a check or note end for end to read the endorsement. Footnotes to Form 32, Opposite Page. 1. See footnote 1 under 55 and observe that in this case the trade discount is deducted from the total of the invoice. 2. References. Never write to a firm to whom you are a stranger and order goods on credit without giving them references through whom they can learn all about your business ability and integrity, unless your financial standing is so good that you have a rating in Bradstreet or Dunn. See observations under 51. To write without references indicates at once that you are either ignorant of business customs and regula- tions or that yon have no standing in your home community and can give no references that would do you any good. In either case it is a bad introduction to a firm with whom you hope to establish a business credit. 52 CAMPBELL'S ACTUAL ACCOUNTING (a) Form 29 lE CiTV. Y. S- 7^te<^^-<^^^ ^ ry Dollars. 100 wlihoui any relief wbaiever from ValuailoD or Appraisement laws of ibe irity until paid. Tbe drawers aud endorsers severally waive presentment (b) In making this entry, observe that this note of Anderson & Anderson is dated February II, and as this is now the 2ist, ten days' interest has accrued, that is, the note has already earned 64c interest and is worth that much more than its face, which we do not wish to lose in trans- ferring the note. We will therefore claim from the Keystone Company a credit. First, for 1% Discount on the amount of the invoice^ $ 7.44 Next, for the face of the Anderson & Anderson note 382.88 Next, for 10 days' interest accrued on the note .64 And last, for our (C. W. Burke's) note to balance 353-14 $7i4- — and will make entry as follows: 7' '^y;^ 7 1. The student will carefully note the appearance of both Interest and Discount and Merchandise Discount Items in the entry and study the distinction between them, that he may never have any difficulty hereafter in deciding to which account a discount belongs. Observe that the 1% thrown off the bill is to secure payment or part payment by cash or a note is Mdse. Discount, while the interest accrued on the note (or the discount In case this note had been sold for less than its face) goes to the other account. Consult your teacher, if neces- sary, to get a complete understanding of this point. CAMPBELL'S ACTUAL ACCOUNTING 53 Your letter to accompany this remittance should be in form very much as presented below. Copy it neatly on your letter paper, signing your own name in place of that of T. H. E. Student. Then write out Mr, Burke's note at 30 days, for the balance of $353.04, and attaching both this note and the note of Anderson & Anderson, endorsed as in 61 (a), to your copied letter, place them in Envelope No. 5, Vouchers for Others. Cljester W. iSurfee JOBBER IN GROCERIES AND GROCERS SUNDRIES COLLEGE CITY Y S. The Kflystono Conpany, Chicftco, 111. Gentlemen: Desiring to take advantaco of your 1% diecount Tor payment by note, I am enclosine you here7»lth a well secured note endorsed to you, i*ith ny 6t»n note at 30 days for balance, in full payment of your invoice of February 14. Please credit my account as follows: Mdse. Disct., 1% of invoice, -----$ 7,44 Note of Anderson & Anderson, ----- 362.68 Accrued interest on A*& A. note, - - - .64 Hy note at 30 days ---------- 353.04 Total credit -- ------- $747.00 For the remaining item of account, your invoice of January 5, I shall be pleased to honor your draft at Jtaturity, if I do not renpit sooner. Very truly yoxxrs, C, W. Burke. 2 Enclosures. .^ — -^ Pebrnapy 21, 19... 62. Detach from Prepared Blanks Forms 33 and 34, observing that 33 is an order for goods and that 34 is the enclosed draft referred to. Enter prices, make extensions and add other billing memoranda, as indicated by the writing in the form No. 33. Then make out the bill, deducting a credit for the cash with 2% discount on the amount of the bill that is paid by the remittance, and making the terms. Draft at 50 days for Net Balance. Observe carefully the form of invoice rendered by Armour and Company, in 16, noting carefully that in the order the quantities pre- ceded the description of the goods wanted, while in the invoice, unit quantities follow the de- scription of the goods and immediately precede the prices. For a form of acknowledgment of the receipt of part payment by note and discount see the form shown on the order in the memoranda for the billing clerk, and follow it in making out your bill. Present this invoice to your teacher for criticism before placing it in your Vouchers for Others. 1. The word, per, is omitted in modem business in the correspondence of many business houses, espe- cially when the signature is a firm name, the signature of the writer appearing immediately beneath. 54 CAMPBELL'S ACTUAL ACCOUNTING (a) Form 33 anderson & anderson Groceries, ALBIA. Y. S. February 19, 191_«. Mr. C. W. Burke, College City, Y. S. Dear Sir: brl Please send us by first freight :- 100 brls. "Pillsbury Best" Flour in }i 60 ' ' Jenneting Apples. 50 Doa. Star Sliced Bacon 100 " VB Corned Beef 60 " ' ' Roast Beef 60 " " Chili Con Carne 100 " << Corned Beef Hash ZO " ' ' Chicken Loaf ZO " ' ' Roast Mutton Z5 " '' Bnls. Pigs Feet 20 ' ' Columbia Bologna 6 Brls. Star Hams - // oo % 100 lbs. Star Bacon Narrow — /o/ff 1 Crate VB Sliced DBf Insides — ;Z^* We enclose you herewith draft on Chicago, for $980.21 to apply on account, and will be pleased to accept your draft at 30 days for the balance. Thanking you in advance for prompt attention and immediate shipment, we remain. Very truly yours. sks c^^.asfi/ '• ii,.a¥- • /'OX. • z /i • /// / OZ.oo <£"/■ oo /ff oo ^AS Ho ¥3 Zo ^f oo Anderson & Anderson. M^. (b) In advanced bookkeeping this transaction would receive its sales entry through the Loose Leaf Sales Book, while Anderson & Anderson would receive credit for the cash remitted and for the discount through the Cash Book. Following this plan as closely as you can while using the Daybook-Journal you will first make entry for the sale as in former sales (see especially 23 (d) and then make a second entry for the cash received and the discount allowed, similar to the entry for the transaction in 58, except that Cash is the principal debit, instead of Bills Receiva- ble. Many texts instruct the student to make all in one entry, but by so doing Anderson & Ander- son's debit would show only the net balance of $863.67, while it is a principle of modern book- keeping that a personal account should show the total of all transactions. You will draw a draft on Anderson & Anderson at 30 days for the net balance and send it out with the invoice as you did in the case of the sale to McConnell & Co. in 49, but will make no entry for the draft until it is returned accepted. See 49, 50 and 51. CAMPBELL'S ACTUAL ACCOUNTING 55 63. The following letters just received are self explanatory: (a) .References': First natiohi B«nk Farmers union In Answerino Refer to Number- ATTORHtYslSO- TOMPKINS I H. C. JONES PORTER BUILDING College Center, Y» S» TeLEPHONE. Main 744 Fe brnery 19, Mr, C. W. Burke, Coll«e« City, Y, 3* Dear Sir: The undersigned, havinc been appointed trustee of the estate of H. U. Goble an insolvent debtor, holds your ac- oeptanoe for $195 due March 13, 191_. It being desirable to oolleot all accounts at the earliest i^oSsible date, I am authorised to discount at 6^ per annum all ansets not due that can be collected prior to March 1. Hoplne that it may be convenient for you to take ed- vantage of this discount and that I may have the remits tance on or before the date named, I am. Very truly, yours, A. G.^Wilkiap, Trustee. (b) F. H.VBURNS SOS SoA»ttv"5utmnitJ\irt, *C ^fjlo-' f f/f-r-' Amount of Check Balance ward to the top of the next page of stubs, as shown in form (b). This form (b) shows the condition of your check-book to date. Note the record of the deposit of the sight draft drawn on February lo and the entry for the collection of J. C. Dowell & Co.'s note. (See 53 and 54.) Observe also the deposit of Anderson & Ander- son's draft on Chicago and the check in favor of A. G. Wilkins. Observe that the frequency of deposits necessi- tated balancing the check-book every time a check was drawn, giving no op- portunity for the practice of combined addition and subtraction. Observe further, that the check-book balance of $818.39 lacks $106.00 of being the total of cash in your possession as shown by the Cash account of your ledger, that is, the $818.39, cash in the bank, plus the $106 in your cash drawer is the exact amount necessary to bal- ance Cash account. (c) To "Find Cash," when the balance does not prove as above, the most satisfactory method that the author has tried with beginners in an experience of nineteen years of teaching by "actual business" methods, is presented in (d) in what we will term an Analysis of Cash. Arrange four columns as in (d) following. Let the student first enter the figures of his last preceding cash balance on the debit side, placing the amount that was in the bank, in the bank column and the amount that was in the cash drawer or safe, in the safe column, entering the safe items as you would if listing checks and currency for deposit (See 18). Next let the student copy into the credit bank column all the credit items of his cash account that were paid out by check, placing all others in the credit safe column. ' When this is done, do not add, but take up the check-book and commencing with the last preceding balance (the number which is entered at the head of the debit bank column) check, both in check-book and on proof sheet, first, the checks drawn, to see if they agree with the num- bers in the credit bank column. If you find a check drawn in the check-book that is not in the credit bank column, it may be a cashed check, in which case you will enter the amount in both the credit bank column and the debit safe column (see (e) following), or it may be an omitted or incorrect entry (unless you have inadvertantly placed it in the credit safe column). Look it up and correct it, both in your books and on the proof sheet. Second, check over the deposits, beginning at the same point in the check-book, as fol- lows: Check both in the check-book and in the debit safe column of the proof sheet, the items of each deposit, copying the items into the credit safe column and entering the total of each de- posit in the debit bank column of the proof sheet. When this checking of the deposits in this manner is completed, add all the columns, and the diflference between the footings of the bank columns will show what the check-book balance should be, the diflference between the footings of 58 CAMPBELL'S ACTUAL ACCOUNTIX (4) CASH PBOOP 8HBST •BANK $ 414 92 $4137 74 3519 35 % 816 39 Debits J« C. D* St. Dft. Sote Col. Chi. Dft. Cheok- Boolc Balance plus SAPS $1293 08 150 00 1299 53 980 21 100 00 /^^ — $3922 82 5816 62 106 oa< Cr94lts fBalaneel In Cash iDrax^er B A K K % 150 00 2875 00 194 35 $3319 35 iBalance of Cash Aocouat. SAPS $ 50 00 42 00 2 00 /s-a — $3816 62 the safe columns will show how much cash should be found in the cash drawer or safe, while the sumi of these two differences will show what the balance of cash in the ledger should be, pro- vided, of course, that all the work of the proof sheet is correct. If there is a disagreement in the check-book balance, look for it in the additions and subtrac- tions of the check-book ; if in the balance of cash in the safe, look first to see that every item in the credit safe column represents either an item deposited and checked in the debit safe column, or cash actually paid out to some one either in currency or by the transfer of a check or sight draft. Sight drafts drawn should not be found in this column, although that is a common mis- 1. Sum, in the Algebraic sense. If the bank balance be an overdraft it will be an arithmetical difference. N. B. In mtlrint enirls* of notes or drafts fill ill blanks except those Included under 67 BILLS When Received Kind of Paper Date of Paper Time to Run MATURITY Account Credited in Ledger Face of Paper Rate & -^p^^ (/a^Ji. ^.9(2^ jl/L ^^ ^L^^tsk^^ /2.f>l 2il^ Z ■A^ ^^ >%ttft^ ^ d^^^^^Z2!Z2£^^^^:^A x^^^-^ ^ ^ ^^ U. '^^Y^^. i^^^ ^"±7 '"' - y^^^^.^^, ^ S- T^ "t^, '^■^^-rr^^-'C'/^ ^^^^^^'^r ^^ Payment Dju These are to be (illcd when the note or draft is paid PAYABLE Face 0! Paper Account Charged in Ledger Where Payable Names and Addresses of Parties In Whose Favor Drawer or Endorser fAr/> &l _^^^ia2fc«:*^iLi_i:£3^1«%i ^k^stitSsfH ""ZV^?^-^^ — ^-^-*^ J.^- ^;^^-r^t^t^; T:::y^.y^-ga^<-<* --;»-/— ^ ^^-»*-<^<>^ y^^/JL-AA,, dJ2. '6L ^'^^.^t./l^i^-^J^^ ^:^s^ ^3^ y^^ '-r=i^<»-- '-«rr^r. I 69. To Prove Bills Receivable and Bills Payable Accounts is the next step in making a closing of the books. This was omitted in the former closing, partly to avoid confusing the student by the presentation of too many new things at once, and partly because the simple con- 6o CAMPBELL'S ACTUAL ACCOUNTING dition of these accounts at that time made it unnecessary. It is introduced now as a step not to be omitted by the student in any regular closing of the books. (a) Bills Receivable. By comparing your ledger account of Bills Receivable with the bill book page presented in 67 preceding, you will observe that the amounts of the notes received are identical with the debit of the ledger account, and that the one note marked Paid, and the one marked Transferred, together, make the credit of the ledger account. To complete the proof, you should have in your possession in your safe all other notes described in the form in 67 as received and not yet paid. This being the fact, you will put this proof on record in your journal, next fol- lowing the last transaction recorded, as follows: Bills Receivable on Hand. No. 2, Acceptance, 2/10 — , 30 days, McConnell & Co., $648.47 Total unpaid in bill book and balance of ledger account $648.47 Note. Observe that Bills Receivable is debited when received and credited when paid; and that Bills Payable is credited when notes are issued and debited when they are paid, and find out why this is so. Yoa will be called on to answer the question later. (b) Bills Payable. The proof of Bills Receivable was much like the proof of Cash inas- much as the actual notes are in your possession to verify the records of the ledger and bill book. This is lacking in the proof of Bills Payable as the notes are not in your possession, but in the possession of those to whom they were given. See column marked, "In Whose Favor," in bill book form in 68. The best proof that is possible, therefore, is to observe that the items posted to the credit side of the Bills Payable account in the ledger are identical with the face of the notes recorded as given in the bill book, and that the note indicated as paid in the bill book form (68 above) cor- responds to the debit, or record of notes paid, in the Bills Payable account in the ledger. The record of this proof you may enter in your journal, next following the proof of Bills Receivable,, as follows: Bills Payable Outstanding. No. I, Note, i/iq/ — , 60 days, Favor Armour and Company $ 940.08 No. 3, Note, 2/21/ — , 30 days Favor The Keystone Company 353-04 Total unpaid in bill book and balance of ledger account $1,293.12 Note. Those familiar with bill books of the ordinary type that has been used for years, remaining un- changed through all the advances made in other business methods, will appreciate the advantageous features of the bill books presented for the use of the student through this course of study. The compact presentation of all data relating to maturity at the beginning of the record, the central arrangement of the figures show- ing the face of notes and the amount collected or paid, with the amount of interest collected (or discount allowed), and the names and addresses of the parties at the right for reference purposes, constitute an arrangement that is convenient for use either as an auxiliary book or for use as a ledger and book of original entry in the economies of modern accounting. It is used in this introductory work as an auxiliary record only; later, its use in modern accounting methods will be presented. (c) Now take the bill book from your actual business supplies and using the first double page on each side of the book (observe that one side is for Bills Payable and one for Bills Receiv- able), copy therein all the records of notes and drafts shown in the forms 67 and 68. 70. Having proved Cash and ruled it, and proved Bills Receivable and Bills Payable, the next step is to take a trial balance of your ledger to prove all other postings and the additions^ The work of taking this trial balance will be similar to that of 46. Observe, however, (a) that Cash being balanced shows only a debit in the trial balance, (b) that all accounts, even those in which the debits and credits were equal, were included in the preceding trial balance (See 46 foot note)^ (c) that two personal accounts should be ruled and omitted from this balance, Henry M. Goble among your creditors and J. C. Dowell & Co. among your customers, because both firms CAMPBELL'S ACTUAL ACCOUNTLNG 6i have gone out of business. Rule their accounts as in Model Ledger No. 2, before proceeding. Accounts that are active are left open during the year that they may show the entire amount of your dealings with the firm and enable you to make comparisons of the business of one year with aijother, and all such should go into your trial balance, showing exactly the face of your ledger. When accounts of this class are balanced by regular payments as each invoice matures, this is indicated either by a single red line ruling, as in the account of the Pillsbury Flour Mills Co., or by checking opposite the items as in the account of Armour & Company. The footings being carried forward, the latter plan is the neater and the better. See Model Ledger No. 2. 71. If your work is correct, your trial balance at this time will be as presented in the form in 72 (e) 3d column. If incorrect, — 1st. Determine the exact error. So long as the amount of the error changes with every addition of the ledger or trial balance the error is probably only in adding, and you may just as well stop right where you are until you have learned to add. 2d. When you are certain of your additions, divide the amount of the error by 2 and then look carefully over the trial balance, and through the books from which you have posted, to see if you can find either the whole amount of the error omitted from one side, or the half of the error posted to the wrong side of some account. Also observe closely whether all balances have been properly brought down and all accounts taken into the trial balance. 3d. If the remainder be exactly divisible by 9, 99, or 999 it may be reversed or misplaced figures. For example any two figures reversed as 36 written 63 will cause an error that will be exactly divisible by 9, while the writing of 109 as 1.09 would make an error divisible by either 9 or 99. Being divisible by 9 in this case would show nothing, while being divisible by 99 would indicate that the quotient figures had been misplaced either to the right or the left. These suggestions will, however, only be useful in keeping you on the watch for such errors while you review the posting, which is the next step. 4th. Review your posting, lightly check-marking with pencil (V) each number, as you pass it, both in the journal and the ledger, that you may be certain to omit nothing. Erase the check marks when the work is complete. This will probably discover any error that it is possible for you to make in the present work. If it does not, proceed as in 72 below. 72. To Find a Trial Balance When Ordinary Methods Fail. ^^^^^•^^^2^^^^^^^ J^-^e-^^^t:^ <:^^!^=^zL^^ix ^3^ y i/ 22- ■2-4^ ^;zX 7.4^^- 0/2^. AM, :^^«A^^ / ^2 :^^^;^2fV' ^ J_£Z_ /^ypy; 7^.^ 'V2^AM, /'S^if. jLX:. ■^ ^v £^ ,ig^<^>^/^ a^y ^^ ^v? 7 ys 'if tL ^^5i4^^ft*t^ J\ r /ifZ /^^ -r — '^lLfiformer balance and bal- ance OF NEW WORK ADDED FORMING A KEY TO THE PRES- ENT CONDITION OF THE LEDGER '/yy^ Sat 3a2 2 s g'-j ^2 sa /^£ /:f(P 2.S /S 22SO 32^e/3 g'C/C. ^1/2. <^fv^l/L ^3 Sy2 /Sff p.sjia^.? /£ /r ^ 1. The method of finding a trial balance set forth in this section 72 may seem long, but a long road that leads certainly to the desired end is usually shorter than a road that may lead there and may not. It can be used to find any trial balance, and is easier of application, though different in form when more advanced books are used. The author had occasion once to suggest this method to a graduate of one of the oldest, best, and best known business colleges in the United States after he had struggled with his trial balance in his first position for some weeks and was about to give up in despair, and had the pleasure of hearing him say a few days later that he had learned more through that experience than all he had learned in college. CAMPBELL'S ACTUAL ACCOUNTING 65 73. Having found your trial balance, record it in your journal next following the copied records of Bills Receivable and Bills Payable, and you have completed what is termed The Daily Closing, Detach from Prepared Blanks, Form 36, fill it out as you filled out your former report per instructions in 48 (d) and copy it carefully into the form following. Form 36 REPORT Cash balance in Ledger, $ In bank per check book, $ Notes received. Number, $ Invoices bought, Number, $ Orders filled. Number, $. . . ! Receipts taken, Number, $ Outgoing Papers. , Checks paid out, Number, $ Bills rendered, Number, $ Stamp of Notes given. Number, $ Approval When this is done submit your report with your books, to your teacher for approval while you write out carefully the answers to the following questions : 74. Questions to Test Your Knowledge. — Copy the following questions and write answers as instructed for the questions in 26. Be careful of your penmanship and English. 1. What is the best way to express the absence of cents in writing round numbers and why? See 32 Note i. 2. In posting, is it safe to leave the date or reference column blank when the figures, if entered, would be the same as in the preceding item? 33 Note. Why? 3. In what accounts is it of advantage to make a record in the wide (explanation) column of the ledger when posting, and what is the nature of this record? See 33 (a) and 34, also 36 (a) Footnote. 4. What sort of pencil should be used in adding ledger accounts and where are the pencil footings to be written? What is the best method of finding and recording the difference between the footings of an account? What other method is a common, allowable practice ?44. 5. What proves the Cash account? 45 (a). 6. When a check book has more than one check to the page, is it necessary to subtract and show the balance every time a check is drawn? When is it desirable to do so? What short method in arithmetic may be advantageously practiced in the subtractions of the check book? To what other computations in bookkeeping may it be applied to advantage? 7. What is a draft? What is it to accept a draft? What is a bill of exchange? When you draw a draft in your own favor on one who owes you and he accepts it, what account do you debit? What credit? If it be a sight draft and the drawee pays it in cash, what difference will it make in the entry? 51 and 53. If it is not certain that your draft will be honored what is the best method of handling it? 53 Footnote i. 8. If a creditor draws on you at sight and you pay the draft, what account should be debited? Credited? 56 (a). If it be a time draft and you accept it what account should be debited? Credited? 57 (a). 9. What account should be debited when you pay a draft that you have previously accepted as in 57 (b) and (c) ? What account, when you pay a draft that you have not accepted as in 56 (b)? 10. To what account or accounts do you charge money paid for freight and drayage (or cartage) and why? 11. When you collect a note with interest what is the entry? 12. If a charge be made for collecting, what should be the entry? (54, foot note). 13. If you pay a note with interest what should the entry be? Why not charge it to the person to whom it is paid? 20 (a) ? 66 CAMPBELL'S ACTUAL ACCOUNTING 14. Why are bills receivable debited when received and credited when paid and bills payable credited when they originate and debited when they are paid? 23 (a) (b) (c). 69 (a), note. 15. What do you understand by accounts receivable? What by accounts payable? 28 Foot- note I. Having completed your answers to these questions, submit them to your teacher and if your books and report have been approved, your teacher will hand you your books so that you may proceed to make out your balance sheet and close your ledger while he examines your answers. 75. Having proved your Cash and Bills Receivable and Payable, and taken your trial bal- ance, the next step is to make out a balance sheet, and preparatory to this it is necessary to take inventories of the values represented by some of your accounts. In Merchandise, this is called taking stock, and has already been done under Mr. Burke's direction and supervision to the extent of making a list of the goods on hand with their cost prices. It is for you as bookkeeper to make the extensions and footings. Detach Blank Form 37 and compute and enter the extensions and footings so as to show the goods on hand both by departments and in the total. The plan of computation is illustrated by the dots and dashes in the form below. INVBrrTORY OP IISRCKAITDISB. t - Extension Colunns _^®^, Total i Totals Udae. Department B: Pillabury's Flour 225 brie. 5.00 . • . . — 16 •» 5.75 . . — 18 6 •» 5.50 • . • • — . • • . . _» Total Department B ----- - Department C: Granulated Sugar 465 lbs. 4,50 • • -- ^ ^ __ Total Department C ----- - Department D, Teaj Eng. Break. Tea 240 Ibe. 33 l/3^ • • — Uncolored Jap. Tea 180 " 33 l/3j^ • • -- ... ._ Inventory of Tea» Dep»t d - - - - Ueats: Star Sliced Baoon 50 doz, 2.45 ... — V3 Corned Beef 200 " 1.70 . — VB Roast Beef 50 " 1.70 — VB Corned Beef Hash 100 •• 1.65 . — VB Chicken Loaf 10 '» 1.80 -- VB Roast Liutton 20 •» 1.80 — VB BnlB. Pigs Feet 25 •• 1.65 — Columbia Bologna 20 '• 2.00 — Star Hams 425 lbs. 12 l/2^ , .— ... ^^ . . • • Inventory of Meats, Dep»t d - - - Total Department d ----- - Department E: Apples, Roman Beauty 100 brls. 2.40 . • • -- " jennetings 70 •• 3.00 ... — ... .. Total Department e ----- - Department P: Glassware, Tumfilers 2 gross 8.55 • • — Bellshaped Tumblers2 " 9,30 • • — Wines 1 " 13.50 . . — Saucer Champ. 4 •• 20.25 . • — Hdld. Lemonades 1 2/3 •• 32.40 . • — » ... ^^^ • • • • — Total Department f ----- - Total value of Merchandise 76. Analytical Proof of Merchandise. Having taken your inventory, preparatory to closing the Merchandise account, it is very necessary to know that it is correct as on its accuracy will CAMPBELL'S ACTUAL ACCOUNTING 67 depend the loss or gain that your books will show and to a very great extent the truth or falsity of the statement that Mr. Burke relies on to show the real value of the business that he is put- ting into the partnership. There are many ways of proving work of this kind, the principal being the methods of proving addition and multiplication, with careful revision of every step of the work. Mr. Burke, however, has very carefully classified his goods according to the per cent, of profit that they will bear and find ready sale, and this classification will materially aid you now in proving the accuracy of your work in taking this inventory. Except the A. R Kay stock which was sold at aviction for what it would bring, all goods have been classified as they came in and listed to sell at a definite per cent, of profit as follows : Class A Class B Class C Class D Class E Class F Floui Suf. Smoked nd Frails Glassware /^\ INVOICE AND DESCRIPTION OF \ "■/ GOODS No Fixed Per Cent. Lilted 10 Sell at Profit Listed 10 Sell it 10* Profit Canned M and Te 20» Pro r andOtherCoods in Bulk lt>!< Front Listed to Sell at 1 lit Front INVOICES A. R. Kay Stock, Misc 1600 1500 Inv. 1-P, Flour 1125 1125 Inv. 2-A, Hams and Can'd Meats 1880 16 1880 16 Inv. 3-P, Flour 5376 5375 Inv. 4-K, Sugar, Tea, Rice 154 S3 391 25 99 645 la Inv. 5-Q, Glassware 195 195 Inv. 6-K, Apples 744 744 Total Cost of Merchandise 1500 6500 164 93 227 1 41 843 195 11464 34 SALES Auction of A. R. Kay Stock . . 1580 1580 Sales 1, Hams, Tea, Glassware 138 12 150 Sales 2, Flour, Sugar, Tea, Rice 2310 58 16 162 56 2586 16 Sales 3, Flour, Sugar, Tea, Rice 577 50 17 97 49 50 3 50 648 47 Sales 4, Flour, Tea, Rice . . . 288 75 42 56 386 76 Sales 5, Flour, Apples .... 577 50 140 717 50 Sales e. Flour, Sugar, Apples 115 50 71 28 28 214 78 Sales 7, Flour, Meats, Apples 603 75 1085 13 175 1863 88 Total Sales of Merchandise 1580 4473 147 41 1476 63 458 50 12 8147 64 Deduct Profits by Percentage 80 213 13 40 246 1 1 65 50 1 20 619 21 Leaves Cost of Goods Sold 1500 4260 134 01 1230 52 393 10 80 7628 33 Deducting cost of goods sold from the total cost of Mxise. above. gives Inventories .'.... 2240 20 92' 1040 89' 450 184 20 3936 01 (b) Correction of Errors. If your proof of Merchandise has discovered errors in any of your invoices or sales, the principle that will govern you in making the correction will be. Cor- rect every mistake that would be corrected in business. In the early history of business it was the object of the seller to cheat the buyer and of the buyer to beat the seller, and it is still true in the Orient, but in countries pervaded by the civilization of Christianity, business has practically adopted the motto. Honesty is the best policy; and business firms everywhere stand ready at all times to correct, even without being asked, any mistake that is apparent. If, therefore, the error is in your favor you will always make offer to correct it unless it is so insignificant as to be ridicu- lous. If against you, you will feel at liberty to ignore it, unless it be of some financial import- ance. In a retail business, dealers will correct errors in favor of their customers as a good policy, if for no other reason, and for the same reason would probably pass over all errors against them- selves, for the sake of holding custom. Among wholesale merchants and their customers, however^ the principle works freely both ways. The entry for a correction of an error in a merchandise transaction will probably be first, a debit or a credit to the person or firm interested according as the mistake is against them or irt 1. This profit is not computed by percentage. Being in the Miscellaneous Class the computation is made by taking the actual difference between cost and sales. 2. The student who has carefully worked out his inventory as instructed in 75 will find that his results: if correct differ from the department results above by one cent each in Classes C and F. These differences are due to the taking of the half-cent in invoices and inventory, or in the computation of the profits by percentage, and cannot be certainly controlled. As one of these differences is plus and the other minus, the total in- ventory proves exactly and the total gain is as shown in the table. In making a tabulated showing like the above for business purposes, it would be perfectly allowable and correct to arbitrarily adjust the one cent of ap- parent error in each case on the gains of the respective classes or departments, making the gain in Class C, $13.41, and that in Class F, $246.10, which as checked up by the inventory is the exact gain for each of these departments, and makes no change in the final or total result. 68 CAMPBELL'S ACTUAL ACCOUNTING their favor, the opposite entry going to Merchandise or possibly to an account known as Mer- chandise Errors. For further instruction, consult your teacher. (c) When entries have been made to correct all errors, it will be necessary to revise the trial balance or to make a new one before proceeding to make out the balance sheet as in- structed in 78. It will therefore be apparent to the student that, when Merchandise is to be proven preparatory to a general closing of the books, it will be best to prove it along with Cash and your Bills Receivable and Bills Payable, before taking your trial balance. 77. Other Inventories. Many other accounts besides Merchandise may have an inventory to take into account at the closing of the books, but the only additional inventories that we will consider at this time are to be found in Expense and Salaries. Closing books as we are doing on the 21st of the month we have (a) A week's rent paid for that we have not yet used, and we owe (b) Three weeks' water bill that has not yet been paid as these items are usually settled on the first of the month. Observe that the item of rent (a), is in our favor, is a value that we will get out of this ac- count in the transfer to the new partnership, while the item of water rent is against us, is an item that we will owe to the new partnership since it will come in for them to pay on the first of March. Compute the Expense Inventory as indicated below and copy it on the detached form 37 immediately following the Merchandise Inventory. Form 37 INVEUTORY OP EXP2NSE ACCOtJHT. Resource Inventory: 1 -" 7 days* rent unused, 1/4 month, $150 37 50 Deduct Inventory of Liabilities, 21 daye* water bill unpaid, 3/4 month «2 1 50 36 Leaves Net Resource Inventory of Expense 00 IHVEUTORY OP SALARIES ACCOaNT. Liabilities Inventory! 21 days* Bookkeeper *e salary Qnpai(l,3/4 month 550 37 50 The student will carefully observe that the $36 of Expense Inventory is a value that can be turned into money and that as we proceed we will use it in the Expense account exactly as the Merchandise Inventory will be used in Merchandise ; but that Salaries Inventory is an inventory of debt or something that will take money out of the business and decrease instead of increase the value of Mr. Burke's business at this time. Copy this inventory also on the detached Form 37 immediately following the inventory of Expense. (c) Observe that a Resource Inventory is a list at cost prices of goods or other values, that have been charged against their respective accounts and not yet used up or credited out. They are unused capital, just as much as the money in the cash drawer though they are in another form than money. Observe also that a Liability Inventory is a list of debts owed for services rendered (sometimes for values received) that have already been used in the business, but have not been charged to their respective accounts. TO MAKE OUT A BALANCE SHEET. 78. The Balance of Differences. Copy your trial balance as it appears in the third pair of columns in the form in 72 (e), on scratch paper^ and reduce it to a balance of differences^ by 1. Although it has seemed necessary in this and other instances to require the student in the beginning of his work to do it, first, on scratch paper, the "scratch paper habit" is not to be encouraged. It breeds in- accuracy and self-distrust. The accountant that can add, subtract, multiply, or divide accurately has little need for scratch paper, and unless you intend to make that kind of an accountant, you would better quit at once. A gentleman who held high position on the Pacific Coast, both as an accountant and as a teacher of CAMPBELL'S ACTUAL ACCOUNTING 69 subtracting the smaller side of each account from the larger and writing the remainder on the larger side. Accounts that are the same on both sides will not appear in this balance. Prove the accuracy of your subtractions by adding the resulting columns. The two footings will be equal though they will not be the same as in 72 (e). Now copy this subtracted balance, except the foot- ings, into the first two columns on the first page of your trial balance book and re-add it to obtain the footings^. (a) When the re-addition of your columns proves them to be correct, write at the head of the second pair of columns, Losses and Gains, and at the head of the third pair of columns, Re- sources and Liabilities, making your trial balance page appear as in the form below. ^^^^^ y^^^-d.^^^^ ^^^^^^^L-^t^-^-^ZZ^i-^ J- / /^/ TRIAL BALANCE LOSSES OAIN5 R650URCeS LIABILITIES ^fy?^' ^^aa ^/ 7r ^/^:!/^ ^f77 ^/ /J- (b) Studying the above form and remembering that in making entries you have always credited the source from which your values came and debited the accounts that represent the places into which you put these values (see 12), it should be apparent that your debit column now contains all that is due to the business from any and all of its accounts, and that if you can get back the sum charged to an account in cash or in something that can be turned into cash, it is a resource, if not, it is a loss. For example, if you can go to the cash drawer or the bank and find the $924.39 charged against Cash, as above, it is a resource, but if the drawer has been robbed, or the bank has failed, what you cannot get is a loss. Or looking at the account of McCon- accounting, once told his students that he very nearly lost his first business position because he had been taught in a business college to work everything out first on scratch paper and then copy it into his books. Business men want original work in their books, not a copy of the original. 2. The subtraction of the smaller side of the account from the larger is made uniform in all the accounts of this trial balance that it may be easier to instruct the student in distributing the items to the proper col- umns. Later, the student will be required to let every trial balance (especially one preceding a balance sheet) show the face of the ledger, or both the debit and credit footings, of Merchandise and all similar accounts in which it is desirable to show both cost and sales. 3. The importance of the instruction to re-add the copied trial balance to obtain the footings instead of copying them, should be at once apparent to the thoughtful student. If in copying the figures of the columns, there be a number omitted or figures reversed, or copied incorrectly owing to Imperfect formation, and the footing be copied, the error in copying the numbers will not be discovered, until some question of the accuracy of this balance is raised. It will then be found wanting, and although you may know that it was correct when you copied it, you will need to find It again, because you did not copy it correctly. All this might have been avoided at the time by re-adding to obtain the footings. Never Copy Results. 70 CAMPBELL'S ACTUAL ACCOUNTING nell & Co., if you can collect the amount charged against him, it is a resource, but if he has failed, whatever you cannot collect is a loss. If you can go to your landlord and get back from him the money paid for rent and charged to Expense it would be a resource ; but as you cannot expect this return of your money after you have used the building, all of that debit which represents rent already used is a loss. In like manner, it should be apparent that the credit column contains all the business owes to any and all of its accounts, since we credited the source from which our values came, and that when these accounts represent persons outside of the business who will have to be repaid, the amounts are liabilities, while the credit balances of accounts representing departments of the busi- ness are gains, since we owe these to accounts representing our own efforts and will not need to repay them to anyone else. We except from this statement, the $5,000.00, that stands to the credit of C. W. Burke, because we know it to be his investment. In a way, it is what the business owes him, but it is subject to the gains and losses for its final amount. The work of making a balance sheet is the assigning of each of the amounts in the trial balance columns to one of the other columns according as you find it to represent a loss, a gain, a resource or a liability. See column headings in form (a). (c) Inventories. When it comes to investigating such an account as Merchandise to see whether we can get back from it the $3,316.80 that you find charged against it in the trial balance in (a) above, it becomes necessary to take an inventory of the merchandise in stock, that is, to count up its value at cost prices. This has already been taken and proved as instructed in 75 and 76. Take up your Inventory Sheet, the detached Form 37 and copy the amount of each inventory on your balance sheet where it appears in the balance sheet form in (a) preceding. 79. Extending the Items of the Balance Sheet. Take the balance sheet you have already prepared as instructed in 78 (a), and proceed to enter the amounts in the columns to which each belongs as per the following instructions which you will follow closely: (a) Passing over the Proprietor's credit (see comment on this item in 78, b), the first debit shows you that Cash (representing either your safe or your bank account, or both) is charged with having received $924.39 belonging to your business, above what the credits of that account in the ledger showed that it has returned to you, or given up on your order. Since you have proved in 66, that exactly that amount of cash is on hand, viz : $106.00 in your cash drawer and $818.39 in your bank subject to your order at any time, you count this sum a resource and enter the amount in that column, on the same horizontal line with the title Cash, (b) Taking the next item, you notice that your ledger, as shown by the trial balance, calls for $3,316.80 in merchandise at cost prices. Your merchandise cost you a total of $11,464.34 as shown by the trial balance presented in section 72 (e) and you have sold goods to the amount of $8,147.54, leaving the balance of $3,316.80 standing against your present stock. But the inven- tory, taken to see if Merchandise is good for this amount, shows that you have goods on hand to the value of $3,936.01. This then is your resource from this account; extend it into the re- source column in the same horizontal line with the title Merchandise. Since, however, it is more than the amount you have charged against Merchandise account (see trial balance is 78, a) it is clear that the difference is a gain. Extend this difference, $619.21 into the Gains column, on the same horizontal line with the title Merchandise. (c) The next item, Mdse. Discount, $31.57 being in the credit column indicates that that amount of money came into your business from your discounting bills by paying them before they became due (see 21, a) and as this comes out of your own industry and foresight and not from some source outside of your business it is a gain to you. Extend the amount into the Gains column on the same horizontal line with the title Merchandise Discount. (d) The next item is Expense $302.00, with an inventory memorandum of $36.00. Enter the $36.00 in the resource column. Turn to your Inventory of Expense on your inventory sheet and observe that the unused rent amounted to $37.50. This is all you could possibly expect to CAMPBELL'S ACTUAL ACCOUNTING yi get back of the money you have paid for rent if you should sell out the entire business to some one who expected to continue it in the same building; or it is exactly what the unused portion of the rent is worth to you for future use. The rest of the money that you have put into the things represented by the Expense account is loss, and we find in the Inventory of Expense an addi- tional item of loss $1.50 for water that is due but not charged up. Deducting this from the value of $37.50 that we found in the rent, we have as the real value represented by this account, $36.00. The rest of the money that you have put into Expense, or the difference between the debit of $302.00 and this inventory credit, is a loss, $266.00. Enter it in the Losses column on the same horizontal line with the title Expense. (e) The item of $42.00 that was paid for freight and cartage as shown by the next account is entirely loss. The service paid for has been fully rendered. There is no part of it due to you from the drayman. You can neither collect from him in cash, nor claim anything in the form of future services. Extend it into the Losses column^. (f) The next item in the trial balance columns is. Salaries $50, with a liability inventory of $37.50, earned and unpaid, hence, due. This being a debt due and not yet paid, it is a liability, extend the amount, $37.50 into the Liabilities column on the same line with the title. Salaries, then add it to the $50 that is already in the debit of Salaries and place the total sum, $87.50 in the Losses column. In this respect this amount is treated exactly as it would be if the $37.50 were paid, except that only $50.00 appears on the debit of the trial balance. Observe that in placing $37.50 in Liabilities, which is a credit column, you destroyed the balance until the same sum added to the $50.00 was placed in Losses which is a debit column. Observe also that in entering the Inventory of Merchandise in the Resources column, you preserved the balance by placing the same amount to the credit of the account when you placed the difference between that and the Merchandise debit in the Gains column ; and that the same thing was done in Expense, the $36.00 of Inventory being offset by subtracting it from the Expense debit and carrying that much less into the Losses column. (g) The next item, Interest $7.74, is very similar to the item of Merchandise Discount. It comes into your business from your money loaned out and not from any outside party to whom it must be repaid. It is therefore, a gain. Extend it into the Gains column, x)n the same line with the title Interest and Discount. (h) The next item. Bills Receivable, $648.47, indicates that you have put that amount into notes of other persons which you hold against them. If some of these persons should fail there would be a loss on this item, but since the note represented by this sum is considered perfectly good and possible of being turned into money, we count this a resource. Extend it into the re- source column on the same line with the title of the account. (i) The next item. Bills Payable, $1,293.12, indicates that you have that amount of money or goods in your business that came from your giving notes to outside parties to whom it must be repaid. See definition of Bills Payable 20, a. It is therefore, a liability. Extend it into the Liabilities column, on the same line with the title of the account. (j) The next item, a charge against McConnell & Co., of $717.50, is counted as good as cash when due and hence is extended into the resources column ; so also the debits to Anderson & Anderson and F. H. Burns, respectively. (k) The last item in the trial balance, a credit to the Keystone Company, indicates that you have that value in some form in your business, received from the Keystone Company and not as yet paid for. See 22, 59 and 61. Since you owe that sum to the Keystone Company, it is a liabil- ity and is to be extended into that column. 1. Freight and Cartage charges on goods received constitute an expense which is often charged directly to the Merchandise account when it is paid, or after being collected into a separate account as in this practice, is closed into Merchandise instead of directly into Loss and Gain. This, however, is a feature of cost ac- counting that will be considered in a future practice. In this practice we will close this account directly into Loss and Gain. 72 CAMPBELL'S ACTUAL ACCOUNTING (1) If you have carefully studied the foregoing while extending the amounts into the respective columns, you have observed that the debit column of a subtracted trial balance (except as influenced by inventories) contains all the losses and resources and these only, while the credit column contains the liabilities (debts) of the firm, and the gains excepting the pro- prietor's account which we have not as yet considered. (m) Before proceeding farther with the balance sheet, it is desirable to prove the accuracy of the work done^. Add each of the four columns, Losses, Gains, Resources, and Liabilities, and set the result in pencil below the red line at the foot of the column. Then add together the losses and resources for one sum and the gains, liabilities and the proprietor's credit for the other and if the two sums are equal, you may proceed to enter these footings in black ink, as shown below. 80. ^'y^.l^^^^^.^ii^^^^^A^e^ ^y^^;z.^4^<^^^^tl^^^s::?^^'^^^^^ :z^^^s;6.*«;^z^i^ -2-^ /^^ / TRIAL BALANCE LOSSES GAINS RESOURCES LIABILITIES ^2 :ra i^//f'^y f/:> 70 //z 7^^^:^^.!-.^.^^ ,^ S£?i?a yS/ yy* /2fJ a ^4r^// £lZZt 2 7 2^ ^7 ^^) iSf^ 1.0 7J ^J-f- c>d^>l-<^!grZ^/ccot/r?T Class B. Flour, Plllsbury's Flour, brls. 5.00 5?6 6.25 6.00 less 12 1/E^ 1/8 brl. sks. 5.75 5% 6.03 3/4 6.90 II It 1/4 " 5.60 5?5 5.77 1/2 6.60 " It Class C. Sugar, Gran. Sugar 4.50 10 56 4.95 5 65 5/7 n H Class D. Tea and Meats, £. B. Tea .33 1/3 20 ^ .40 .60 n £03f Y. H. " .££ It .30 .37 1/2 m n Uno. Jap. Tea .33 1/3 ft .40 .50 n It Gunpowder " .27 1/2 " .33 .41 1/4 " " Star Sliced Bon 2.45 n 2.94 3.43 " 14 2/756 VB Corned Beef 1.70 n 2.04 2.38 It II VB Roast Beef 1.70 n 2.04 2.38 " n VB ChlllConCame .85 n 1.02 1.19 It n VB Corned Beef Hash 1.65 n 1.98 2.31 " It VB Chicken Loaf 1.80 n 2.16 2.52 It n VB Roast Mutton 1.80 It 2.16 2.52 It 11 VB Bnls. Pigs Feet 1.65 It 1.98 2.31 It " Columbia Bologna 2.00 " 2.40 2 80 " Star Hams .12 1/2 " .16 .17 1/2 " Star Bacon Narrow .22 1/2 It .27 .31 1/2 " VB Sliced DBf Insides .29 n .34 4/5 .40 1/3 " Class B. Fruits, etc. S. C. Rice .06 L6 2/3 36 .07 .08 Japan Rice .03 n' .03 1/2 .04 " Apples, Rom. B. 2.40 II 2.80 3.20 " " Jennetings 3.00 n 3.50 4. 00 Class F. Glassware, Glass Tumblers 8.55 LI 1/9 % 8 50 11.40 " 16 2/3?& " Bellshp 9 30 It 10.33 1/3 12 40 Wines 13 50 " 15.00 18.00 " . Saucer Champ. 20 25 n 22.50 27.00 Hdld. Lemonades 32 40 n 36 00 43 20 CAMPBELL'S ACTUAL ACCOUNTING fJ (d) Cl)ester W. iSurfee JOBBER IN GROCERIES AND GROCER S SUNDRIES COLLEGE CITY Y. S. Vessrs. VcConnell & Conpany, Fairfax, Y. S. Gentlenent — In aocordanco with your order of Pobroary 19, i have been pleased to forward to you by freight,- 100 brlB, "Plllshnry'a Beat" Flour, 50 " Itanan Beauty Apples I troist that the shipnent will reach you promptly and in good condition. Enclosed herewith la ahlpping invoice covering the order. I am not aiarpriaed that you like Pillabury'a. The demand that you find for it is quite universal among those that demand the bent, and apeaks well for both the taste and the Judgment of your patrons. Trusting that I may have the pleasure of serving you further in any way possible, I remain. Very truly yours. CV7B-GG February 21, 1 9 •. • . Note. The above is presented as an illustration of a form letter prepared to accompany an invoice. With the exception of the paragraph referring to Pillsbury's Flour (which is specially dictated) it is prepared by the stenographer "from the form" without any instructions from the proprietor. 78 CAMPBELL'S ACTUAL ACCOUNTING 85. Model Ledger No. 2. Ta'^g / ^ ^^ \2./ -^ZC92. z^/- -2. 2./ ^^2:2. 2^3tf^^^^^.^^4<4^^ / 2^3 a 2 -5-2^3 (S?-Z. if2^02. ^ _;^^^ ^ /2f^ ^fr /a 2- //2^ - ^2f /a :r /a-a — /^ 2- ^x^ ^>r 7 /2^f s-^? ^ /a / 2- 2^:ra — ■ 2/ ;(f2^'^ 7 ^ra 7./ / / / // 2/ 7 2 2^y3 Ja- >^^S2^*:^^-»*-«J^ /^d.^ 2/ IOC //p^a2 r2- yi?^a2 zz. ^^ 2Z ^2^ "^f Phge 3 ^V/ J^**^ 2- 2 2 2 /a y/ // 2/ K^j^o^^a^'-^^'t^^r'i^ / / / / 2 /^ /2 £>g^ ^^ y9fC3^ U^*<^t^ Z/ a/ /r/ ^^ 7 // // 2Ci // // // 3^ 2/ 'q^i^i?'*-«-**;S^:^*^J>-2-^ 2. 2 yy ya-jH /'T'a, 2^£g/^ 2/^7g^ 3^J<^ o/ K^^. ^ y2.^S^3a-^ ^ S-'^ CAMPBELL'S ACTUAL ACCOUNTING 79 <^-«^^:»^^a^<^^<^ a^Lt'^'<^'^i^?-2:^^^'Z<^ 2./ 2/ -d. ^^/^^Z^t"^^ y 7 2 '^^ ^7 ^^ (^^^^Z>^L^i^i^<^y^ / ^7 :r0 Z^/' 2/ 2/ 2/ hr^^d^ ^:^.^Yjl^. ;^2tf*^^ ^y^^^C-.^^^^^^^'^Z^^^^ 7^c3^e <3 /'F/ Ic*^^*^ / /A J, ^^^2-//.sa^ J/2 ^;»*€^^ef^ 7 /f. \7t2^*^ /^> // 2/ 2y ^ff^M: ^ ^-// J^ ^^^-^-=^^ ^^^g__^^^^V 9^-' // ^/ - -^^ /S-£> — Z^/-- - /f^J fS^ 7 /^ >/^ ^, ^^P^. ^ ^/^/r /f/' 2/ )g//^af^ ,A^/2.^ 7 /J-a^ (yfy^^^^'^^^^-^^^vf^.if^:^:;^^^^^ ^~;:i^/€'^t>^^^-t^ yf/- jj^^t^ /^ y^ ^^^ /fj^^?^^ V /rr^/^ /^/ [/■a^^ 2.-/f^^i;^^:^^^^ f /rs^a/^ ^^^^'^-^ ^-^ *^ ^^^^^..31^ 2- 2- //-z-^'— 2- 2 //-2 J — •:r^/a — ^/ / 2^^'— ^K^.^.^ n^ge /^ /^/ // ^ ¥ /f^- // ^ V /^ — 82 CAMPBELL'S ACTUAL ACCOUNTING 86. Immediately after closing your ledger, you will take a trial balance to prove that the closing has been done correctly and that all balances have been brought down properly on the right side of each account. You will then make out on loose sheets of journal paper a state- statement of the Condition of C. W. Burke's Business, February 21, 19 . Trial Balance, Face of Ledgor. C. W. Burke, Proprietor Cash Merchandise (Inventory $3936.01) Merchandise Discount Expense (Inventory $36.00) Freight Salaries, (Liabilties inventory, .$37.50} Interest & Discount Billi* -Receivable Bills Pai'able MoConnell & Company Anderson fc Anderson F. H. Burns, The Keystone Conpany Resources & Llabi litles ------ Resources Cash liorchandise, per inventory Expense, per inventory Bills Receivable^, McConnell £ Co. Accept, 2-1, 30d McConnell & Company Anderson & Anderson F. H.. Burns Total Assets Liabilities ^- Salaries, (Earned but not charged, Lla. Inv. ) Bills Payable, The Keystone Company, 2-21f(,30d, 353.04 Armour Packing Co. 1-10, 60d. 940.06 The Keystone Company • Total Liabilities net Resources, C, Burke's Present Worth* Losses & Gains -- Gains -- Uerchandiso Sales Merchandise Cost, total $11464.34 Deduct Goods on Hand, (Inventory) 3936.01 Gives Cost of Goods Sold Subtracting from Sales gives Mdse. Gain Merchandise Discount, On Invoices Bo't Allowed on Sales Net Gain in Udse. Discounts Interest & Discount, Int. Col. on notes Total Gains -- Losses -- Expense, Total debit Inventory deducted Net loss in Expense Freight, On incoming invoices Salaries, Ledger debit Earned but not charged (Lift. Inv.) Total loss in Salaries Total Losses , C. "W. Burke's Net Gain, 08147.54 7626.3 3 $57.44 25.67 $302.00 36.00 $50.00 37.50, 1)i8poBition of Not Gain C. W. Burke's Capital on commencing Ret Gain as abo^e C. H. Burke's Present Worth 924 114t4 2 5 ,302 42 50 •2.124 195 1365 22 50 214 744 19903 924 3936 36 648 717 863 112 37 1293 64 5 619 31 7 266 42 _§Xlfl 41 21 5000 263 5oao 8147 5 7 7 1675 1488 64*^ 1.18 6 • 102 1389 19903 7238 1975 5263 658 395 263 5265 GO 54 44 74 96 12 47 96 00 18 U. 82 80 02 52 M 02 02 CAMPBELL'S ACTUAL ACCOUNTING 83 ment of the condition of Mr. Burke's business suitable to submit to Mr. Foley the incoming partner in form as shown on page 82. 87. All work having been completed as instructed, you are almost ready to submit the books of C. W. Burke's business to your teacher for final approval. Carefully remove all check marks, finger marks or other blemishes, leaving only your entries, postings and pencil footings, and place your books all closed (not open as per previous instructions) on your teacher's desk accompanied by answers to the following: 88. Questions to Test Your Knowledge. Copy each question and follow it with your answer, being careful of your penmanship and English. 1. What is it to buy goods "on account." 2. What is the signification of January 10, dating, on invoices i-P and 2-A? 3. What is it to endorse a check, note or draft? 4. What is the form of endorsement placed by Mr. Burke on his checks in 17 (c) called? See Modern Business Law, page 83. What other forms of indorsement are in common use in the transfer of business paper? 5. How do business houses keep a record of the business secured by their traveling men? 23 (c) foot note. 6. Is there ever any advantage in having checks printed to read, or bearer, instead of, or order f Why? 7. Where should the year date appear in every ledger account? 8. In posting, what is the importance of checking the Journal entry? What is the advantage of using the page of the Ledger as a check mark? When should the Journal be checked, before the item is posted or after and why? 9. Why should the cash balance be found before taking a trial balance? 10. What is the advantage of proving Bills Receivable and Bills Payable also before taking a trial balance? Is there any other account or accounts that might be proven to advantage before taking the trial balance? 76 (c). 11. What record is made in your pass book when you discount a note at the bank? What if you leave it for collection? 12. How did Mr. Burke give you authority to sign his name to checks? In order that your authority to sign his name to notes and other business paper might not be questioned, what additional evidence of authority did he give you? How do you in signing papers indicate that you hold such authority? 13. Which should be filled out first, the check or the stub? Why? 14. If cartage be charged to customers for delivery of goods to depot or express office should it be debited to the same account as cartage on incoming goods? Why or why not? 15. Distinguish between interest receivable and interest payable. May these both be kept in the same account? 16. Distinguish between Interest & Discount as an account and Merchandise Discount. 17. What is trade discount? 18. What is said as to the propriety and importance of giving references when asking for business credit? Footnotes to Statement on Opposite Page. 1. In case the list of notes receivable or payable or both should be large it would be best to refer to a schedule in which they are listed, rather than to enter a large list in the statement. See inventories in Mer- chandise, Expense and Salaries. 2. The student should observe that in closing Merchandise the inventory was added to the sales (credit) instead of being subtracted from the cost (debit). This is a bookkeeper's way of subtracting and while it produces the same result it is not as clear to persons who are not bookkeepers as the form in 86. 3. The student should observe that red ink is used in this statement in the lines showing the proprie- tor's present worth, although it was not permitted in the balance sheet. It is here used for emphasis and prominence there being no chance in a statement of this kind to mistake the red ink for that used in the usual balance entry as in the Losses and Gains columns of the balance sheet. 84 CAMPBELL'S ACTUAL ACCOUNTING 19. Where should the endorsement of a check or note be written? 20. When should personal accounts be closed? 21. Why not enter the proprietor's present worth in the Liabilities column of the balance sheet in red ink? Why is red ink used in the statement in 86, in recording the proprietor's present worth, if not permissible in the balance sheet? 22. When an inventory amount is arbitrarily entered on the debit or credit of an account, how is the balance of the books preserved? 79 (f). 23. What is the signification of the check marks placed against the prices in Invoice 5-G Sec. 57? What, the signification of those placed against the figures in the quantity column? What, the signification of the check marks following the extensions? after the total? after the discount? after the net amount of the invoice? 24. On which side is the balance of Cash account? On which side is the red ink balance entry? Where is this balance entry transferred after the account is ruled? On which side is the red ink entry of inventory found in the Merchandise account? Where is it transferred after the account is ruled? On which side is the red ink entry of gain in Merchandise found? Where is it transferred after ruling the account? 25. So far as you have been instructed, is a red ink entry ever transferred to two places in the same ledger? Is it ever left in the account without being transferred some place? 89. Final Report. Take from your Prepared Blanks, Form 38, and fill it out carefully. When it is complete, copy it carefully in the form below and place on the teacher's desk all the books u^ed in this practice, with your answers to the preceding questions, your text book, and your copy of the following: REPORT Report of School Duties'- I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of letters written No. of Invoices bo't of wholesale houses No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Entries made Average per hour Time on trial balance hours. NOTES 1 CASH Bills peceivdhle^ Ledger Balance Ledger Balance Tn bank, Rtb. No. , In safe, Currency Tn safe, ChftokH, Total value of notes in the safe .... Bills Payable, Ledger Balance Total unpaid, in bill book. Total Cash on hand Respectfully submitted, .191. TEACHER'S STAMP TEACHER'S MARKING Accuracy. . . Neatness . . Orderliness. Records . . . . Progress.. . Average . . . . CAMPBELL'S ACTUAL ACCOUNTING 85 BUSINESS TRANSACTIONS OUTLINE I. 90. Introductory Information. To the student. You are about to begin practice in actual bookkeeping and accounting. While the practice you have just completed has not been exhaustive, yet it has been extensive enough for the immediate needs of the business you v^ill be required to do and further instructions will be given you later. In a smaller way you are now exactly in the situation of a majority of busi- ness college graduates when entering upon their first business positions. The practice you have just completed will correspond to your business college instruction, and the actual business that is just before you will correspond to the work in an outside position with just these exceptions in your favor, namely that you will not be hurried to do work any faster than you can do it and do it right and that you will have in your teacher, one to whom you can go for assistance in your difficulties, rather than an employer to whom you would fear to confess your troubles. One principal point you should fix in your mind at once ; this lesson should mark for you the dividing line between school boy and business man. You may have done the work of the preceding practice as a school boy, but you must do the rest of your work as a business man if you expect to enter business successfully on the completion of the course. I. Realize that you are making, right here in this school room, your first business record. When you go out to a position, if you apply through an employment agency, you will be re- quired to name as references some persons who know you of whom the agency may make inquiry, not alone as to your ability as an accountant, but as to your general habits and character. Or, if you have secured a situation that brings you into a position of financial responsibilty, you will apply to some bonding, or fidelity insurance company to go on your bond. Again you will have to name references. The questions that will be asked of your references will be very searching. We present on a following page such a set of questions with the accompanying letter just as it is sent out by the American Bonding Company of Baltimore. You would do well to make a copy of it and then fill in the blanks with honest answers, and see whether or not it is just such a letter as you would like to have written about you, and whether or not you think it would secure you a position, or recommend you to a bonding company. If any of your habits are such that you would not want them reported in such a set of questions and answers, better change them. A good character is an invaluable business asset. Naturally your teacher or business college proprietor will be one of the references on whose favorable opinion you will rely for a position. Do not expect anything of either of them but strict justice in answer to such questions as are asked by the American Bonding Company and be careful to make, while you are here in school, a record to which you will be proud to point through all your future life. (a) Always remain steadily at your desk busily engaged in your work until the signal for dismissal or a call for a class. The young man who forms a habit of getting his desk in order and then standing with "his hand on his hat and his eye on the clock" waiting for the moment, when he may go, will never retain a place if he should secure one, and will not be recommended for a position so long as there are others with more industrious habits wanting places. (b) Communication with other students. During that part of the day devoted to business practice you will be expected to conduct yourself in an orderly, business-like manner, being always at your desk ready for the transaction of any business that may be presented, except when you are necessarily absent for the transaction of business at the office or at the desk of another student. It is out of order during business hours : For more than two students to be talking together at one time ; 86 CAMPBELL'S ACTUAL ACCOUNTING For students to talk on any subject foreign to their business; or to talk on business except when one of them is at his own desk ; To talk business at any time in a tone loud enough to attract the attention of any person except the one to whom the conversation is addressed ; Or for any student to attempt to communicate farther than the adjacent desk, except by going to the desk of the student with whom the business is to be done. (c) Disorder. It is out of order at any time in the Commercial Room whether before the session opens or after it closes, or during any part of the noon intermission, for any one to engage in loud talking or laughing, or any exercise that would tend to disturb any one who may be posting books or preparing a lesson. In short, you are a business man in business and it is expected that you will conduct yourself in a business-like manner, pushing your business in busi- ness hours and posting or closing books out of business hours, whenever you can. (d) General Behavior. Habits. In the halls or on the street, you are expected to conduct yourself as a gentleman or lady, not only that you may reflect credit upon yourself and your school ; but also that your actions may not interfere with your securing a position when one is offered^. (e) Honesty. This is absolutely essential to business success and in this again you will be judged by your record in the school room. Be as strictly honest in your business transactions here, as you expect to be in real life, and be strictly honest with yourself and your teacher in the matter of your studies and recitation. No student ever wrongs himself so much as the one who attempts to cheat his way through school. In many cases such dishonesty is purely thoughtless or is provoked by unwarranted suspicion on the part of teachers ; but in most cases it is the natural outgrowth of a dishonest nature that cannot be trusted unless it be reformed. It is the principle of this school to rely upon every student's honor and to trust each as a gentleman or lady; and it is our conviction that a student who will betray this confidence cannot be trusted in the business world, and is not worthy to receive the diploma of any college. 2. When you change from one position to another in business life, your record made in your first position will follow you ; therefore, when you get into a position, any position, be sure that you "make good." Do not imagine that you are doing more work than you are being paid for, or slight your work, thinking, "I am doing all I am paid for anyhow." One who does that never gets an advance of salary, and if dull times requires a reduction of the force, is dropped, rather than the one who is always giving his employer his best and most eflfective services during the hours or seryice regardless of the amount of his salary. Make it a point to give so good service that you will never leave a position except of your own motion to go to a better one ; and never take the matter of collecting your salary into your own hands unless it is a case that justifies you in taking legal action. Many a young man working on a commission, having a dispute with his employer over commissions, has retained money that he should have turned in, and while the employer may not have had a case that would justify him in prosecuting, or some other business reason may have prevented his taking legal action, the young man has clouded his record. He cannot avoid giving that employer as a reference, for he is required to account for all his time since he entered on employment, and if the employer was unjust in settlement he will not hesitate to represent the affair from his own standpoint when questioned by an agency. Follow- ing is a copy of the letter sent out to applicant's references, followed by a set of questions such as are asked of one's former employers when a question of reliability arises. 1. A business man in Rochester, N. Y., applied to the Rochester Business University for a bookkeeper, and a young man who had completed the course creditably was recommended. "I don't want him," was the reply, "I see him sitting around the Commercial Hotel entrance every time I come down town." The young man perhaps had "nothing else to do," but had he been spending his time in work at home, or in the public library and reading room, he would have secured the place that offered. CAMPBELL'S ACTUAL ACCOUNTING 87 (a) American Bonding Company of Baltimore, GENERAL SURETY AND BONDING BUSINESS. Baltimore, 191 ^ Dear Sirs: Mr — of aged years, has applied to this Company for its surety upon his bond tor as in the employ of (character of business) at , and has referred us to you for information regarding his personal stand- ing, business record, etc. Will you kindly send us an early reply to the questions within submitted, for the confidential informa- tion of the employer and this Company, that prompt consideration may be given to this application. Respectfully yours. To Mr American Bonding Company of Baltimore. QUESTIONS ANSWERS a. How long have you known the applicant? } a. b. What is your relationship, if any, to applicant? ( b. Have you had recent opportunities of observing the applicant's personal conduct, habits, etc.? What is the character of the applicant's home and ) domestic surroundings? f By whom has applicant been employed during your / acquaintance? f Has he ever been dismissed from any situation or en- gagement, and if so, under what circumstances? S Gambling, Betting?. Speculation? Unfavorable Associates? Excessive Use of any Liquor, Drug or Opiate?. Do you regard him as generally economical and living ( within his means? f Have you ever known or heard of any personal or 1 business transaction, in which the applicant could I be charged with dishonorable conduct? J a. Has he ever been in business on his own account? [ ^• b. Has he at any time been bankrupt or made an / b. assignment? [ c. If so, please give particulars, when and where? f c 10. Are you aware of his being at present under any ex- \ cessive debts or liabilities whatever? f 11. Has he been prompt in paying ordinary debts? [ 12. What is the nature and value of the applicant's 1 private property? y a. b. Is it, to your knowledge, encumbered in any way? J b. 13. a. Are you aware if he has income apart from the 1 earnings of this position? I a. b. If so, please state approximate amount and sources? ] b. 14. From your acquaintance with him and his antece- dents do you regard him as entirely trustworthy? 15. Do you consider him competent and capable of fill- ing the position referred to? 16. Are you aware of any circumstances affecting the 1 surroundings of the applicant's position or em- ployment, under the Bond now applied for, which !► in your estimation, would render a risk as his j surety in any way undesirable? j Signature of Reference - Occupation _ Dated // your knotoledge of the applicant does no't admit of your answering the above questions, will you kindly give the names and addresses of parties who may he able to give such information, or make such general re- marks as you choose on the other side. 88 CAMPBELL'S ACTUAL ACCOUNTING Extract From Letter to Former Employers: Dear Sir: As we depend largely upon an applicant's record with his Former Employers, for an estimate of his present worthiness of guarantee, we would thank you for replies to the questions asked, assuring you that any in- formation given us will be treated as strictly confidential, and will be used by us solely in judging the risk. Very respectfully yours, American Bonding Company of Baltimore. QUESTIONS. 1. (a.) When did the applicant leave your service? 5. For what reason did he leave your service? (b.) How long had he been with you? 6. (a.) Was he in debt to you at the time he left your (c.) What position did he occupy in your service? service? 2. (a.) Did his duties embrace the handling or cus- (b.) If so, give particulars of such indebtedness, tody of cash? and state whether it has been liquidated? (b.) Did he always make prompt and correct set- 7. Judging from your knowledge of him, do you con- tlement of such handling? sider him a proper person to guarantee against dishonesty? 3. (a.) Was he required to keep accounts? 8. If you would suggest further inquiry along this /v, -. TTT 1, e 1 J i • ii- js line, will you kindly give names and ad- (b.) Was he careful and^ accurate m the dis- ^^^^^^^ of parties to whom you would cnarge ot nis auty. ^^^^^ ^g, 4. Were his habits good while in your employ? 3. Plan of School Room Business. — A few words of explanation as to the customs of the business community, of which as a student in this school you have now become a part, will be in place before you attempt to begin your business. While we cannot in a school have that large body of consumers that makes and maintains commerce, we can plan a circulation of goods that will reproduce very nearly the conditions of business and afford training in bookkeeping, commercial law, commercial correspondence, com- mercial discounts, commercial paper, and that wide field of commercial practice generally described as commercial customs. To state this plan briefly, you will purchase your principal or wholesale stock of goods from the manufacturers' and importers' agents at College Center, Y. S.,* your own place of business being known as College City. These goods you will sell in smaller quantities to a list of cus- tomers furnished by your teacher. As these customers are students engaged in business as you are, they also buy at College Center and sell to student customers, and your name will be on the list of customers furnished to some of them. While the entire matter of the ordering of merchan- dise from the College Center houses will be in your charge that you may have practice in the busi- ness correspondence that it affords, you will not have the ordering of goods from the students with whom you are listed as a customer, but your teacher acting as purchasing agent for your firm will place these orders for you and you will from time to time receive invoices for entry, of which you have had no previous knowledge, which are the exact conditions under which most accountants labor. You will accept these bills as they come in without question, except that you have a right to require the seller to show the order signed by your purchasing agent, if you have any doubt of its existence, and you will proceed to check up the invoices and enter as in the case of bills which you ordered personally. Purchasing the goods thus from different sources on two different bases of price forms a basis for the classifications of your goods into two departments the merchandise of which you will keep entirely separate. The goods ordered by you from College Center, you will keep in an envelope marked Wholesale Stock or Department A Goods and from them you will make your sales to student customers; the goods bought from student jobbers through your purchasing agent, you will keep in an envelope marked Department E, and these goods you will sell to the Townsite & Trading Company on terms to be stated later. *Y. S. An abbreviation representing the words, "Your State." The student may use these initials to rep- resent the State or he may use initials of the State in which he is doing business. CAMPBELL'S ACTUAL ACCOUNTING 89 4. Careful Work. — This course does not consist in sets to be worked out like problems in the grammar school, but in business habits to be acquired. The first of these is Accuracy, abso- lute accuracy; the second, Neatness; the third, Orderliness (in and about your desk) ; the fourth. Records and the fifth, Progress. Accuracy and Neatness need not be explained. The former will count three points and the latter two out of ten in every grade. Orderliness and Records will count two points each. Orderliness signifies having a place for everything and everything in its place, and Records includes the proper memoranda as to where everything is. Proper explanation of the entry of every transaction, the insertion of the reference numbers when posting, proper records in the Bill Book, proper references to the filing cases for papers filed, and many such memoranda that you will learn about later are included in the grade of your work on this point and are very important items in the making of an accountant. Progress counts only one point in ten and does not have much influence in the making up of your grade, if you are only diligent. Speedy work is very desirable, but it is the last point to be sought in your education. See that your work is perfect in Accuracy, as nearly perfect as possible in point of Neatness, perfect in all the points included under Orderliness and Records, and then just as speedy as you can make it. Failure in the first four points will send you back over the work of the Outline or necessi- tate supplementary work that will more than overbalance any gain you may think to make by undue haste. 91. The First Day's Work.— I. To Obtain your Capital, turn to your book of "Drafts" and fill out the first blank draft and stub exactly as in the following form, signing your own name in place of the words, "Draw- er's Si2:nature." wyffljaaaflJsfflJKwaKffluc*^ m$ College City. Y. S.. 's^^^^^y 19 No ;z^ /CfC^...;:z>if'2>r^ -^^^S^^ ^ — -Dollars College Currency. Value Received and Charge to Account of Your drawing this draft implies that the College Investment Company owes you money or that you have made arrangements to obtain money from them for the purposes of your invest- ment in business. The fact is, that your teacher has made arrangements to have this amount placed to your credit on the company's books and he will accept this draft as president of the company. Present it to your teacher for his acceptance, then make entry as follows, at the top of the first page of your journal after writing your city, state and the date^ on the light blue line above the headline. See 13, or Gilbert's Twenty Lessons^ 266 and 277. For form of draft see 57 (6)- 1l The student will use the date of the day on which he makes this opening entry. Real transactions and real dates in your actual accounting instead of supposed dates and illustrative transactions, as in Mr. Burke's business, are in order now. 2. As far as possible in the actual practice of this text there will be duplicate references to Gilbert's Twenty Lessons in Bookkeeping, as well as the sections of this text. References to Gilbert's Twenty Lessons will hereafter be designated by the initial letter G., followed by the paragraph number in light face type. Ref- erences to this text will continue to be by bold face section numbers as heretofore. 90 CAMPBELL'S ACTUAL ACCOUNTING When your draft has been accepted by the drawee, that is, by the person on whom it is drawn — in this case the College Investment Co., it becomes cash to you. All sight drafts in your favor, whether drawn by yourself or some one else, are counted cash, because they are to be paid in cash on presentation. Instead of paying this draft in money or by a check, your teacher will accept it "payable at the College Bank," an expression not unusual in accepting drafts, and which has the effect of making the draft an order on the bank, equivalent to a check. Observe that this is the only form of acceptance that can be permitted on a sight draft. -■^^^e^e-t^^-^^, '^. s^^ :s,3/^. y, /f/^ '"l^^«z-<^<^ (^^i.1!^-c^Ay^^y^^^z^^■^i^^A.^^i^J ^aoa ■^aao 2. (a) Deposit the draft drawn and accepted according to above instructions, first endors- ing it on the back by writing your name across the left end. (See 17 and 61, Footnote 2, or G. 352.) Observe that you must write your name exactly as it appears on the face of the draft. See your signature. If someone else had drawn the draft in your favor, your name would have appeared in place of the word, Myself. Before going to the bank, prepare your deposit ticket as instructed in 18 or G. 315. Copy the items of this deposit ticket on the fly leaf (or back of check stub) opposite the first check and enter the amount in the money column as shown in 66 (a) and (b). Submit your check book and deposit book to your teacher for approval.^ When work is approved ask your teacher to give you a business introduction at the bank.^ (b.) Draw a check m favor of Cash for $387.35 prepara- tory to drawing the cash from the bank. See section 52, (b). Then endorse your check with your firm name across the back about one inch from the left end and present it to the cashier of the bank with a memoranda of change wanted exactly like the memoranda in the margin which you will copy on a blank ticket. Make no entry for this transaction. Why not? This money is for the payment of freight and other "expense bills." Place it in your Cash drawer. 3. Pay your store rent for one month in advance, drawing your check in favor of the College Real Estate Company, for the amount indicated as the monthly rental in the explanatory part of your opening entry, and filling your check stub as in the form following, except that your signature will take the place of T. H. E. Student. 1. Approval. All papers of any kind prepared by the student to be used in any way in the commercial room must bear the teacher's "vise" or stamp of approval before being circulated. No unstamped paper will be held valid. This is essential to enable the teacher to see all papers that are made out that he may guide the student in matters of form and neatness. 2. No bank of any standing will accept a stranger. He must be vouched for as a depositor, by someone known to the bank. CHANGE WANTED No. of Pieces Denomination Amt. 1 $100 100 00 5 50 250 00 12 2 24 00 10 1 10 00 9 25^ 2 25 11 10^ 1 iO $387 35 CAMPBELL'S ACTUAL ACCOUNTING 91 BALANCE BROUCm FORWARD Deposited i9 Ck No D>'aujn / 9 _. In )jvot oj hr Amount of Bill, ory . Payment to be made ] Discount. % I- Amount 0/ Check Balance C!)f CoIItgr Banfe (-yC--»^ ^ ^-^/J^^-^-^^f-i-^ii^^- v<^eg^ ISollflrg 3n eolU0t Curctncp Then make entry as follows, omitting two^ lines between the opening entry and this. (See footnote.) ~^^i>i^ ^.yLe-Le^ z^^ — /^d - (a) Take a receipt for your payment of rent. When payment of any bill is made by a check, a receipt is usually considered unnecessary as the check when returned after payment by the bank is itself a voucher. In the case of rent, however, it is well to form the habit of taking a receipt since the failure to do so in a single instance in which the payment may be made in money might cost you an extra month's rent. If your teacher acts for the Real Estate Com- pany in receiving payment for rent, prepare a receipt for his signature, taking the blank from the back of your receipt blanks. This is to save the teacher's time. If the payment be made to a Real Estate Office, the student in charge of the office will write out the receipt. In preparing a receipt for your teacher to sign, you do not fill the stub. Why? Why take the blank from the back of your receipt blanks? If you cannot answer these questions consult your teacher. 4. Orders from Wholesale Houses and Manufacturers. — Your next act of a business nature will be to place three orders for merchandise, one with the Quaker Oats Company one with the Van Camp Packing Company, and the third with the American Biscuit Company. All of these companies, and others with which you will have business relations later, have a number of offices over the country. You will order from the point nearest you, which for college purposes is known as College Center, just as your own place is called College City. (a) In preparing these orders, refer to your confidential price list, addressing each order as directed therein and ordering from one to five times the number of packages indicated as the selling lot, EXCEPT that the total quantity ordered must not exceed the number of packages indicated as the limit^ in the respective price lists. (b) While you will, hereafter, be left to your own will as to what to order, with only the above restrictions, in these first orders, for the purpose of illustration, both in the matter of pre- paring orders, and in the method of proving accuracy, the items will be definitely specified. You 1. Omitting two lines between entries is considered the quickest, neatest, and most business-like separa- tion. "When the date changes, the figure of the new day is written in the center of the second of these lines. While the date remains the same, these lines are left entirely blank. The full instructions given for this entry in 3 above is not needed by the student who has faithfully worked the preceding eighty-nine sections of intro- ductory practice, but will doubtless be of advantage to students who may be changing from other texts to this one at this point. 2. Limit. A school regulation. There is ordinarily no limit to the size of an order in business. 92 CAMPBELL'S ACTUAL ACCOUNTING will, therefore, make out orders as follows, the duplicate order sheets in your Order Book enabling you to preserve a copy of your order. Order No.^^^: College r;«^ Jt>^»i^^^ 10 Ordered of ^^^^^^.c^^^^^ (9^^j?^ y^^ By — (Your name herel ^ ^ rv Street AdHr^«. ^<^^ ^ ^^^^.^^^^^^ ^ y z:^^. Terms C:.^^^ J^^;^ /^. ^ ^dA Shinvu , i^-^yP ^ 2^ ^t^^,^^ .. — -^^^.^■..^. yc^A^^^ji^y^.^ //y ^.^^ Xl^.^^^^^^ ^^^^J^ <^ ^r ^ zz:: .^^ Note. Observe that the first item of the order is for five times the selling lot, the second for four times the selling lot, the third for three times, and the fourth again for five times, making a total order of forty-seven packages, which is well within the "limit," which in this case is fifty-eight packages. Fill out order blanks similar to the preceding for each of the following lists of merchan- dise: Order No. 2. From the Van Camp Packing Company, — 15 cases No. 2 Pork and Beans, T. S., 40 cases Assorted Soups, 100 cases Bordeau Catsup, 60 cases No. 3 Extra Tomatoes ; 100 cases Family Size Milk. Order No. 3. From the American Biscuit Company, — 20 bxs. A. B. C. Soda Crackers ; 20 bxs. A. B. C. Oyster Crackers; 30 cartons Nobetter Biscuits; 30 cartons Ambis Sugar Wafers. (c) Correspondence^. .With each of these orders, you will write a neat, carefully prepared letter, in which you will state that, being about to engage in business for yourself in College City, you are referred to them by C. W. Burke of the same place, by whom you have been for merly employed and to whom you are pleased to refer for your financial integrity. See letter in 60 (b) also footnote 2. State that you wish to buy goods from them on 60^ days, with the usual cash discounts for earlier payment, and that, confident that your reliability will bear investigation, you are enclosing an order for merchandise, which you hope they will be able to ship you at an early date. Work this letter out first on scratch paper, then copy it neatly on your correspond- ence paper, making a duplicate copy for your teacher's files. (d) As soon as you have one of these letters ready for mailing, infold with it your order ready to be placed in the envelope, and submit both to your teacher, with an addressed envelope to be vised^. Then forward it to the company's address at College Center in order that these goods may be coming while you are preparing the other orders. 1. Correspondence. The student cannot be too careful in the preparation of these business letters. The actual business transacted invests the letter with a reality that the prescribed letters of a text on correspond- ence can only imitate, and the student has, in the writing of these letters, an opportunity for practice that is invaluable. 2. In counting time in the school room, except in settling accounts with the T. & T. Co., divide the quoted time by 10 to find the real time. Thus thirty days signifies three days; sixty days, 6 days, etc.; but after the maturity of a note or invoice the time that elapses when payment is delayed should be counted naturally and not multiplied by 10. In settling accounts with the T. & T. Co., natural time will be calculated, except in calculat- ing the maturity of notes and acceptances which will follow the rule. 3. Vised means seen. When used as the word on a teacher's stamp of approval,, it signifies merely that he has seen the paper and permitted it to be used in the commercial room by the student who prepared it, subject to any restrictions or criticisms that he may have made orally. It does not authorize any other student to copy it as a correct form. CAMPBELL'S ACTUAL ACCOUNTING 93 In writing the other two letters, vary the style and wording as much as you can without making any material difference in the contents of the three letters. Try to say the same thing in different words. All of your first letters to business firms ordering goods and asking for credit will be similar to the one outlined in (c) above, but they should not be copies of each other. Make each as much better than the preceding as you can, remembering that it is not getting over the ground, but doing well everything that you do that will qualify you for a future position. When these other letters are prepared, submit them also, with their infolded orders, to your teacher to be vised. Prepare also a duplicate copy for the teacher's files. If you use a typewriter, a carbon copy is the correct thing, otherwise a neatly written copy is the best. Your teacher will then have it at hand for criticising and marking, and will keep it as a part of Your Exhibit of work done. Let it be well done. If any of your goods have arrived, you will now proceed as in 5, below. If goods have not yet arrived, the greater part of the work of 6 can be done while they are coming. 5. When Goods Arrive, whether ordered by you or by your purchasing agent, as explained in go, 3, Introductory Information, — First, Compare the Quantities listed on the invoice with the tickets representing the goods and see that you have received the goods as billed, checking each item in the left hand margin and affixing "O. K." and your initials as done by D. A. C. in the left hand margin of the invoice in 57. This should be done as soon as the goods arrive in order that claims for loss or damage may be made at once. In this you are doing the work of a receiving clerk. Second, Compare the Prices and discounts of the invoice with those quoted in your confiden- tial price list and if you find them correct, check and "O. K." them also, as illustrated in the invoice in 57. This is the work of that member of the firm or that clerk who knows the prices and terms on which the goods were bought, and is to be attended to as soon as the invoices are received. Third, As soon as the first and second instructions above are complied with, detach all tickets representing goods bought from the wholesale houses and manufacturers, from their respective invoices, and place them in the envelope marked Department A or Wholesale Stock. Likewise detach tickets representing goods bought from students from their respective in- voices, and place them in the envelope marked Department E. Fourth, Go carefully over all computations, the extensions, the additions, the discounting and the subtracting of the discounts, and again place your "O. K." as done by T. E. C, in the money columns of the invoice in 57. Fifth, Make entry for all invoices bought similar to the following, which is the correct entry for the purchase from the Quaker Oats Company, omitting two lines between the last entry (made for the payment of rent) and this entry and two lines between all succeeding entries. /^f ^f /^f r When the entries are completed, make the proper memoranda in the stamped form on the upper right hand corner of each invoice as instructed in 15 and file alphabetically in the In- voice compartment of your filing case. The proper memoranda to be placed on each invoice is the date, the book and page of entry, and the filing letter and number of the invoice. The form in which this is placed is printed on the invoice as a matter of school convenience; in business a rubber stamp is used and is sometimes placed on the back of the bill, or on a corner turned over for the purpose. Sixth, Pay in currency at the general offices of the Transfer Company, or at the teacher's desk if so instructed, the bills for freight presented when your goods are delivered, numbering 94 CAMPBELL'S ACTUAL ACCOUNTING these in order as, Expense Bill No. i, Expense Bill No. 2., etc. In making entry for these freight payments, use the phrase, Expense Bill No, — as the explanation of the entry and carry the explanation to the ledger when posting. Seventh, Observe that you are getting a much wider range of business instruction than merely a study of bookkeeping, and go very carefully through all the details suggested above. Since all errors and mistakes that you make in your work, or overlook in invoices received from others, will appear in your proof at the end of this outline, and will prevent your going ahead until they are all corrected, careful work now will save you hours and even days of time spent in finding and correcting errors. 6. Securing Orders From Students. While you will not hereafter be controlled in the matter of your sales any more than in the ordering of goods, it will be most convenient that your first sales be exactly specified. You will therefore sell to six students who will be designated by your teacher, the following bills of goods, first copying them on your small order blanks as illustrated in the form following. Fill out all the order blanks completely as to the items before going to your teacher for the names of the purchasers, but make no extensions until after your teacher has approved the orders. See (a) below. In the same manner as No. i is filled out, fill out blanks for the following lists of goods : Order No. 2, 6 cases Quaker Whole Wheat Flour; 10 cases Pork and Beans No. 2; 5 boxes A. B. C. Soda Crackers. Order No. 3, 10 cartons Nobetter Biscuits ; 20 cases Vegetable Soup ; 5 cases Pork and Beans No. 2; 6 cases Quaker Pufifed Wheat. Order No. 4, 2 barrels Quaker Patent Flour; 6 cases Quaker Whole Wheat Flour; 40 cases Bordeau Catsup No. 10; 10 cartons Ambis Sugar Wafers. ORDER BLANK College City, -^r-^^^^^- 7 ^19- Ordered of iVour own name liere! Per. Purchasing Agent- TeroM ^a ^ ■-? /^^S^ /^^ ,i>^ ^ //\z>^'^. ^..^..^^.^j'^y ?^C^^, ^fTP^/^Z^ 6L^£i^.^, /fy^'?' 1^ rSr^^^^^^ -(f^l^^^^^.-f ;^(S^,^^Y/:P^^/ .»2? ^'>:^-^^^:^^.^^ ^-,^^^^^^y^^a^gii^^^^ Order No. 5^ 8 bxs. A. B. C. Oyster Crackers; 10 cartons Nobetter Biscuits; 30 cases Extra Tomatoes. Order No. 6, 10 cartons Ambis Sugar Wafers; 2 barrels Quaker Patent Flour; 50 cases Milk, Family Size; 20 cases Extra Tomatoes. (a) When your teacher has completed the above orders by accepting the goods as Pur- chasing Agent for certain students whose names he will give you, you will proceed to fill in the prices as indicated on each ticket and to compute and make the extensions, discounting the entire bill 3% as a trade discount. You should be able to make these computations accurately without the use of scratch paper, and as these order slips can be easily replaced if spoiled, this is a good opportunity for practice in ofifhand addition, such as you will be expected to do accu- rately and neatly, and rapidly if you should go into a position as a bill clerk. (b) When the orders are thus completely filled out, proceed to make out your bills, follow- ing carefully the form of invoice on the opposite page, which is the bill for Order No. i com- plete except for the names of the parties. Substitute your own name for that of the proprietor, and the name of the purchaser for that of H. P. Lemler. When all bills are made out, turn to your journal, and, omitting two lines from the last entry, make entry for the first sale exactly as shown in the entry presented below the invoice on the opposite page, except that you will write the name of the purchaser in the place of that of H. P. Lemler. CAMPBELL'S ACTUAL ACCOUNTING 95 GnLA.RD. Y. S., M. '=^^^::^^^y^^^ -9?^— »» — ^^'>>^^^ ^w^ BOUGHT OF F. H.VBURNS. ORDER NO 3o5 SouXVx SwmxnVT^^vt.' TERMS ^(l^^^y ^{^^^ ^.^^/^^^^;/g^^^^ ">X««e ^ ^.^^^ -^^.^^^^^^ y!^^^^^..^ ^^^^^^ g^^^ 22 ^^g^Z^^U^i^ ye..-.^:^^ /^^ _2?^ ^ 1Z^ v:^ ^^^^. ^-^-i^^ ^^...^.z:^^ -;^ ^^>^i^^A&^ ^ a^ ^^^ .6^ ^.^A^^ y^.^,~>i,^^.^^^^ ^g^ae-^S/^.^^^ ^/^, ^^.rta!^. ^^^ .^^ "i^^^^^ \? y^? ZA^ ^2jC- J^^9^.;^^^*.>S^ //f aC //^ ^s*^ (c) Now submit the entry you have just made to your teacher for approval with all the bills that you have made out, to be "vised." When these are approved proceed to make entry for the remaining bills in the same manner as for the first, omitting two lines between entries, and when this work is completed take the tickets representing the goods you have just billed, from the evelope marked "Wholesale Stock" and attach them to the respective invoices with a pin or patent fastener (not with paste) that they may not be easily lost, and deliver the bills with the goods to each customer. In doing this, do not stop for explanation or other conversation (unless the customer asks to see your order) but place the bill and goods on his desk and return to your own work. Anything that the purchaser needs to know he can learn best from the teacher. If he is already overloaded with goods it is a situation that he should report to the teacher, not to you. (d) File away your order slips in the file marked "Sales Tickets," as they may be needed for reference. Later in your work, methods of using them as a part of the original entry, or record, will be introduced. At present they are used as voucher evidence of your authority to sell, the entire record being made in the journal just as if these orders did not exist. 96 CAMPBELL'S ACTUAL ACCOUNTING 7. Purchases from Students. As stated in Introductory Information under 90, you will from time to time receive goods from other students, ordered for you by your purchasing agent. When such bills are received, turn back to 91, 5, for instructions as to checking and entering, and be careful to place the tickets representing these goods in the envelope marked Department E. As these goods are bought at the prices current for sales to students, they cannot be resold to students at a profit, hence they are kept separate from your wholesale stock to be sold later to the Townsite & Trading Company (T. &. T. Co.) which, as the owner of the College City townsite, has, with an enterprise common in the developing of new towns, opened a market for this class of goods on terms stated below. 8. Terms of Sales to the Townsite & Trading Co. This company will buy goods from stu- dents at the list prices of the wholesaling companies, on four months' time, subject to the seller's draft at any time for amounts not aggregating more than 95% of the total sales; and will settle in full at any time when the seller is instructed to secure settlement, a cash balance being found by equating the accounts on the basis of the current rate of interest, not, however, exceeding 8% ; or this company will at the time of sale pay cash less 21/2% discount from list price. 9. Payment for Goods. From day to day you will have special instructions as to the man- ner of making payment for goods. Much will depend on the terms quoted by the seller. (a) For the goods which you have ordered from the wholesale houses, you will pay cash less the discount to which you are entitled by the terms of the invoices. Write a letter to each of these houses, enclosing your check for the amount due according to the above instructions, and a second order for merchandise^ your own selection, limited only by the instructions in gi, 4, (a) and your special price list. Express in this letter your appreciation of their promptness in accepting and filling your former order. Make entries as instructed in Fifth under 5. Present all work to be vised handing your teacher neat copies of all letters. (b) For goods bought from students through your purchasing agent, make payment as fol- lows : If notes or drafts accompany any of the invoices, sign the notes and accept the drafts (if correct in amount and form) make the proper record in your bill book, consulting 67 and 68, and make entry in your journal as instructed in 57. If the option of paying by either cash or note is allowed you, draw checks, less 2%, for a part of the bills (not more than half of them), and give a note, less 1%, for each of the others. Enter cash payment as in 21. Payment by notes will have a very similar entry, except that you will credit Bills Payable instead of Cash. See instruc- tions and information in 20, (a). Show your entries for these payments to your teacher, when you present your checks, notes, and other papers to be vised, and complete the payment of bills bought from students by delivering the checks or notes to the students at their respective desks without writing a letter. It is considered that the wholesale work will furnish sufficient practice in correspondence. 10. When You Receive Payment for your sales, see that the amount is correct (after deducting the discount), and make entry for each payment separately, consulting 24, 51 and 58, for form of entries. Place the cash, notes or acceptances received in the proper compartments of your filing case, and make the proper record in the bill book for all notes or acceptances. 11. You are now ready to post and make what we call the daily closing. (a) Do Not Expect Business to Stop because you are closing your books. In general, if invoices come in while you are closing, check them as instructed in 91, 5 under first, second, and third, and place the bills in a clip, or in the back of your filing case for future entry, If drafts are presented for acceptance, or statements, notes, or acceptances for payment, see that the amount is correct, then make the proper record in your bill book, and, if it be necessary to make pay- ment to accommodate the selling student draw your check for the amount, carefully explaining 1. If this order is filled and you receive the merchandise before you have completed your work and had it accepted up to and including the report on page 110, file invoices as instructed in 11 (a) following and make no entry until your books are accepted. CAMPBELL'S ACTUAL ACCOUNTING 97 the check stub. In the first cases of this kind that occur, consult your teacher to make sure that you have the proper memoranda to enable you to make entry when you are ready to do so. Frequently it is convenient to continue making the journal entries while closing, but not posting these new entries until the next daily closing. Consult your teacher on this point, but do not refuse to do necessary business because you are closing your books. If your trial balance gives you trouble and you are delayed until double the usual amount of business for a daily closing has accumulated, report to your teacher, asking him as purchasing agent not to buy any more for you for the present, and get his advice as to your trial balance. (b) Open your ledger accounts on the following pages of your ledger, in your best style of penmanship, and prepare your index to correspond: (For a guide consult C. W. Burke's ledger, prepared in your former business.) Page I, (Your name) .Proprietor; page 4, Cash; page 6, Merchandise; page 10 Merchandise Discounts; page 12, Expense; page 13, Loss and Gain; page 15, Freight; page 16, Cartage; page 17, Furniture; page 18, Chattels; page 19, Collections and Exchange; page 20, Interest and Discounts; page 28, Bills Receivable; page 29, Bills Payable; and for your cus- tomers (those to whom you sell), open accounts on the half pages in that part of the book designated as Customers' Ledger; while for your creditors (those from whom you buy), you will open accounts on the half pages in that part of the book designated as Creditors' Ledger, giving each account one half of page. Your ledger being loose-leaf you will number the pages of the general ledger only. In the customers' and creditors' ledgers you will arrange the accounts alphabetically paging separately under each letter as, A-i, A-2, B-i, B-2, etc. (c) Post, following the method explained in 28 to 45. Index your ledger as soon as opened. See Index of C. W. Burke's ledger. (d) Prove Cash, as illustrated in 66 (a), (b) and (c). (e) Prepare your deposit ticket as in 18 copying it on your check book stub as instructed in gi, 2. (f) Endorse your checks, as you did the draft in gi, 2, and present pass book with deposit ticket and checks to teacher to be "vised" before going to the bank. (g) Prove Bills Receivable and Bills Payable, as instructed in 6g. (h) Take a trial balance as instructed in 70 and when balance is found, record in trial bal- ance book with the amounts in the first pair of double columns (see 78, a), writing the date where the words, Trial Balance, appear in 78 (a), and entering beneath on consecutive lines, the names of the accounts with the ledger pages from which they are taken, as well as the debit and credit of each account. Always re-add the trial balance after copying it, and write the foot- ings between the red lines at the foot of the trial balance page. Never copy your footings. See 78, footnote 3. Be careful also to observe instructions regarding accounts that are in balance. See 46, Footnote 2. If your ledger does not balance, try the ordinary methods of finding a trial balance in 71. If you still cannot find your balance, work it out as instructed in 72, "To Find a Trial Balance When Ordinary Methods Fail," and carefully follow the instructions there given. It is a some- what lengthy method, but, if followed carefully, it is certain to result in a balance, and will point out the account or accounts in your ledger in which the errors exist, and even the side of the account on which they are to be found. There is absolutely no reason that a trial balance should ever become a bugbear to anyone, nor any reason why you should not find your first (and every other) trial balance without any assistance. To obtain assistance is to lose the very thing you attend college to gain. g2. To Find a Trial Balance When Ordinary Methods Fail. As a second aid to the student in mastering a method of work that is of great importance to him both as a plan for overcoming difficulties in school and as a training in avoiding them in future work, the lesson presented in 98 CAMPBELL'S ACTUAL ACCOUNTING 72 is repeated, being specifically applied to the prescribed work of 91. By a comparison of the two sections the student should not fail to thoroughly master this subject. (a) Take a sheet of trial balance paper from your trial balance tablet and copy from your ledger all items posted therein arranging the debits in a column or columns on the left hand of the page, and the credits in a column or columns on the right as the specified items of your first day's work are arranged below. In taking these numbers for the purpose of illustration, we have supposed some probable errors. If you are proving another day's work, your figures will be entirely different. If you are proving the first day's work but have bought goods from stu- dents, or paid bills not distinctly specified, or received money for any of your sales you will have additional items in some of these accounts and possibly some new accounts. Otherwise your "Checking Page" when first copied, will appear, as below, except that the figures may difTer.^ Lodc«r Debits Cash 15000 QO Customer 2 $ 64 08 Customer 6 $ 207 10 Mdse. 149 19 90 04 Customer 3 lOE 73 QcOsts Co. 149 19 742 00 Customer 4 120 28 An.Bls.Co. 90 04 •Expense 125 00 Customer 5 72 83 Van camp Company Customer 1 742 00 119 06 Lodger Credits Q.Oats Co> t 149 19 An.Bls.Co* 90 04 Tan Camp ~ Company 742 00 Udse. $ 119 06 64 60 105 73 120 26 78 23 207 10 Udse.Sis 2 98 160 00 14 64 Proprietor ^5000 00 Cash 125 00 146 21 88 24 727 16 (b) When all items are copied as above and space left beneath each separate account for adding (we are not ready to add yet), proceed to check the debits and credits as below, number- ing the debits consecutively in red ink (marking with an x any that you cannot match with a credit) and numbering the credits that correspond exactly to the respective debits with the same checking number, in red ink. When this is done the page will appear as in B, and the x's on the left hand and the unchecked numbers on the right will include all the mistakes and sometimes, as you learned in 72, combinations that are not mistakes, but cannot be certainly checked without reference to the journal. (c) Having gone over the checking page as above, we find several numbers that do not check as indicated by the x's on the left hand and the unchecked numbers on the right. Taking up the first x on the left. No. 7, in the account of your second customer, you will turn first to the ledger to see that the error is not merely in copying, then following it to the journal by the reference number, you will learn that the correct figures are 64.08, the cents figures being reversed in posting to the Merchandise account where it appears as 64.80. Correct the error, first in the Merchandise account in the ledger, then on the checking page and observe that now this number checks off with 64.08 in the Mdse. credit. Cancel the x thus, /, and number 1. For the purposes of this proof it is immaterial whether the student has the same figures in each account as above or not. Except that it will be easier to follow the plan of proof through the explanation following in each plate, the student will get a better practice if his work should be altogether different, or if he will prove his trial balance from the instructions given in 72 and without consulting 92. CAMPBELL'S ACTUAL ACCOUNTING 99 B Ledger Doblta Ledger Credits Cash 1 15000 00 CuBtoraer 2 x7 S 64 08 Customer 6 11 Z 207 10 Q.Oats Co. 2« 149 19 Udse. 6 $ 119 06 64 80 S 105 73 9 120 28 78 23 aj 207 10 Proprietor ] ^5000 00 Udse. 2 149 19 3 90 04 customer 3 « 105 73 vscovxn\i i\:«voanv UuaVer PoiC. rVouT lU.\)iV\eo.\:nouT QuaVer R0LU6 feats QiuQVdr / 7 <^ / 2. Gain fa 2^ /JU^^y if^ cP a 2 >■ ^7 ^. y//\2- 2.y^ 2.2 // yy U2. ^2 :i/ - y a ■^/ 2f :ny ^y 3o ^7^ 7^ ^j- -v^-- 7^ y^ y^ 2^0-0 2^2.a /y^ /a 2.S xo 2-^\x^ 5-a y^> 3o ys-/2. ^4. 3ou.p& 13or6eau Extra 'Tbina.tocs Tam\\ii h\VL y^ — ^7 S-£> 2.0 - ^7 2.S j-a 7"" 7^ 7^ - — J.2S — /2La — 3aa 3ao — s _ - - a^ ._ 5 - /2. 2-^ Si) 7^ - ^^ - — — - io6 CAMPBELL'S ACTUAL ACCOUNTING (d) Take up now the work of Department E. (i). First enter the last preceding department inventory as shown in the form (c) on the line marked Old Inventory. (2). You will next make a list of all the invoices bought that belong to this department, distributing the extensions exactly as you did in the matter of the wholesale invoices and as shown in form (c) above, and will add each of these columns, entering the footings in red ink. (3). Proceeding to prove the purchases of Department E in the manner in which we proved the purchases of Department A, you will add together the footings of the distribution columns and will observe that these exactly equal the footing of the List Amount column. This proves that there are no errors in the additions of these invoices. Now compute 3% of the list amount (the trade discount in this class of goods) and observe that it does not agree with the footing of the Discount column. This shows us that there is an error of the difference of $1.10 somewhere in the computation of these discounts. (4). Subtracting the $76.76 footing of the Discount column from the footing of the List Amount column, we fiml that it gives $1.25 more than the footing of the Net Amount column, showing us that there is an error of $1.25 in the subtraction of the discount in some of these invoices. (5). But the proof submitted in 95 shows us a total error of $63.59 in the work of Department E and we have thus far discovered but a small amount of it, — really, errors amounting to $2.35, but as you will see presently, errors that offset each other so that the total amount that CAMPBELL'S ACTUAL ACCOUNTING 107 E^^§ Loxi) L«mons e<\\! 2-^ a /7 s'a /7 /7 yent. Manaoer. AasociATED Offices Do not present this check for approval and countersigning until after your books are proved as instructed in 9 following. 7. Pay freight as in 91, 5, sixth, then secure orders for next day's business, 97. 8 Make daily closing, that is, post, prove cash, prove bills receivable, etc., as per 91, 11. (Except II, b and h, see 76, c.) 9. Prove the accuracy of your work from the beginning, or from last closing if you closed books as instructed in 98 (h), following instructions under 95. This proof will include the previous proof made at the close of your first day's work, unless your books were closed at that time. When you have found all the mistakes shown to exist by your expert report, correct them as instructed in 76 (b) consulting your teacher if necessary, and when all are corrected, take your trial balance, as instructed in 91, 11 (h) ; then arrange your books as in 98 and submit to your teacher for approval with your orders for next day's business and the report blank carefully filled out but not copied into the form in the text until after your teacher has accepted your work to this point and placed his stamp here. CAMPBELL'S ACTUAL ACCOUNTING 115 10. When your teacher has accepted your report and approved the entries made for the correction of errors discovered in proving your accounts, present to him for approval and accept- ance the voucher check drawn in 6, filling in your name in the proper blank in the face of the check and the correct amount of the bill in the places for dollars (both words and figures) so that the check is entirely ready for the official signatures. If your proof of merchandise made corrections necessary in this invoice, see that the sales entry made in 102, 6 is corrected. Then place it in your file for unentered business until after your books are reopened for the business of Out- line II. 11. Copy neatly into the form below your report as accepted and approved by your teacher in 9 above, then proceed to make out a balance sheet of your business as per instructions 78 to 81. 12. Close your ledger following instructions in 82 a, b, c, d, e, f, g, and h. 13. Close your other accounts as per instructions in 83 (a) and (b) and make out on journal paper a statement in the form presented in 86. When this is completed, leave at your teacher's desk for approval all books in which you have done any work under this outline, with the state- ment you have just made out. While your teacher is grading your books, you will work out in C. W. Burke's books the practice presented in 103 to 107 and when this is completed your teacher will return to you the books he has been grading and will enter his markings in the form fol- lowinsf. REPORT Report of School Duties' I take bookkeeping — Hours a day. Hours worked since last report , Absent __ Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes _ ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills Receivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. MERCHANDISE Cost of Mdse. bought Present inventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Department A Goods Department E Goods TEACHER'S MARKING Accuracy. . . Neatness . . . Orderliness. Records . . . . Progress. . . . Averar^e. . . TEACHER'S Respectfully submitted, ^^P .191.... STAMP ii6 CAMPBELL'S ACTUAL ACCOUNTING PRACTICE PREPARATORY TO OUTLINE II. 103. I. Preparatory to continuing your actual business transactions and while your teacher is grading your books, you will work out a practice in the use of the six-column journal taking up the business of C. W. Burke where it left off when you began working Actual Business Outline I. Note carefully the conditions of the contract as stated in the following Articles of Co-partnership. THIS AGREEMENT, made this 23rd dav °^ February Burke of College City, Y. S. C. W. V?e3t Bend, Y. S A. D. 191 Part y Part y by and between of the First Part, and C. A- Foley of of the Second Part. WITNESSETH. That the said 0- W- BurkO »»* C A. Foloy are desirous of forming, and have formed, a co-partnership to be known under the firm name of 0- W. Burke & Co. that the general nature of the business Intended to be transacted Is a Wholesale Grocery and Commission Buainesa ; tiiat the investments of the partners are as follows, namely C . Vf , Burke P^^ty of the First Part Invests as his Interest In the said partnership, his Present Worth. aS shown by his statement of Resources and Liabilities in the Grocery Jobbing Business on February 21, 191 , which resources hereby become the property of the firm and which liabilities are hereby assumed by the firm, making a net investment of Five thousand (5000.00) Dollars, and the said C. A. Foley party of the Second Part invests as hi 8 interest in said co-partnership, the sum of Twenty-five hundred (2600.00) Dollars in Gash It Is further agreed by and between the parties hereto that C. V^. Burkd , Party of the First Part is to have the general management and to do the buying of the said firm, giving thereto his full time and best judgment and receiving therefor a salary of One hundred (100,00) Dollars per month, and that the said C- A. Foley, party of the Second Part, is to be general sales manager of the firm, giving his full time thereto and receiving therefor a salary of One hundred (100-00) Dollars per month. It is further agreed by and between the parties hereto that neither party is to be permitted to witn- draw from the funds of the said co-partnership more than FiVG hundred (500.00) Dollars In any one year, and that either party withdrawing money from the co-partnership shall pay interest thereon for the time it is so withdrawn at the rate of 6% per annum. It is further agreed by and between the parties of the said co-partnership that the losses and gains of this co-partnership are to be shared in proportion to the respective investments, namely: C. W. Burke, party of the First Part, tvO- thirds 2/3 and C. A. Foley . party of the Second Part, one -third 1/3 : that a true and accurate set of books of the business transactions of this co-partnership shall be kept by the party of the second Part or under hi 8 direction and shall be open to inspection at any time by either party, and that at the close of each business year, or on the dissolution of this co-partnership, a balance sheet shall be made out and a true and accurate statement of the condition of the business rendered, and the books closed, the gains and losses being divided between the partners in the proportion provided for in this contract and the amounts adjusted upon their respective stock accounts. In witness whereof we hereunto set our hands this 23rd day of February, 191 '9??./^/. Q^yj^^n^ ^Q./rr\^^. -) nXTifness^s. Qc(m.^.u^ CAMPBELL'S ACTUAL ACCOUNTING 117 104. Having carefully studied the contract between the partners, give careful attention to the journal form in the pages following, and observe, (a) That instead of one debit and one credit column, both on the right side of the page, there are three debit columns on the left side of the page and three credit columns on the right side; (b) That all the items of the opening entry are placed in the two Sundries columns, that they may be at once posted to the ledger to open the accounts; (c) That in making subsequent entries, whenever the debit item is cash or merchandise, the debit amount is placed in the Cash or Merchandise column on the debit side, and whenever the credit item is cash or merchandise, the credit amount is placed in the Cash or Merchandise column on the credit side; (d) That at the foot of each page the columns are added and proved, the total of the three debit columns being equal to the total of the three credit columns, and that when thus proved, these footings are carried forward to the top of their respective columns on the following page, before making any additional entries. (e) That the journal is closed by ruling as shown at the foot of the last page of these forms, the footings of the special columns being at that time carried into the Sundries column and posted thence to their respective accounts in the ledger, so that (f) Only items that are entered in the Sundries columns, and footings that are brought into it, are posted to the ledger ; (g) That the addition of the special columns footings to the Sundries columns footings gives debit and credit totals that are equal, and is presumptive proof that the special columns are added correctly. 105. For section 105 see pages 118 and 119. 106. I. Take up C. W. Burke's journal and beginning at the top of the first page of six- column journal rulings, make, under date of February 23, 191 — , an opening^ entry of the exact form presented in 105 (a) and (b), taking Mr. Burke's resources and liabilities from the Re- sources and Liabilities columns of his balance sheet dated February 21, 191 — and taking as Mr. Foley's investment the draft on New York for $2,500 which you will find in your Pad of Prepared Blanks, Form 39, properly issued and endorsed. A correct form of the draft is given below. @f rman AnuMif au ^ru$t €ampau^ Ho 2Ji^y J2^a^es. College Center, Y. S. ^?^le^^.^.g,^g^^^/ 19 C VS. ^ , /*^t^.^S^*.t^.y£i^i^^^^^.^ .^^,eiC^ ^OL LARS HhiWESTERNlRUST ^Savings Bank / German /Imenc^o [rust Company \ ^9/ 3]^. .^^^^ ^. NEW YORK. N. Y. 1. While an opening entry is not necessary to the proper continuation of the entries at this time, because you will continue to use Mr. Burke's ledger which is already opened, a form of opening entry is here presented for the purpose of giving practice in making opening entries and this plan will be followed for the most part throughout the text. ii8 CAMPBELL'S ACTUAL ACCOUNTING ^S^^Z^^^Z^^^^^^lc-i;^ ^^SS^ Q^^!^^'-^^^^^^ 2, -?/^/- CASH LF. SUNDRIES MDSE CASH 2-^J-iJ 2.^£iJ^:> 2 :raa JiP^ fi //^ -f^ ft) tA :^ ^^'^^^-e^Uf r 7 2^00 /a/ // ^■^^5 /J ^2 / ?s sTj CAMPBELL'S ACTUAL ACCOUNTING 119 February 27, 19. Cash Mdse. Sundries L.F. L.F. Sundries Mdse. Cash 2465 25 (e) (f) (g) '(h) (1) ((J) (k) 579 1485 (1) (m) (n) (0) (P) (q) (r) (s) (t) (u) 125 00 242 55 jm- 50 i 1000 3465 00 25 11156 40 635 211 100 25 50 15 31 2433 9 26 200 247 200 142 15292 3465 2432 21IM 00 73 V/ 50 00 95 M s/ V v Footings bro't forward Hanson & Co. Merchandise Sales 7. 30d 2/10 C. 1/10 Note — Mar. 1 — Salaries Ca^h C. W. Burke Paid sala- C. A. Foley ries for T H. E. Student February Cash Bills Rec. Rec'd Payment C. W. Moore Accept Cash Bills Pay Int. & Dis. Discounted our note at 60 days at bank. M. A. Birge&Co. Mdse. Returned two brls. Sugar, 705 lbs. which were damaged and unfit for sale. M. A. Birge & Co. Cash Exchange Mdse. Disct. Remitted by N. Y. Draft for Inv, 7, less credit for returned goods and 3% discount. Cons. No. 1-G.— Frt. Pd.— Cash Cons No. 1-G.— Dft. Pd. Rec'd from J. F. Gowdy, Tar- klo, Mo., 250 brls. Apples to be sold on commission and paid charges and draft for advance as above. — 7— Cash — Sales 8 — Consignment" 1 50 brls. Jennetings at ?2.50 H.G.Garrow, Sales 9 Consignment 1 7.} brls. Rom. $2.40 on 60d 2/10 25 brls. Winesaps $2.70 on 60d 2/10 — 8— Mdse. Cash Bo't at special price one car load of dried fruit. Praisewater Pro- Mdse. duce Co. Ship. No. 1 Consigned to P, P. Co for sale on commission, 200 boxes Cal. Prunes, 5,000 lbs, cost 4c Cash Cons. No. 1 H. G. Garrow H. G. Garrow settles for sale No. 9, less 2% cash discount. Cons. 1, J. F. Gowdy, Storage 1% Guaranty 1% ' " Int. on Adv. " " " *• Commiss'n 2% Cash-Exch'nge '* " " " " Cash-Remit. Closed Cons, and rendered Account Sales with remittance by draft. Dr. Cash Cr. Dr. Mdse. Cr. V V ^ s/ V V 13621 3 579 1500 73 125 180 67 247 631 78 175 00 73 01 16444 831 3914 21190 2369 226 93 50 00 1000 00 200 50 142 54 89 S31 78 I 3914 86 £L I20 CAMPBELL'S ACTUAL ACCOUNTING Detach this draft from the Pad of Blanks, observe that it is endorsed payable to C. W, Burke & Co., and place it in the firm's Cash Envelope making entry as for the investment of D. P. Pyers in 105 (b). Use the Sundries columns only for all items of the opening entry. 2. The opening entry proper being made, the next step is to make the entry adjusting a special agreement between Mr. Burke and Mr, Foley by which Mr. Foley is to share not only the future gains and losses of the business but is to have a like share of the profits that have already accumulated less $100 which Mr. Burke will take as January salary. Make entry as in 105 (c), and draw the firm's check in favor of C. W. Burke for the $100. Omit only one line between entries while using the six-column journal. This special adjustment being really a part of the opening entry, since it reduces Mr. Burke's capital to exact proportions with Mr. Foley's invest- ment, all the figures, including cash, will be placed in the Sundries column and posted from thence. 3. February 24, F. H. Burns remits in full for the sale made on the 21st, by New York draft in favor of C. W. Burke, the form of which is given below. 827 r%^^^_ ^ ^^^^^^ j'^^.v^'^- -^7^T'- "^^''^V^<^ >-^ *Ag«nt must detach and retain this Shipping Ortfw and must sign ths Original Bill of Lading. 126 CAMPBELL'S ACTUAL ACCOUNTING tTnifOnn BiU of Ladlnc— SUndard Form of Straisht Bill of Lading; approved by th« Intantato Commarce Commiiaion by Order No. 78T of Jane IT, ItOB. COMMERCIAL COLLEGE RAILWAY COMPANY B STRAIGHT BILL OF LADING— ORIGINAL-NOT NEGOTIABLE Itlpptr't K.. i(tat'i li- ves RECEIVED, Bubject to the clauificationfl aod tariffs in effect on the date of iasue of this Original BiU of Lading. atCollege City, Jiareh 23, 191 From C. W. BUHKB & COMPANY The p r o per ty described below, in apparent good order, except aa noted (contents and eoodttkm of contests of paekages nnknewn), marked, eonsisned. and destined as indicated beknr- wbich said company agrees to carry to its usual place of delivery at said destination, if on its road, otherwise to deliver to another carrier on the route to said destination. It is ma«' taally agreed, as to each carrier of all or any ofsaid property over all or any portion of said route to destination, anH as to each party at any time intereste 1 in all or any of said prop* crty, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained (including Conditions on back hereof) and which are agreed to by the shipper and accepted for himself and his assigns. The Rat. of Freight f«m COHe/f^e City, Y. 5. to Collefre Cen ter. Y . s. la in Cents per 100 lbs. IF... Times l»t IF l>t Clus IF 2d Class IF Rule 25 IF 3d Class IF Rule 26 IF Rule M IF 4th Class IF Sth Class IF 6tb Class iM IF Special ir Special iMail Address— Not for purposes of Delivery.) Consigned to.. Destination, .... Boate, C olloge Ce nter -State of. Y. S. Gar Initial. _County of. V.V.O.y>.M Car No 200 DKSCBlPnON OF ARTICLES AND SPECIAL MARKS. Boxea Santa Clara Prunes WGT..Sab. to Cor. Class or Rate Cheek Col. 4000 If charges are to be prepaid, writ* or stamp here. **To be Prepaid." Received S ■ to apply in prepayment of* th charges on the property describe, hei-^a. Agent or Cashier. Charges Advanced: O.W.Burl^e & Co. Shippen. PerJ^7^-?^(?f" >^ fry Agent, Per- (TUl BiU of Lading to b* sisaed by th. •hipp.r and acaal of lb. .arri.r iMaia* For use in connection vitb the Standard Form of Straisht Bill of Ladins approval by the Interstate Conunetee CoramiMion by Order No, 787 of Juae IT. ISOS. COMMERCIAL COLLEGE RAILWAY COMPANY THIS MEMORANDUM is an acknowledmncnt that a bill of lading has bcc.-^ issued, and is not the Oriirinal BiU of Lading. coverinK tho property named herein, and is intenOed solely for filinjr or record. ' a copy cr duplicate, thlpptr't ll.. juieot'i Ro- ves RECElVi;i3. bubjcct U) the classifications and tariffs in cITccl on the daUj of the receipt by tho carrier of the property described in the Orisiiml Bill of Ladins, atCollege City, Uarob 23, 191 From C. W. BUHKB & COUP ART The property described below, in apparent irood order, except as noted ( contents and condition of contents of packaena unknown), marked, consiimed, and destined as indicated beknr. wh;ch said company apices to carry toitsusiiul place of delivery at baid dustiuation, if o.i it.1 rc-ui. otherwise lo deliver to another carrier on the TOUW lu baul destination. It is mu- tually atrrced. as I ■ eath carrier of all or any ofsaid property overall or any portion ff said route to de.'si.nation. anl an to each party at any time inleresle in all or any of said prop- erty, that every scnice to be performed hereunder shall be subject to all tho condition*, whether pnolcd or written, herein contained (indudiotr Ckinditions on back hereof ) and which are agreed to by the shipper and accepted for himself and ht3 assij^i s Th. Rate of Freicht f ™m COllttge CltyT Y. S. to " "' College Center, Y. 8. I C>nta per ino lh«. IF.. Timeslstl IF 1st Cla lFnule2r, I IF M Cla lfi(^ I F .'ith Claiis IKKth Class IF Special IF Special tMail Addrefid — Not for purpcea of Delivery-) CJonsigncd to .l.l.._?_r._..!?.?J!:.l 9?^ •?.. A....9j>..i.. Destination, ...„ .^^^...^^^^ ^^^^^ • CHARGES SALF.S ^?^?iZ^A ^^ Freifht or RinrKu y^ 23 y^a //^^/OTi^gkf ^^>a/^}^ ^^^--^^^ -7^/' .^5^^ ?-^ 7"i/ Cartifc / ^■(7 (^^ //yy ,, ^oai>( .^a^ ^d^ %C T-f ^ ^2 //?'D- _ <^/i X. y Xaoj^ ^a^ Si'^,f. ^7 * O^ Slot If p -<^Cj^5;L^ — ^ V /^ «^^c3^^ /3a y5^c it 26. In the above account you will note that 150 crts. of eggs and 100 bxs. of butter were received and that the same quantities of each have been sold showing that the entire con- signment has been disposed of and that you are ready to render an account sales. Take an account sales blank and copy thereon all of the items posted above, in their proper places, as shown in the account sales rendered you by H. B. Wellman & Co. Check the items thus copied as the same items are checked in the account sales of H. B. Wellman & Co. Then proceed to enter on the account sales blank. Storage at ic per box or crate per week, $3.29; guaranty at 1% on $2,385.00 not yet collected, $23.85 ; interest on $380.38 advanced for draft and freight payment, 18 days at 6%, $1.14, and interest on $2,385, the amount of the sale to the Park Grocery Co. on 60 days, for the 53 days between this date and maturity, $21.06, making a total of $22.22. Lastly, charge commission on the total sales, $3,796.88@2%, $75.93. Adding these total charges and deducting from the total sales you have the amount of the remittance, which you may write in the line marked Net Proceeds. Draw the firm's check in favor of F. H. Burns for $3,291.23 net proceeds and place it in Envelope No. 5, then enter in your journal these items newly placed on your account sales (you will distinguish them from the others by the check marks placed against the others) following the form of entry presented in 105 (q), except that you will have no item of exchange since you make remittance in this instance by your own check. Explain the entry fully as shown in 105 (q). 27. March 31. — Post the entries made in the Sundry columns since last posting. Add all columns in pencil and since you have proved Cash in 23 above, you will now rule the six-column journal as shown in the form in 105 (r) and bringing the footings of the special columns into the Sundries columns as in 105 (s) and (t), you will post the footings of merchandise and cash to their respective accounts in the ledger, and will rule, foot and double rule the journal as in 105 (u). Rule and close Cash in the ledger and take the usual trial balance of the face of the ledger (pen- cil footings, except cash which should show only the balance brought down), then proceed to copy on a page of journal paper (and to work out as indicated) the following. Inventory of Mer- chandise. and sales in center columns, and yet not using the debit column wholly for debits below the point where the consignment proper is balanced and the Net Proceeds "brought down" (on the wrong side from the standpoint of formal bookkeeping), has received universal commendation, in that it permits a larger use of the sales col- umn, permits carrying forward sales to additional sheets, to any extent whatever, and yet shows the set- tlement of the entire consignment on the sheet on which the receiving record is made. Observe that the sales column is not footed to avoid giving the student a positive copy or form. The footing may immediately follow the items, or if the items be few, may be placed opposite the debit Total Sales item, or if the sales side be full or should run over to a second sheet, it will properly come at the foot of the sales items. I30 CAMPBELL'S ACTUAL ACCOUNTING 26 INVENTORY OP MERCHANDISE, March 31, 191 Plllsbury'B Plour 225 16 186 Total Inventory, Departme Granulated Sugar 26463 Total inventory, Departme Eng. Break. Tea 240 Uncolored Jap. Tea 180 Inventory of Tea Depar 50 2u0 50 loo 10 20 25 20 425 brl8. 5 00 5 75 5 50 nt B • lbs. nt G . lbs. n tment doz. 4 5u Star Sliced Bacon V3 Corned Beof VB Roast Be-ef VB Corned Beef Ilash VB Chicken Loaf VB Roast Button VB Bnls. Pigs Peot Columbia Bologna Star Hams 425 lbs. Inventory of Leats, Dep»t Total Inventory, Department D • Apples, Roman Beauty, 100 brls. " Jennetings, 70 " Total Inventory, Department ]2 • Glassware, Tumblers 2 gross Bellshaped Tumbler82 •• Wines 1 •• Saucer Champ. 4 •• Hdld. Lemonades 1 2/3 •• Total Inventory, Department P . Total value of Kerchandise in 33 l/3;f 33 1/3/ D 2 1 1 1 1 1 1 2 12 1/2^ D - - - 45 70 70 65 80 80 65 00 2 40 3 00 8 55 9 30 13 50 20 25 32 40 all Departments 29. Other Inventories: Observe that this being the end of the month, there is no resource inventory for unused rent in the Expense account, but that there is a liabilities inventory for the water rent for March the bill for which will not come in until the ist. Also in Salaries you will find a liabilities inventory as in 77 (b). 30. Before proceeding to make out a balance sheet, you should prove the accuracy of the merchandise transactions as far as possible. Turning to the Merchandise account in the ledger, you observe that it appears in debit and credit items as follows : ^ 'c?^^^/ l^J ^2^' ^7 ^^.ii^;^i;^i4H^ ^ -/ ?. ? /:/ (? 2. (1 f^-? / /? Y ff ^f =/ ^ ?. ^ {} / / ^ ff ^f <7 (^ i7 f^rt,owi 14. Errors .... ■ — J— - — — — — -L — — — ■A 132 CAMPBELL'S ACTUAL ACCOUNTING 31. Proceed to make out a balance sheet as instructed in 78 to 81, except that the distribu- tion of loss or gain will be between two partners instead of one, and will alter the closing of the Balance Sheet as instructed in 81, as follows: (a) First, prove the footings of all columns as in 79 (m) ; then find the difference between the footings of the Losses and Gains columns, and dividing it by three, separate it into two parts, two-thirds of it belonging to Mr. Burke and one-third to C. A. Foley and make two red ink entries to close the columns as in the form below. (b) Second, bring down separately each partner's net credit and add thereto his share of the gain, extending the total into the Liabilities column as shown in the form. (c) Form for Closing Balance Sheet in a Partnership. (Compare this with the closing of the balance sheet in 80. Observe that this does not form a key to your present work, but only a form for illustration.) i— (f^^- l£^tt /a-^ffz _A^g /'/.^jcr.f ^ y/^^-9'^ 2.//ilrt7 ^7//*'^ v ?Vz/ 4^ //■r^-Yvi. (d) Proceed to close your ledger carefully following in general the instructions in 82 to 84 but closing the Loss and Gain account with two red ink entries, one for the amount of each partner's gain, as shown in the Losses and Gains columns of your balance sheet, and transferr- ing each to the respective partner's account, as you did the gain of Mr. Burke in the former closing. (e) After closing the ledger take a second trial balance to prove that yoiir closing has been done correctly, being careful to take into this balance only the pencil footings of accounts that have not been closed and where an account has been closed, only the figures that have been brought down below the double closing lines. Then make out a Business Statement, or Analytical Balance Sheet, in the form shown in 86 except the Distribution of Gain which will be as follows: (f) Business Statement of C. W. Burke & Co., March 31, 191. . DISPOSITIOH OF GAIU.- C. W. Btirke's Net lnvostment» M »• •» i» Gain,- Ti»o thirds of total gain, •» ♦♦ •» Present Worth, C. A. Foley^s Investment, H » H Ket Gain*- One third of total gain, « tt M Present Worth, Present Worth 6f C. W. Burke and Company, 5000 492 00 61 5492 2746 2500 246 00 31 61 81 8296 92 (g) Lastly make out the following form of report on a regular blank and copy it neatly into the form following for your teacher's acceptance. There being but two departments of goods in which any business was done, Miscellaneous Class A may be entered as Department A and all the others may be added together and included in Department E. It will make a difference in the inventory figures only. CAMPBELL'S ACTUAL ACCOUNTING REPORT Report of School Duties.' I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses No. of payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Entries made Average per hour Time on trial balance. hours. 133 NOTES Bills Receivable, Ledger Balance Total uncollected in bill book Total value of notes in the safe . Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe. Checks, _ Total Cash on hand. MERCHANDISE Department A Goods Department E Qoods TEACHER'S MARKING Cost of Mdse. bought Accuracy Neatness Orderliness 3 2 2 2 1 Present inventory Cost of goods sold Sales of merchandise . Records Progress Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Average TEACHER'S Respectfully submitted. .191. STAMP 107. General Directions in Regard to the Acknowledgment and the Shipment of Orders. One of the most perplexing and yet apparently simple matters that the business college graduate or under graduate has to face when taking up a position in the billing and shipping department of any establishment, is the routing of shipments. Probably very few competent students would be guilty of the blunder made by a shipping clerk in one of the large printing establishments of Cincinnati, when he sent a large quantity of freight to Philadelphia by the Big Four, all the other important railroads of the country going out from the point of shipment, but in a multitude of cases in which the situation is not so clear, the beginner will be honestly puzzled, if, as is the fact in many cases, a number of different railroads radiate from the point of shipment. Whether to send a parcel by mail, express, or freight is perhaps a first question to be decided. If by express, the question, by what company. Often the same point is reached by two or three express companies, usually at the same cost, in which the one giving the quickest service would be chosen. The same questions arise in freight shipments, and while much of the knowledge necessary to become expert at such work tan only be obtained in actual office experience, a few suggestions are deemed in place, and very valuable training may be given to the student by any teacher who, having secured a copy of the Shipper's Guide and a good railroad map for students' use will give orally to the student body once or twice a week, a few problems in routing sup- posed shipments, requiring them to write out the proper memoranda for routing these supposed shipments, and then discussing and pointing out the errors in their memoranda a day later. 134 CAMPBELL'S ACTUAL ACCOUNTING (a) When an order is received by the shipping clerk, the items should first be checked and prices and extensions made for billing. The student has already had practice in this work with illustrations, in 55, 60 and 62. In many instances, the customer or the salesman will specify the manner of shipment, and such directions should always be followed in every detail. If no method of shipment be designated in the order, the clerk should take into consideration the size of the shipment and any special conditions which might call for prompt delivery, and should decide whether it is to the customer's best interests to forward by freight or express. Unless there be some special reason, either designated or implied, for shipping by express or mail, the shipment when it is of fifty pounds or more weight should be routed by freight. Unless the terms of the order include prepaid delivery, all freight shipments should go forward collect, unless otherwise requested. Upon smaller shipments, inquiry should be made as to the expense of delivery, and where expense will be saved for the customer by prepaying on express shipment, it should be prepaid and the amount included in the invoice. (b) The manner of shipment being determined, the next question which arises is the rout- ing. The best assistance for the shipping clerk of which we have any knowledge is the Shipper's Guide, published by The Shipper's Guide Company, Chicago, Illinois. This guide gives in addi- tion to other items, the following information, — It designates the railroads running through the point to which you wish to make the shipment. It gives the divisions of the railroads, the terminal points and the mileage. It designates the Express Companies which operate upon the different roads ; states whether there is a post-office at the delivery point, whether it is a money order post-office, and whether the station is what is known as a prepaid station (has no agent) ; gives information in regard to telegraph offices, rural deliveries, etc. When the delivery point is not located upon a railroad, it will indicate the distance from this point to the nearest points of shipment. (c) With the Shipper's Guide, the shipping clerk need have no difficulty in the routing of shipments. Where a great deal of shipping is done by freight, it is advisable that the shipping clerk have available for ready reference complete railroad maps of the territory in which the con- cern with which he is connected operates. This will be found very valuable in instances where the shipments have to travel over two or more railroads before they reach their destination, as it can be readily seen from the map what connecting routes, as indicated by the Shipper's Guide, seem best adapted for prompt delivery service. (d) When an order cannot be shipped on the day it is received, an acknowledgment of the receipt of the order should go that day to the customer, giving the reason for the delay and stating the time when shipment will be made. (e) Since the express companies compete closely with the mail service in the matter of expense of transportation of parcels above a certain weight, and since the express company guarantees the safe delivery of the parcels to the extent of the valuation at which it is appraised when shipped, shippers generally give express companies preference over the mail service except in the case of small parcels costing not to exceed 10 or 15c for transportation, or in the case of parcels sent across the international boundary lines, when the mail service is always preferred when possible to use it, since it avoids the special manifest in triplicate required by custom house officials. (f) Following is a form of Certified Invoice of merchandise for shipment to Cuba, prepared for this text in the office of the Van Camp Packing Co., Indianapolis. CAMPBELL'S ACTUAL ACCOUNTING 135 The Van Camp Packing Co. INDIANAPOUS. IND SOLD TO JOHN SMITH & SON Address WAVANA, CUBA Ship To SAME BUYER'S No. Date jan 30, 1911. Terms gg Qp^ys Cash CKsa I 1-2 Pen Ccnt Tcn Oav* C.I .F. HAVANA Freight PREPAID V'^ UNION LINE TO NEW YORK, UNITS PRICE EXTENSIONS 23 C3 TALL SIZE MILK 10 OS #1 PORK « BEANS T.S. ZO CS #2 PORK & BEANS PLAIN 23 4.10 102.50 40 .82^ 33.00 40 1.25 50.00 185.50 DECLARO QUE SOY EL FABRlCANTE DE US MERCANCIAS RELACIONADAS EN LA PRESENTE FACTURA Y QUE SON CIERTOS LOS PREClOS Y OEMAS PARTICULARES QUE EN ELLA SE CONSIGNAN Y QUE LAS MERCANCIAS CONTENIDAS EN DICHA FACTURA SON PRODUCTOS DEL SUELO I^E LA INDUSTRIA UE LOS EST ADOS UN I DOS DE AMERICA, DECLARO QUE SOY EL AGENTE AUTORIZADO POR..... QUE HA" SUSCRITO LA ANTERIOR DECLARACION PARA PRESENTAR ESTA FACTURA EN LA OFICINA CONSULAR DE CUBA EN ESTA PLAZA, A FIN OE QUE SEA CERTIFICADA. CDAftANTCC. (;uada .m lhi> intoiec ut tiiaranlaeJ linJcr the Food >nd Urogi Acl ol June JOlh, IW6. CAUTION. Oon'MllDo rtwr new Mooka lo be lUokMl on top ol old alack. Keep rour atocka revcraed au tkai your uldeal ilooOa trill «l».r> «o tnil irai. Tkia will wvc r«H ipo!li|c in (ll clsaaca of (oed> and uve rou trouble under chM(ea in Pure Food l.*n rulinta m •II eleaaet o( fooda. 136 CAMPBELL'S ACTUAL ACCOUNTING OUTLINE II. General Note — At the foot of every page of the six-column journal, add columns, prove the footings as in 104 (c) and carry the footings forward to the top of the respective columns on the following page. 108. I Your work throughout this outline is to be a partnership, but in order that you may have merchandise on hand for sales when you are ready for business, you will, before pro- ceeding to organize your partnership, place orders for merchandise with the firms with whom you have been dealing. Make these orders as near to the limit of their respective price lists as the condition of your bank account will permit, and write with each order a neat business letter stating that the growth of your business is necessitating larger orders and requesting their prompt attention and early shipment. Ask them to bill the goods as usual on 60 days. If you owe any of these companies for former orders, remit by check, as instructed in 108, 11 (a), but make no entry until you have worked to paragraph 11. 2. Consult your teacher and secure a partner for your business who will invest some pro- portionate part of your present capital, from 1/5 or 1/6 to 1/2. This partner may either be your teacher or some student whom he may select or to whom he may refer you, leaving you to con- duct the negotiations. Draw up your partnership contract similar to the one drawn in your practice in 104, observing that the principal difference between the two contracts lies in the names, amounts and date and that in this you are the party of the first part and the larger in- vestor. Your firm name should be your own name & Company unless that would make two firms of the same name in the schoolroom, in which case you may prefix your initials to the firm name or consult your teacher in regard to some other form of firm name. Draw this partnership contract in duplicate, one copy for each partner. Fold your own copy, noting on the back the names of the parties and the date in the blanks prepared for that purpose, and file it in your Filing Case, Compartment No. i. The other copy you will hand to your teacher, who will file it with your other reference papers. Understand that these papers become a part of the record you are making, and do your work carefully and neatly. 3. Make an opening entry at the top of the first blank page of your six-column journal in form similar to the opening entry made in your last practice or the form presented in 105 (a) and (b). Open your partner's ledger account on page 2 of your ledger, and index it at once. Having secured an enlargement of your storeroom your rent has been advanced to $100 per month. Note the amount of rent to be paid, and the proportionate shares of the partners in the opening entry, for your future information. 4. Draw a check in favor of, "Ourselves"^ foJ* $355-35 preparatory to drawing the cash from the bank. See section 52, (b). Then en- dorse your check with your firm name across the back about one inch from the left end and present it to the cashier of the bank with a memorandum of change wanted exactly like the memorandum in the margin which you will copy on a blank ticket. Make no entry for this transaction. Why not? 5. Using part of the cash obtained in 4, pay your rent for one month in advance at the Real Estate Office or at the teacher's desk and take a receipt for payment. See 91, 3, for full instruc- tions. Make entry as in your practice. Observe that you were directed not to make an entry for the transaction in 4 above. The reason is that no business was done; cashing the check was 1. This term "Ourselves" is used instead of your firm name and is a usual form in either drafts or checks made in favor of the drawer, when the drawer is a firm. No. of Denom- Pieces ination Amount 3 $100 $300.00 1 60 60.00 2 2 4.00 1 1 1.00 1 26^ .26 1 10^ . 10 9 $366.36 CAMPBELL'S ACTUAL ACCOUNTING 137 merely taking your money out of one place and putting it into another — taking some of it out of the bank and putting it into your safe for future use. This payment for rent is the first use made of any of it. 6. Order from the College Center Office Supply Co. the safe illustrated in their catalog as "K, price $150." Request this Company also, if it is not an imposition or too much out of their line of business, to purchase and ship to you a good reliable horse and a first-class wagon and harness, provided they can find a satisfactory outfit at from $350 to $400. Ask them to ship via the Y. S. Central R. R. Co., and state that you will pay cash on receipt of bill. Present this letter to your teacher for approval before mailing; but before going to your teacher, if the merchan- dise recently ordered from the wholesale houses has arrived, — 7. Prepare the required number of customers' orders and take them with you to your teacher for approval when you present the letter, written as instructed in 6. 8. Fill the orders approved by your teacher, accompanying one invoice with a draft drawn in favor of "Ourselves" at 30 days' sight, and another with a joint note at 30 days, making the amounts of the draft and note each 1% less than the respective invoices. The form of this note should be as shown below. It is to be signed by two persons or firms. 9. Make entry for all invoices of goods that have been received since the close of your last actual business work. These should combine easily and neatly in one entry. See 16, Foot- note I. 10. Make entry for all payments of accounts that have been received since last actual busi- ness work whether these payments have been made in cash or by note or by acceptance, being careful to distinguish between payment of accounts and payment of notes or drafts. Observe that when an account is paid you debit Cash (or Bills Receivable if you receive a note or draft) and credit the payer by name ; but that when payment is received for a note which you hold, you debit Cash (or Bills Receivable if a new note be given) and credit Bills Receivable, crediting Interest and Discount for the difference in case the payment be larger than the face of the note or draft. Make record in bill book for all notes. Take from your file of Unentered Business, at this time, the voucher check prepared as instructed in 102, 7 and 10, and make entry charging Cash, then place this voucher check in the cash drawer ready for deposit with other checks. 11. Make payment for invoices received according to the terms of the invoice, first, signing notes or accepting drafts that have been sent out with the bills, and second, taking up the pay- ments on which you are permitted to choose your form of payment. (a) Your wholesale bills belong to this latter class and there being in each case a liberal discount for cash, pay these in cash less the discount, remitting in each case by letter. If these payments were included with the order placed in 108, i, make the entries now. 138 CAMPBELL'S ACTUAL ACCOUNTING (b) For at least half of the bills which you have received from students give notes at 60 days and let the remaining bills stand on account for later settlement. 12. Place an order for dried fruits with the River Dale Fruit Co., through their College Center branch ; also place an order for Apples, Barley, Potatoes, Lemons, and Oranges with the Harmer Produce Co., asking them to allow you to open an account on 60 days' time and giving references, as in the case of your first order from the houses with which you have been dealing. See 91, 4, (c) for instructions concerning this type of letter. Make the size of these orders close to the limit in the respective price-lists of the companies. 13. Detach from your Prepared Blanks, Forms 66 and 67, observing that they are letter and invoice in reply to your order in 108, 6. Fill in^ your own name where indicated and supply the date, making it one or two days earlier than the present date. Write a reply to the letter en- closing your check for the net amount of the bill, and make entry charging the safe to Office Furniture and the horse and wagon to Chattels. Deliver your letter with enclosed check to your teacher, then file the company's letter in your letter file, and the invoice with your other Expense Bills, marking it Expense Bill No. — Make this number consecutive with other Expense Bills. 14. Detach from Prepared Blanks Forms 68 and 69, observing that they consist of Freight and Cartage bills and the tickets representing the articles just bought from the Office Supply Co. Observe also that the freight bill is receipted and that the bill of the carting company includes that item which indicates that they have advanced the freight charges and that you are to pay them. Draw your check for the amount and pay at the general offices of the Freight Co., or to your teacher if so instructed. Make entry, charging this entire bill to Freight, explaining Expense Bill No. , and carrying this explanation to the ledger when posting. Observe that although you have a Cartage account, the Transfer Co.'s bill is not charged to it. That is an account that is to show credit when you charge others for the delivery of goods. Now that you own your delivery wagon, you will charge cartage at 50c per ton on all Department E goods sold during this outline. Pay at this time the freight bills in your wholesale invoices. See 91, 5, sixth. 15. Post as in 106, 22, and make daily closing as in 91, 11, that is, prove cash and Bills Receivable and Payable and take a trial balance. Then make your bank deposit, carefully pre- paring your deposit ticket according to 18 and entering a copy of the ticket on the back of your check stubs, then extending the amount into the check-book money column as a deposit. See deposit of February 11, in 66 (b). Lastly, prepare your customers' orders for your next day's business and submit them to your teacher for approval, arranged as instructed in 98 (except Expert Report)^ with copy of the daily report, neatly entered in the form below, and a duplicate copy for teacher's files. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written _ No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total _ No. of Payments rec'd in cash ; in notes ; in acceptances ; Total — No. of Sales made: To T. & T. Co ; to students ; Total No , $ „ No. of Entries made Average per hour Time on trial balance hours. 1. Rather than attempt to reproduce in the schoolroom all the accessories of the business life, making what hard-headed business men call a "Business Playhouse," it has been deemed advantageous to introduce certain features by means of prepared vouchers and transactions with fictitious persons. The student will, however, readily see the advantage that he has in handling, for the major part of his course, papers that come to him fully made out and naturally presented, as compared with any so-called "actual business" course in which all his work is from illustrative, half made out, fictitious vouchers. 2. The Expert Report and full proof of a student's work will be made only at the close of an Outline, unless otherwise ordered by the teacher. CAMPBELL'S ACTUAL ACCOUNTING 139 NOTES Bills Receivable, Ledger Balance Total uncollected in bill book Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. Respectfully submitted, TEACHERS 191 ... . STAMP 109. I. Fill the orders approved by your teacher. Make the terms of your sales, 50 days, 2/10 c. 1/ 10 n. or ac, sending out with one of your bills a joint and several note making the note for the net amount of the bill less 3 per cent, payable at your bank in 30 days, with "interest after maturity." You will not allow the special discount of one per cent, on this transaction for the reason that the note does not bear interest until after maturity. (a) With another bill send out a draft drawn in favor of your firm for the amount of the bill less one per cent, and leave it with the customer for his acceptance when you deliver the goods. (b) For a third bill, find one of your customers who is willing to pay "spot cash" and collect when you deliver the goods, allowing him the special discount of two per cent. Take the check, or currency, received in payment for this sale, directly to the bank and exchange it for a certificate of deposit in favor of your firm which you will place in your cash drawer. The best way to find this customer is through your purchasing agent unless your teacher instructs other« wise. (c) Permit your remaining sales to stand on account or accept such payment as your cus- tomers see fit to offer. 2. Make entry for all invoices received and unentered and proceed to pay for them as follows : (a) First, sign notes or accept drafts in all cases where these have been presented with the bills, and make bill book record and entry. (b) From those in which you have the choice of manner of payment, select one of the smaller invoices and pay it by a draft at 30 days, drawn on some one of your customers who owes you that amount or more. Select a second invoice and pay it in the same way by a draft on another customer who owes you, but make this draft at sight instead of at 30 days. These two payments introduce you to a use of the draft concerning which you have had but little previous instruction. Draw these drafts similar to the form in 53, inserting the name of your creditor in each case where the name of the Garden City Bank appears in the form, and making as above instructed, one of the drafts read at sight as in the form, and the other at 30 days sight. In making your entry observe that these drafts are not Bills Receivable because there is in them no promise to pay you (your firm) any money; that they are not Bills Payable, be- cause you do not promise to pay any one else any money ; that they are not Cash as was the draft in 53, because they are not in favor of your bank and cannot be turned into cash by you at the bank. What then are they? Observe that each will take money that is due to you out of the account (the customer) on which it is drawn and, since we always credit the source from which the value comes, you have discovered the proper credit for each of these entries. Then 140 CAMPBELL'S ACTUAL ACCOUNTING when you hand these drafts over to the creditors in whose favor you have drawn them in pay- ment of the invoices sold you, you will readily see that these persons who receive the drafts or in whose favor the drafts are drawn are to be debited. Make each entry separately and explain Paid for Invoice No. by draft at sight (or jo days) on (name of drawer). If in doubt about this entry make one of the entries on a loose sheet of journal paper, and submit it to your teacher for approval. Then proceed to complete the record as instructed above. (c) Of your remaining invoices, pay cash for those from the wholesale houses taking ad- vantage of the discount and enclosing your check with the letter written as in (6) below. For the invoices from students, give notes at ninety days for all that allow you such an option. Make bill book record and entry. 3. Discount at your bank all notes or acceptances which you hold that are not due. Collect all that are due you with interest, or if the maker be not able to pay, insist that he pay the interest and renew the note. For entry for payment of a note and interest see 54. For payment of interest alone you will debit Cash and credit Interest and Discount. Fill B. B. record in Collec- tion Data columns. 4. Pay all your own notes or acceptances that have matured, with accrued interest, and make entry, debiting Bills Payable and Interest and Discount, and crediting Cash. If your cash balance in the bank is not large enough to meet your requirements, consult your teacher and the banker, and arrange to borrow at the bank what money you need, giving the bank the usual form of joint and several note signed by your own firm name and that of some other student who will sign with you as an endorser. For entry see 106, 10. 5. Detach from Prepared Blanks, Forms 70 and 71, the letter and shipping invoice from H. S. Tuttle & Co., College Park, Y. S., filling your own name and the date. In supplying the date, antedate both the letter and invoice, also the draft following, suffi- ciently to allow for the distance from the point of shipment to your city. File letter and invoice in your filing case, first opening an account in your ledger on page 23 as instructed in 106, 14 (c). Then detach the draft and freight bill. Forms 72 and 73. Pay the draft at the bank, observing first that it is endorsed on the back payable to your bank. If not properly endorsed, require the banker to secure the proper endorsements before you make payment. Next, pay the freight bill at the freight office and make entry as in 105 (j).i Lastly, detach from Prepared Blanks the tickets that represent the goods and place them in a special envelope marked Consignment No. i, H. S. Tuttle & Co., College Park, Y. S. File the receipted draft and freight bill with the letter and invoice, fastening all together with a pin or other fastener. Place them in your Invoice File.2 6. Write letters to the River Dale Fruit Co., and the Harmer Produce Co., enclosing your checks for last orders less discount as per instructions in 2 (c) above with additional orders for merchandise. In the letter to Harmer Produce Co., suggest that the California Oranges were not up to the standard and that if the goods of this order should prove equally inferior you will be obliged to return them as you cannot afford to have dissatisfied customers. 7. Pay Freight Bill. 8. Make a sale to the Townsite & Trading Co., of all goods bought from students to date, deducting 21^ % trade discount and making the terms Net Cash. Add cartage at 50c per ton and make entry as in 105 (e). 9. (a) Add your journal columns in pencil and prove your additions. (b) Prove cash by adding, on scratch pap€r, the footing of your debit cash column to 1. Observe that the proper title for an account with a consignment received, is, Consignment No Consignor's Name, Address, numbering all consignments consecutively, for convenience in stenciling crates, barrels, etc., in the warehouse, while it will be found best in keeping accounts with consignments sent out to give each consignee a separate set of numbers and to enter goods sent out on commission as, JoJm Smith's Shipment (or Consignment) No 2. Observe that the Order Bill of Lading is not shown. See Form 54 in 106, 14, (b).- CAMPBELL'S ACTUAL ACCOUNTING 141 your last cash balance, and subtracting from the sum the footing of your credit cash column. The difference should equal the total of your cash on hand and in the bank. (c) Post all items in the sundries columns to your ledger as in former work. (d) Rule the columns of your journal as illustrated in 105 (q), carrying the footings of the cash and merchandise columns into the sundries column as in (2) and (3), adding and ruling as illustrated in the form Sec. 105. Then post the items of cash and merchandise from the sundries columns to their respective accounts in the ledger the same as other sundry items. (e) Prove Bills Receivable and Payable as in 69 (a) and (b). (f) Take a trial balance.^ If your balance does not prove, first try the ordinary methods of finding a trial balance as presented in 71. If you cannot find all errors in this way, turn to 72 or 92, and follow carefully the instructions there given. (g) Prepare your deposit ticket as instructed in 18; copy it in the stub of your check-book as explained in 18 (b) and make your bank deposit, being careful to endorse all checks 18 (c), and to present pass book with deposit ticket and checks to your teacher to be "Vised" before going to the bank. 10. Take an inventory of merchandise, listing the goods of each department separately and discounting Department A goods at 12I/2 per cent, and Department E goods at 3 per cent, to find the net cost. See section 75, also 106, 27 and 28. 11. Prove the accuracy of your work following instructions given in 95, and find all errors as instructed in 96. See also 106, 28. 12. When your merchandise proves and you have done all the work required in 9 and 10 above, make out a balance sheet as instructed in 107, and proceed to close your books as in the Practice preceding this Outline. In closing your books, follow 83 in general, in the matter of all resources and liabilities accounts, except that you will always rule your accounts with the wholesale houses and the Townsite & Trading Co., at the close of each outline bringing down the balance of each account after closing. 13. Your books being now closed, take a trial balance after closing (see 86) to prove that your closing has been done correctly, and make out statement as in 86 appending to it the trial balance taken after closing the books.^ 14. Prepare your orders from customers for another day's work, subject to your teacher's approval, disposing of the goods received on consignment from Tuttle & Co., to two of these customers. Do not at this time mix any goods of your own stock with these consignment sales but dispose of your own goods to other customers. 15. Place your books in usual order to submit to your teacher for his approval and fill out the full report below with a duplicate for the teacher's file. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. 1. This being a general closing with a proof of Merchandise as indicated In 10 below, the student may save time in taking a second trial balance if he work 10 and 11 before proceeding with (f) and (g). 2. By comparing the trial balance taken after closing with the resources and liabilities of the statement, the student will observe that the same proof can be obtained by comparing (checking) the statement of re- sources and liabilities with the closed ledger. 142 CAMPBELL'S ACTUAL ACCOUNTING NOTES Bills Receivable, Ledger Balance , Total uncollected in bill book Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. MERCHANDISE Cost of Mdse. bought Present i nventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Department A Goods Department E Goods TEACHER'S MARKING Accuracy , . . Neatness . . . Orderliness. Records . . . . Progress. . . Average ... TEACHER'S Respectfully submitted, 191 ... . STAMP no. I. Draw a check in favor of each partner for the amount of his gain as carried to his stock account in the last closing- of your books ; or if you have been compelled to pass your work with a loss,i require each partner to make up his share of the deficiency in capital. For your share of this deficiency you may give your note in favor of the firm at three months with interest at 8 per cent. Your partner will either give a note or pay cash as he may see fit. 2. From this time until you finish this set, you will keep your cash account in the cash columns of your journal, not transferring the footings to the ledger as in the two previous post- ings. It will, therefore, be necessary for you at this time to transfer the balance of your cash from the ledger to the journal. This can be done most conveniently by making, in your six- column journal, the following entry and explanation, using the figures of your cash balance in place of the asterisks. «#»* y^Z^ • ••» Place the cash debit of this entry in the cash column where the asterisks appear in the form above and the cash credit in the sundries column, and immediately post the cash credit from the sundries column to the credit of the ledger account. Rule and foot the ledger account, as it will now balance. 3. Fill the orders approved by your teacher when your books were accepted, accompanying one of the sales of consignment goods with a draft at 30 days less i per cent, for the buyer's acceptance. When this draft is accepted and returned, see form in 105 (o) for your entry, but observe that the principal debit is Bills Receivable and not Cash. Make a sale to T. & T. Co., 1. A loss in your business can only indicate one of two things, errors in accounting or in making the sales, or failing to do business enough so that the gains, which are on a percentage basis, will overcome the fixed expenses. CAMPBELL'S ACTUAL ACCOUNTING 143 using a voucher check as in 102, 6 and selling all Dep't E goods that were included in your proof made in 109, 11. Remember that you are to charge cartage on Dep't E goods. Make one entry for the sale and a second for the voucher check. 4. Make a shipment of merchandise out of your wholesale stock to some student whose name is on your trading list and who is at least as far along in his school work as the beginning of Outline II, instructing him to sell these goods for you on commission and to render you an ac- count sales with remittance at the earliest possible date. Write a neat business letter embody- ing these instructions and submit it to your teacher for approval before delivering it with the shipping invoice (or the merchandise^). For instructions in making a shipment see 106, 18, following plan of the shipment to H. B. Wellman & Company, as closely as the freight regula- tions of your schoolroom will permit; and make entry as in 105, (n). 5. Secure from some student who is as far along in his work as you are, a consignment of merchandise to be sold by you on commission. If you do not know from whom to obtain this consignment consult your purchasing agent. If some student has already made you a shipment instructing you to sell for him on commission it will fulfill this requirement and release you from securing another at this time. Make a sale of these consignment goods as in the case of consignment received from Tuttle & Co., in 109, 5, sent out to customers on orders, 109, 13. This consignment should be known on your book as Consignment No. 2, followed by the name and address of the consignor, (see 109, 5, footnote i), and the ledger account should be opened about 12 lines below the Tuttle Consignment on page 23. Other Consignment accounts should follow. 6. Make entry for all invoices received since last closing and make payment in cash or notes as you may see fit except as otherwise required by the seller. Pay freight, and make entry as per previous instructions. 7. Remit in cash to your wholesale houses for the amount of last invoices less discounts to which you are entitled, and enclose with each letter a new order for merchandise. These letters will all be similar in form ; and are of a nature that you should be able to write without any special instructions. Prepare them carefully and submit them with other papers to your teacher for approval before delivering. Do not consider them unnecessary because they are alike. All business firms write a great many such letters and your repeated practice should enable you to get very correct forms of expression. 8. To Prove and Rule Cash Without Closing the Journal and Posting Merchandise. (a) Add your journal columns in pencil and prove that the debits equal the credits. (b) Since all your cash is to be found in the cash columns of the journal the difference be- tween the debit and credit pencil footings of the cash columns will show the balance of cash which you should be able to find in your bank or cash drawer. When this proves, omit one line from the last entry in your journal and make a red ink balance entry as in the form below. Rule the cash column only, bringing down the cash balance, exactly as in the form.^ yfy^f^ 4z^ g <:?y^j/4 ^-^(i^^ 26 /a-«^«>.»s^^ -^-^^ dU^^z^^^L^ ;j^^ ^ ^ <^^J=Z. ^^-^^^ ^^r^ -v^ ^ jO ^^^ 5. Pay freight bills and make entry; then open private accounts with each partner and make entry charging Salaries and crediting each partner's private account for the amount of his salary for the month. Open private accounts on page 3 giving each partner a half page. 6. Sell all goods on hand in Department E to the Townsite and Trading Co., for cash less 2i/^%, adding cartage and entering as in 105 (c). 7. Make Daily Closing. (a) Prove cash in pencil. Then foot and rule the six-column journal as in 89 (q). (b) Post all items found in the Sundries column (including the footings of Cash and Mer- chandise) to the ledger as in former postings. (c) Rule cash account in the ledger and make your bank deposit. (d) Prove Bills Receivable and Payable. (69, a and b.) (e) Make out your Expert Report,^ first consulting 106, 30, and if it shows errors, proceed to find and correct them. Observe that this involves taking an inventory of Merchandise. See 93» 94» 95» 96 and 106, 30. (f) Take a trial balance of the face of your ledger (pencil footings) after making and post- ing the correction entries for errors discovered in your Merchandise transactions and record in trial balance book. Be careful to enter the page of each ledger account in the "L. F." column of your trial balance. If your ledger does not balance consult 71, 72, and 92 unless you have al- ready learned to find a trial balance without need of the references. (g) Secure orders for your next day's trading and submit them for teacher's approval, sub- mitting your books for inspection in usual form (see 98) with a carefully filled out full proof, report blank, also neatly copied in the form below. TEACHER'S 113. When your teacher has approved your work to this point and placed his stamp in the form to the right, you will (a) Proceed to reduce your trial balance to a balance of differences in all accounts except Merchandise, where you will use the two footings, — the debit to show the cost of merchandise and the credit to show the amount of the sales, — see Footnote 2 under 78. STAMP (b) The inventory of merchandise taken in connection with your proof in 7, (e), with such corrections as your proof has required is the inventory of merchandise for the present closing. Why are there no inventories of Expense or Salaries? See 5 above. 1. If correction entries have been made during the work, they must not be permitted to increase the amount of real purchases or sales in any department, when making out the expert report. If the Mdse. debit or credit fell on the same side as that of the entry to be corrected, it is evident that it merely made the origi- nal purchase or sales entry what it should be and that it will require no further attention; but if the correction was a contra entry, it increased unnaturally the opposite side of the account, and must either be subtracted from both footings or treated as returned merchandise or sales at cost for which see 106, 30. 148 CAMPBELL'S ACTUAL ACCOUNTING (c) Make out a balance sheet and close books following closely the instructions in 107 (d). If either partner have a private account, bring down separately each partner's net private debit or credit and adjust thereon his share of the gain, carrying the result to his stock account as in the form following: 114. Form For Closing Balance Sheet in a Partnership When the Partners Have Private Accounts (compare this with the closing of the balance sheet in 107.) y^£^..'^!Z-^^^7^ ?£2_^ ^ '>^y>2 M ^^^^ J2J-\1'. ^.Siya JafC^' 7'7 Js-g- Ut Z^L g / 16125 lb Cash Merchandise, per Inventory, Bills Receivable Personal Accounts due us Expense, per inventory. Total Assets liabilities Salaries, due and trnpaia. Bills Payable Personal Accounts that we owe Total Liabilities C. W. Burlce's Present Worth 924 3936 648 1693 36 39 01 47 95 00 7238 1975 37 1293 646 60 12 82 —J ^ 5227 02 1 150 ii6 CAMPBELL'S ACTUAL ACCOUNTING THE EVOLUTION OF ^r^r (n) (o) (P) /J- ^^*2-.^i^ ^^^y&.^^.4^ ^ S£>oa - ^a / ^Ja - /^ra /2^^ ar / JfJ at^ (a) Observe, first, that on this page above are copied all the entries in which Cash was debited in your practice entries in the business of C. W. Burke as far as section 26 of the text book ; and on the opposite page above, all the entries in which Cash was credited in that business during the same time. Observe, second, that this makes the left hand column of this page and the right hand column of the opposite page exclusively cash, and that the totals of these columns are the totals respectively of the debit and credit of Cash in Model Journal No. i. Now take up (b) on the opposite page and 117 z^/- (n) Q^tJ» /^^S — ar (a) When a cash book is used it takes the place of the journal as a book of original entry for all entries that are entirely cash as in the ist, 2d, 3d, 6th, and 7th entries of the Model Journal (see 25, pages 22 and 23) ; while in the case of entries that are only partly cash, as in the 9th, loth and 14th entries in the Model Journal, the first or original entry is to be made in the journal and the cash posted to the cash book just as if it were the Cash account in the ledger as is indicated by the references marked "J" in the preceding cash book. (b) For Practice in the use of the cash book along with the journal as you will use it in Outline III, take up your practice journal (the book used in C. W. Burke's business) and re-enter, in cash book form, explaining carefully, every entry that you have previously journalized CAMPBELL'S ACTUAL ACCOUNTING 151 116 THE CASH BOOK. (q) (r) (s) (t) (u) /o /a /a (^^<2>^^-^'>i^c^^ ^^' /^a - /j-a /SOO /^^^ //2ji -" //2i ^-^ ^/ '^^a 2^sa 2-^J-a ar (b) Observe that on this page below are arranged all the debit items of the cash credits above, and that the total is carried into the right hand column as a credit to Cash, w^hile on the opposite page, the credit items above are similarly arranged, presenting three credit items with the total as a Cash debit. 117 ^9/ (q) J^-^i^ (r) (s) (t) .^^^^s^^ -^^^17^ ^^ yii;^^ ^-^i-^^^r^^ ^^^ti^^-tiCs^^^^ ?i^>-t.^-^iy> yy^^.^/,.^^ "^»r'^^ ^,^4<>^^.^^^^ ^. .^^J'^^ ^.^^^^^ g^^^i^^ ^^^«g>g-<- --,^J»^.gZ^»^,...g^>^g^ -^.^-^iL.fl e^^<^g^^g.gi^^ r:^ ^,e^.^^.£^ ..^ei'i.^r^^J'/ ^yl.&id^^i^,9~x7,^L^tiA^. ^^<,^^ J^i^S^^ ^^i,^z^^^<^^ ^^^91.y^^.t!^^,^i!Z^C^^'^^ ^^^^^^re4^^^^t.y±,^^.^e^^.^iit>^ ^^^ ^. ,-«g-.:^-=^^ £r^ l64 CAMPBELL'S ACTUAL ACCOUNTING OUTLINE IV. 126. I. Your work in this outline will be a continuation of your partnership but with a considerable change in your system of accounting, although you will use for the most part the same books ; namely, the Cash Book, Sales Book, Journal and, for merchandise purchased, an Invoice Book. The Invoice Book, while the only one of the set with which you have not been previously acquainted, is the simplest of the books to be used while working the outline and will be explained first. Take your Invoice Book from your supplies and open it, comparing it with form in 128 on the page opposite. Observe that the form represents invoices pasted into a book like the one furnished you for this work, the amount of each invoice being extended into one of the money columns to the right of the page. Observe also that this extension of the amount of the bill (observe the bill entered at foot of page) is made directly opposite the name of the creditor and that the page of the ledger on which the creditor's account is found appears as the posting check in the red ink form following the word Entered, which is no longer needed to indicate the journal page. Pasting in the invoice and extending the amount is all the entry that it is neces- sary to make for any invoice received while working this outline. Before proceeding with other work, you may immediately take up all invoices that have been received since your last closing and carefully checking them according to your previous instructions (see 91, 5), proceed to fasten them permanently in your invoice book with paste, being careful to number and ar- range them properly as instructed below. (a) Paste the first invoice firmly at the top of the page and extend the amount into the the first to expose all the upper part of the first bill — all except the figures, and paste to the page of your book that part of the second bill which extends below the first, leaving the part which covers the first bill entirely free, so that it can be lifted up in order to show the lower part of the first bill. Extend the amount as in the first invoice, (c) Continue with the other invoices in the same manner until your page is full. Then ruling neatly across the columns of extended amounts, add the columns and carry the footings forward to the top of the next page. Since your invoice book has two ruled money columns (it may have more) the two columns may be used for items and totals as you used the two columns on either page of your cash book ; or if the business of the firm be such that goods are received belonging to different departments of the business, each column of the invoice book may represent a department and the total of an invoice would then be extended into the column representing the department to which it belongs, or if in any invoice there be items belonging to different departments these items would be separately extended into the respective departments to which they belong. In your business one column may be used for Branch House Merchandise received. 127. TJie Sales Book. This book in this outline will be similar to the sales book with which you are familiar, but will have one additional column. Of the three columns, use the left hand column for extensions, and the right hand for the totals of merchandise sold ; the central column you will use for various purposes and you may mark it "Sundries." The principal use for it will be found in the sale of consignment goods but it may be used for the amount of any sale that is not your own merchandise. Readjust your loose-leaf Sales Book to bring in 3-column pages at this time. CAMPBELL'S ACTUAL ACCOUNTING 165 za8 (3_ fl'-tPwoNc ««a ■""rR^^"^^' ^BROUIIOB«WtBBl|»™WBRHS»|JtL Nos. 71 and 73 East Santa Clara Streeb p^g 0. . f. Bi uLk^, Coii#ee cit»» Tj_8_. 'CoHacrct I* flx toiHbuld of ClvfllHUtM" PBOPRISTOBS OF REVERE COFFEE MILLS AKD SPURR'S REVERE COFFEE 2275 - 27 Direct SoMtt. C« W. Bttrlw, Oollee* OUy, T. 8.; FAT DO Monr TO Aonrrs ok J«a. S8, 19 RECEIVEDi2«r»S^yr..l9/..... enteredCs-! _ NO. AND RLE LETTEFl/c entering of suit against purcttaser orwhen purchaser setts At/iMAMJSTJ^fiot\Jt^^fikAf^if^^^fpff^4l^^ a/t&npts orpfxxeeds to close out Oustness orputcnosers failure fophmfi^Moai^^iL^'Uj^^^^if^ ^ * ' NO. AND FILE LETTER^^,;!^ O.A.SCHNUU-x •vficp. G omrfnit ADiscounl ofTwopntCpnl will Ite niUttfptl mtkishwoim if paid wUfunWiikxj'^frofnifiite, fntttri'M wui ft« duirffed aflgr auttu/ify' ItuportemManafadiiifem E^nem and Jobbers of Grogeries, UO tom&MeridianSl. Indiunupolisjnd. jAHTJAai ztth, i9ii. Soldto 0» W. Burke. Ooixege City, V. 8. The Van Camp Packiwg Co , .-^ — — mDIAMAPOUS. IMD. | ENTERED..,V-I rc-i V NO. AND FILE LETTER«^.c*ai 2 2 06 ^^^ y^ "^-^^ P^2Z<*^^^»^-?2<^^--^^i2-as»-^^>-2^^»-iWs'^?«.x 2^:iS /Sa ■ St o /J4t^a J// Saaa — ^t /2f. Si^aa //2<^5^ rc /^4<^/ ^i"^ /S /^ii/aji/' 130. The Cash Book. Your cash book in this outline will have three columns on each side instead of two as formerly, and each column will have a distinct use. Mark the columns of your cash book as shown in the form in 129 except that Accounts Receivable might be written instead of Customers' Ledger and Accounts Payable instead of Creditors' Ledger. In the cash book you have just been using, you will remember that you did not enter cash directly when merchan- dise discount was considered a part of the payment, but that you made the entry in your journal and posted the cash to the cash book. Now all such entries will be made directly in the cash book, the amount of merchandise discount being entered separately " in the Discount CAMPBELL'S ACTUAL ACCOUNTING 167 c&U(Si. ACCOUNT DEBITED EXPLANATION CREDITORS- LEDGER OIS PAYMENTS z^/- ^ 2^a/i. 2. 2. /a /a /a / / / / // 2/ '/ / / C /^? /3 /3 yj /^ 9/ ^/ P- Pz ^^^/d^ jd^i/t^ /i^ /<^ 3^/3 /s //^:S 3 i- 7 f 2S^y:i y/6fz/ ^/I2/ y^/i '/^ 2 2 — // 2.S xs 333^ 2.a /fa/V^^V /S''^^/^2. column, and the amount of cash received in the Cash Receipts column ; or, if it be cash paid out, in the Cash Payments column. Study carefully the form of cash book in 129 and observe how the discounts are entered, totaled and posted. Do not be discouraged because you find it difficult to understand every step of your work at first, for the subject that you are taking up now is the hardest subject that you will encounter at any time in your course, but it is one that will not be made easier by postponing it, while it will grow easier by practicing it. When you have carefully plodded through your first day's work and have taken your first trial balance, you should begin to understand the work of this outline. But read very carefully every word of your instructions and consult your teacher at any time that you do not clearly see what is meant. 1 68 CAMPBELL'S ACTUAL ACCOUNTING 131. The Journal. You will use in this set what is termed a four-column journal. Observe that two of these columns are on the left hand and two on the right hand side of the entries after the style of your six-column journal. Observe further that the two inner columns are marked General Ledger and of the outer columns that the one to the left is marked Creditors' Ledger and the one to the right. Customers' Ledger. With these explanations you are now ready to open your books. 132. Enter in your four-column journal at the head of the page a statement and entry similar to the following, the resources and liabilities of which are taken from the Business Statement of C. W. Burke & Co's. business on March 31 ; but take your figures from the Resources and Liabilities of the Business Statement which you have just rendered at the close of Outline IIL 133 ^T^^^s'^z^^^z^^ /^^:|< ^. ss^ /^^^^i^i^^ /, z^^/- S/ax ^a /xao.f y-*^ {^^t^t>^ ^^^**^£^i.^^^^ \^<^pt^.. ^ 3^^ i3t>^ *^ f 2 St) '29BXi . 2yV£3/ o^ CAMPBELL'S ACTUAL ACCOUNTING 169 (a) Check the items of the opening entry in 133 with the accounts in your practice ledger and observe that all the figures entered in the sundries columns are to be found in the ledger on the page indicated, except the two items marked Accounts Receivable and Accounts Payable and that for these you can find only the personal accounts composing them. Now open two new accounts in your practice ledger (the ledger of C. W. Burke & Co.) on page 15, entitling one of the new accounts Accounts Receivable and the other Accounts Payable, and posting to each of them the amount entered against that title in the opening entry in 133. (b) Check the opening entry of your own business with the accounts in your ledger in exactly the same way, opening accounts with Accounts Receivable and Accounts Payable on pages 32 and ^^ of your ledger and placing opposite the name of each account in the opening entry of the ledger or cash book the page number as in other posting. This finishes all the work necessary in opening the ledger at this time since all other accounts already have their places in the ledger, except Cash, which you find is a balance brought down in your two-column cash book. Transfer this balance by red ink transfer entry, from the two-column cash book which you have been using, to the General Ledger column of the three-column cash book which you will use in this outline, ruling the two-column cash book with the usual red ink closing lines. 134. The observant student will, at this point in his work, undoubtedly feel that his ledger balance is spoiled by inserting the additional debit to Accounts Receivable and the additional credit to Accounts Payable (items which do not balance each other) when at the same time the individual accounts which make up these totals remain in the ledger. The explanation of this is that from this time on in your work you will not take the individual accounts into the same trial balance in which Accounts Receivable and Accounts Payable appear, but your ledger will here- after be divided into three separate books (or what represents three separate books) known respectively as the General Ledger, the Customers' Ledger (Accounts Receivable) and the Cred- itors' Ledger (Accounts Payable) ; and your trial balance will appear in three parts as illustrated below by figures taken from C. W. Burke's ledger immediately after posting the new accounts of the opening entry preceding, as instructed in 133 (a). 135. Illustrative form of trial balances for Outline IV. ^4^*-^^ ^';^$:^:^t2«>4-*^^ V^^j'-V^^^rTp^?^ ^^^^i^u^/f- / />^^.i^^ / a:s'yy ?--^ '' '^^77 ju' I/O CAMPBELL'S ACTUAL ACCOUNTING ^~-^^.^^^^r^^i?^^S^li/'^^^f^e^t^t,^^i^ 7// ~3772 (b) Pay for other invoices received, by note or in cash, so planning your payments that of all the bills paid in this day's work, at least one-half will be by note or acceptance. Cash pay- ments will be entered in the cash book on the credit side, the amount of the check or currency being placed in the Creditors' Ledger column and the amount of Mdse. Disct., if any, being placed in the Discount column. (c) Pay at least one and preferably two invoices that call for cash, by drawing at sight, on some one who owes you, in favor of your creditor (see instructions in 109, 2, b). Cash pay- ment made by sight draft not being cash to you (but counted cash by the one who receives it) will be entered in your four-column journal charging the creditor in the Creditors' Ledger col- umn, and crediting the drawee in the Customers' Ledger column as in the form following, the discount being entered in the General Ledger column. 1. Make consignment numbers consecutive throughout your practice. This is much more convenient In marking the goods in the warehouse. It is called the hot No. It is followed by the consignee's initial in refer- ences merely as an index to the filing case. 172 CAMPBELL'S ACTUAL ACCOUNTING 3^^^^' ^^$^=2^^.,,^^.^^ ^f. 33 ^.3^ 6. Make entry for all payments that have been received since last closing, carefully dis- tinguishing between payments of accounts (payment for bills rendered) and payment of notes or acceptances. Enter all payments of accounts as follows : (a) For notes or acceptances that have been received in payment of accounts, make entry in your four-column journal debiting Bills Receivable and Mdse. Disct. (if any), in the Sundry col- umn and crediting your customer in the Customers' Ledger column with proper explanation as in the form below. ^/•^o^ T/ ^7<^^ (b) For payments received in cash, including sight drafts, make entry on the debit side of your cash book placing the amount of the check, currency, bank draft, or sight draft, in the Cash Receipts column and the amount of discount, if any, in the Discount column. (c) For payments received for notes or acceptances, make entry on the debit side of your cash book in the sundries column for the face of the note or acceptance crediting Bills Re- ceivable ; and on a separate line, immediately following the entry for the note, make entry credit- ing Interest and Discount for the cash received for interest, placing the figures also in the sun- dries column. See iig, 7 and 8, or the entry for Feb. 10 in cash book form in 129. 7. To close the Cash Book, (a) Add each column of your cash book in pencil and make a penciled proof of your cash exactly as in former cash book work, but omitting from this pen- ciled computation the footings of the Mdse. Disct. columns and adding together, to make your cash debit, the footings of Cash Receipts and Sundries on the debit side and to make your cash credit, the footings of Cash Payments and Sundries on the credit side. (b) When cash proves, draw a single red ink line across all three columns of each page im- mediately below the figures and enter the footings in ink. Red ink is sometimes used for the footings of the discount columns to distinguish them, as these do not represent cash either re- ceived or paid out. (c) Rule the Mdse. Disct. and Cash Receipts' and Payments' columns with double lines beneath these footings, and make entry below these lines for the total cash received or paid out as follows : (i) On the debit side of the cash book enter to the credit of Accounts Receivable the sum of the footings of the Cash and Discount columns representing the Customers' Ledger and carry the amount into the General Ledger column, as shown in 129, on debit side of form. (2) On the credit side of the cash book make entry charging Accounts Payable for the sum of the footings of the Cash and Discount columns representing the Creditors' Ledger and carry the amount into the General Ledger column, as shown in 129 on the credit side. (d)) Observe now that you have debited Cash for the footing of the Mdse. Disct. column which was not cash received and that you have credited Cash in the same way for the footing of CAMPBELL'S ACTUAL ACCOUNTING 173 the Mdse. Disct, column, which was not cash paid out, and that this disturbs the balance of cash as proved in pencil above. Proceed to correct this condition by crediting Mdse. Discount in the General Ledger column on the debit side of your cash book for the amount of the footing of that column on the credit side of the book, and by debiting Mdse. Discount in the General Ledger column on the credit side of your cash book for the amount of the footing of the Mdse. Disct. column on the debit side. These two entries will restore your cash balance and place the amount of the Mdse. Disct. in proper shape for footing. Make your cash balance entry in red ink, as formerly, itemizing separately; first, the balance in bank and then the amount of money, if any, in your safe, listing separately the currency and each check as in former closings. (e) Before leaving the subject of the Cash Book, post all items from your cash book to your various ledgers as follows : First, post all items (except the cash balance and footings) found in the General Ledger columns to the respective accounts in your general ledger exactly as in the posting of the cash book of Outline III, noting that this instruction applies also to the totals of Mdse. Discts. and Accounts Receivable and Payable that are entered below the first closing lines. Second, post the items from the columns marked Customers' Ledger and Creditors' Led- ger to the personal accounts in your customers' and creditors' ledgers respectively, posting to each name first, the amount of cash received or paid out as indicated by the entry, and immediately under this amount, the amount of merchandise discount appearing opposite the name in the Discount column of the cash book. No explanation will be needed in the ledger to indicate the cash payment but it might prove advantageous if the discounts were indicated by the words Disct. 2 per cent, written in the wide column of th3 ledger. 8. To close and post the Journal, (a) Rule the journal similarly to the forms shown in 105 (q), bringing the footings of the outer columns into the General Ledger columns to be posted, the left hand outer column footing as Accounts Payable and the right hand outer column footing as Accounts Receivable. (b) Then post these footings and all items found in the General Ledger column (except the opening entry which you either checked or posted at the time of making it) to your general ledger; and post the separate debits and credits found in the columns marked Customers' Ledger and Creditors' Ledger to the debit or credit of the individual accounts in the customers' and creditors' ledgers respectively. 9. To Post the Sales Book, (a) Post the amount of each individual sale to the debit of that individual's account in the customers' ledger. (b) Post the amount of any sale of consignment goods (found in the central or Sundries column of your sales book) to the credit of the consignment to which it belongs just as you would if this were a journal credit column. This is in addition to posting the amount also to the debit of the purchaser. (c) Post the total footing of the Merchandise, or right hand column, to the credit of the Merchandise account in the general ledger. (d) Add together the footings of the Sundries and Merchandise columns and post the total to the debit of Accounts Receivable in the general ledger. The ruling of your sales book for this / c:^^ti^.y^ 2^/^^ /jTfj :23frfy ♦Checked ( V ) because not to be posted. 174 CAMPBELL'S ACTUAL ACCOUNTING closing will be in the preceding form, the figures representing the footings of the Sundries and Merchandise columns. The items or extension column is not footed. lo. Post and close the Invoice Book. The posting and closing of this book is very similar to the posting and closing of the Sales Book. (a) Post the total amount of each invoice to the credit of the seller's account in the credi- tors ledger, post-checking the invoice as in the form in 128. (b) Add the Merchandise column and post to the debit of the Merchandise account in your general ledger. (c) If a Sundries column be used in this invoice book as in the sales book, its items would post to the debit of the respective accounts as from a journal debit column and the total would add to the merchandise total to make the credit to be posted to Accounts Payable. In this closing there is no Sundries column used in the Invoice book and the total footing of Merchandise column posts, as in (b), to the debit of Merchandise and to the credit of Accounts payable. See form below: X^^aitfi^^l^'^ ^!^^^«-*:-«?-*''-^*^«'^ .^^-5^-«z-<^<^' ^7f7' 4KZ. 11. This completes your posting. Prove Bills Receivable and Bills Payable as in former work. Then take a trial balance of each ledger separately, observing, — (a) That the general ledger including Accounts Receivable and Accounts Payable ac- counts, but excluding the separate individual accounts, should balance perfectly, and (b) That the customers' ledger (personal accounts in your favor) is to be balanced by the difference between the sides of the Accounts Receivable account in the general ledger, and the creditors' ledger by the difference between the sides of the Accounts Payable account in the gen- eral ledger. 12. If either or all of these balances fail to balance as they should, and you cannot dis- cover your error by looking over your work, the best method, both for finding your error quick- ly and for enabling you to understand this set of books will be that set forth below. Copy into the first pair of columns on a sheet of trial balance paper, the trial balance taken after making your opening entry in 136, making neat small figures as there will necessarily be two and sometimes three numbers on one line, then proceed as follows : (a) Take up your four-column journal, and beginning with the first entry following the opening entry, take the first debit item found in the General Ledger column, which is probably Expense $50, and looking down through all the items of the debit General Ledger column of the journal to see if there be any other items charged to Expense, add together mentally all such items, writing the result in red ink in the debit column on the same line with Expense or on the first vacant line of the trial balance copied from the General Ledger, if there be no item of Ex- pense in the copied balance. Passing down the debit column, your next item is probably a debit to a shipment, but whatever it may be, take the next item, and in the same way add to it all the other items debited or charged to the same account in the General Ledger column of the jour- nal and carry it into the copied balance in red ink as before. As there is no account entitled Shipment in the copied balance with which you started, write the present total on a new line (the first vacant line), using red ink as before. Continuing down the column you will probably find one or more items of Bills Receivable. Add these together and write them in red ink on the same line with the Bills Receivable item in the copied balance. You will also be likely to find in the debit journal column several items of Mdse. Discount. Add these together and write the result in red ink in the debit column of the trial balance, using a new line as there is no item of Mdse. Disct. in the balance which you copied. Continue in this manner until you have aggregated in CAMPBELL'S ACTUAL ACCOUNTING 175 the respective accounts and carried to the debit column of the trial balance, in red ink, all the items found in the debit General Ledger column including the footing of Accounts Payable car- ried into the column at the closing. (b) Proceed in the same manner with the credit General Ledger column of the journal, adding together all items that go to the same account and carrying them into the credit column of the trial balance previously copied, making sure that no title is repeated in the balance which you are constructing. Continue this to and including the footing of Accounts Receivable car- ried into the General Ledger column at closing, and when all items of these two columns have been thus carried into the trial balance in red ink, the red ink items added by themselves should balance. If they do not, it will help you to prove one side at a time to know that the sum of the red figures on either side of this balance added to the opening entry figures for the same side should give the journal sundries footing for that side. When they do, add together such items of the copied trial balance and of the red ink balance as appear together in the same line and on the same side, and extend all items into the second pair of columns on the trial balance paper as shown in the form illustrated in 72 (e). The addition of the two balances written into the first pair of columns and extended into the second pair should also balance and the footing of the new balance should be equal to the sum of the footings of the copied balance and the red ink balance which was made up from the journal. This last suggestion will aid you in deciding on which side the mistake has been made in case the balance does not immediately prove. (c) Take the cash book and proceeding down the General Ledger column on the debit side of the book, aggregate the items belonging to the respective accounts (if there be more than one item for the same account) and write the results in red ink on the credit side of the second pair of trial balance columns which you have just proved, each result on the same line with the name of its account or on a new line if it has no account. In aggregating these items omit any which show that they have been posted from the journal to the cash book as these are already aggregated in the balance taken from the journal. Include in this aggregation all other items from the general column including the Accounts Receivable and Mdse. Disct. amounts below the first addition lines. Add together the red ink items just entered on the credit side of the trial balance columns and write the result in black ink on the debit side in the line marked, Cash. (d) Take up the items in the General Ledger column on the credit side of the cash book and deal with them in the same way including also the Accounts Payable total and the Mdse. Disct. found below the first addition lines, and enter these in red ink on the debit side of the second pair of trial balance columns, the same pair of columns used in (c) above but on the opposite side. Add together these red ink debits and write the sum in black ink on the credit side of the balance in the line marked. Cash. To prove that you have copied, your cash book correctly into this constructed trial balance, add together the items appearing as the debit of cash (both red and black) and from the sum subtract the items appearing as the credit of cash, and the difference should give your present cash balance as it appears brought down in your cash book. When the amounts taken from the cash book to the trial balance in red ink prove this, add each red ink amount in the second pair of columns to the amount in black on the same line and extend the result horizontally into the third pair of columns, adding and balancing to prove that your work is correct. (e) From the Sales Book you will obtain two credits which you will write in red ink into the trial balance now appearing in the third pair of columns, namely, Merchandise, which you will write into the Merchandise line in the credit column and one or more items of a consign- ment sale which you will enter on the credit of the line marked Consignment No. 2. Add together these two credits, as they appear in your trial balance in red ink, and write the sum in red ink as a debit on the Accounts Receivable line in the same pair of columns. (f) Turn to the invoice book and take the one footing that appears in that book to the debit of Merchandise in red ink and to the credit of Accounts Payable also in red ink. As these 176 CAMPBELL'S ACTUAL ACCOUNTING last items exactly balance and have been taken to a trial balance previously proved, the result must balance. Add together as before the black and red amounts and extend all into a fourth pair of columns, adding to prove this work. When this fourth pair of columns balances you will have a key to the correct condition of your general ledger at the present time. Compare the previous instructions step by step with the work as illustrated in 72 (e). 13. To Prove the Customers' Ledger. Copy the balance of the Customers' Ledger as taken after posting your opening entry and, turning to your sales book, write into it all sales to customers, adding those belonging to the same accounts, and writing the amounts in red ink on the debit side of the copied balance. Prove the accuracy of this work by adding the red ink items. The result should equal the amounts posted to the debit side of the general ledger from the sales book footings. Write the sum in pencil at the foot of the credit column. Then turn to the cash book and from the customers' ledger columns on the debit side of the book, take the credits be- longing to these personal accounts, both the cash receipts and the discount, adding together all items of cash and discount belonging to the same person and writing the amounts into your copied balance in red ink in the credit column. Add these red ink credits. They should equal the total item of Accounts Receivable carried to the general ledger from the debit of the cash book. Write it in pencil at the foot of the debit column. See entry below first closing lines. Take from the Customers' Ledger column of the journal the journal credits in the same manner as above, then write it also in pencil at the foot of the debit column. The red ink results added to the former balance and extended as in the work done in finding the general trial balance above, will be a key to the customers' ledger and the penciled total taken with the former balance of per- sonal accounts will give the balance of Accounts Receivable in the general ledger. 14. To Prove the Creditors' Ledger. Copy the balance taken after posting your opening entry, and write into it in red ink on the credit side the amounts of invoices bought as shown by your invoice book, following the plan given for abstracting the sales book items in 13 above. Prove by adding the red ink items just copied. The amount should equal the credit, posted to Accounts Payable from the footing of the invoice book. Write it in pencil at the foot of the debit column. Then turn to the cash book and from the columns marked Creditors' Ledger take both the cash payments and the discounts charged to creditors and write them into the copied balance on the debit side in red ink. Prove by adding these red ink items. They should equal the total amount posted to the debit of Accounts Payable from the General Ledger column on the credit side of the cash book. Write it in pencil at the foot of the credit column. See entry below first addition line. Next take the debit items from Accounts Payable column of the journal in the same manner. This completes the construction of a key to the balance of your ledgers by which you can discover your errors and compel the balance of your ledger as in 72 (e), and when you have learned to work it, it is quicker and easier than the copying method set forth in 72 (a), (b) and (c). 15. Your ledgers being now in balance, place orders with the Riverdale Fruit Co., and the Spur Coffee Co. for merchandise and in your correspondence remember that this will be your first order from the latter company, but that Mr. Wemple is well acquainted with the firm. Your letter should read somewhat as follows : "Gentlemen : — Your former customer, E. H. Wemple and (your own name), have formed a co-partnership and are pleased to state that the new firm will hereafter be known as (your name) & Wemple. We are enclosing herewith an order for merchan- dise on 60 days, subject to your usual discounts and trust that you will accord us the very satisfactory treatment that Mr. Wemple has alv/ays had at your hands, etc." In writing to the Riverdale Fruit Co., remember that you are the member of the firm who is known to them in a business way. This will reverse the style of the letter. Secure your customers' orders for next day's trading, including one of E. H. Wemple's former customers among this day's buyers, (his purchase to be delivered to your teacher) CAMPBELL'S ACTUAL ACCOUNTING 177 then submit your books for teacher's inspection arranged in the usual form, with the usual duplicate copy of the daily report neatly copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total...;.... No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills Receivable, Ledger Balance Total uncollected in bill book Total value of notes in the safe . Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance. , . In bank, Stb. No.. In safe, Currency In safe, Checks, .. Total Cash on hand. Respectfully submitted, TEACHER'S .191.... STAMP 137. I. Write a letter to the Van Camp Hardware Co. at College Center, Y. S., stating that you have been for some years engaged in the grocery business at College City, during which time you have had many inquiries for the common articles of domestic and farm hardware, and that while you cannot consider putting capital into a side line of goods at present, you would be glad to handle a small stock of their goods as a branch of their business, with only such expense to them for house rent as would represent the proportion of your floor or shelf room occupied, and a similar arrangement as to clerk hire as the business develops. State that you would be willing for the first year to undertake to manage and develop the business for the salary of one clerk, or $100. Name a number of the business houses in College Center with whom you have been doing business as references. 2. Fill orders approved by your teacher at last closing, accompanying one bill with a draft at 30 days for acceptance and one with a note payable "on demand." In writing out the draft and note remember to deduct the i per cent, from the face of the bills. Make entry in sales book as in previous work. 3. Enter all invoices received since last closing, by pasting them into your invoice book (after checking carefully) and extend the amounts into the Merchandise column directly opposite the name of the seller so that in posting you will not need to lift the loose part of the bill to see to what bill the figures belong. Note. Observe that while working this outline you can conveniently enter invoices at any time, just when they are received, or while closing your books after the invoice book has been ruled, provided only that you check carefully the items, extensions and other computations. 4. Pay for invoices received as follows : (a) Sign notes or accept drafts when they accompany the invoices. (b) Pay for one or two bills by drafts at 30 days on some of your customers who are in- debted to you ; and for one or two bills by sight drafts on persons who owe you. Observe that in 178 CAMPBELL'S ACTUAL ACCOUNTING the case of a thirty-day draft your merchandise discount is i per cent, and in the case of a sight draft, 2 per cent., — the latter being equivalent to cash to your creditor; and that the entry on your own books is the same in either case. Make entry for all of the above payments, both (a) and (b), in your journal. For one or two remaining invoices pay cash less 2 per cent, (if you are entitled to a discount) and make entry on the credit side of your cash book in the Cash Payment and Discount columns as in former work. 5. Make entry for payments received. (a) In entering payments on account of bills sold, make entry for notes or acceptances received, in your journal as instructed in previous work, and for cash received, on the debit side of your cash book in the Cash Receipts and Discount columns. (b) In entering payments received for notes or acceptances, enter in cash book. General Ledger column, debit side, using one line for the face of the note or acceptance paid and one line for the amount of interest. 6 Pay all acceptances or notes which you owe that have matured ; making entry as in 4 (b) except that it will be on the credit side of your cash book. 7. Make a shipment of merchandise to some student to be sold on commission, and secure a consignment of goods from this student or some other, to be sold by you on commission. Make entry in both cases as instructed in 136, 2 and 3. 8. Remit to your wholesale houses for invoices last received, taking advantage of the cash discount ; and place new orders for merchandise with F. W. Stone & Company, Spurr Coffee Company, and the Harmer Produce Company. Be careful not to make your aggregate orders larger than you will be able to pay for. Remember in writing your letters that Mr, Wemple has been dealing formerly with F. W. Stone & Co., and write a letter similar to the one written to the Spurr Coffee Co. 9. Take from your business blanks a form of warranty deed and fill it out neatly with pen or typewriting similar to the form presented in 138. Fill in everything that appears typewritten in 138 (including the notary's certificate) except the signatures. In doing this, you are performing the work of a real estate clerk, and preparing papers for signing. Observe that you are being required to make out these deeds not because it is your business as purchaser to prepare the deeds, for that usually is considered the business of the seller and is done at his expense; but you are required to do this work as a practice, that you may have, in turn, the preparation of each and every form of deed required in the course of study. Observe that the Townsite and Trading Co. is the party of the first part. Fill out the form carefully, asking your teacher or the manager of the Real Estate Office to assign you a suitable residence lot. Observe that both the number of the lot and number of the block enters into the description in the form of deed presented in 138 for your guidance. This residence lot will cost you $500. If you have any money outside of the business, as for example the check withdrawn as instructed in 123, 6, use that to pay on your lot, and draw the firm's check in your favor for whatever balance you need, or for the whole $500 if you have no money of your own. Endorse this check payable to the Townsite and Trading Co., and deliver it to your teacher or the manager of the Real Estate Office who will at this time have the deed signed and the notary's acknowledgment completed. Make entry charging yourself personally and crediting cash in the cash book, credit side, general ledger column. Explain With- drazvn for private investment. It is not necessary to report on the books what you did with this money, as it is not the business of the firm, but a private matter. 10. (a) Take from your business blanks a second warranty deed. This time your firm has decided to purchase a business lot with a view to erecting its own building. Negotiate with your teacher or the manager of the Townsite Co. for a suitable business lot which will cost you $1,000. In making out this deed, observe that the Townsite and Trading Co, is again the party of the first part, but that your firm is the party of the second part. Observe further that a part- CAMPBELL'S ACTUAL ACCOUNTING 179 nership can not buy and sell real estate in its firm name, but that the deed must be made out either to one of the partners in trust for the firm, or to the individual partners jointly, or, in case their interests are not equal, separate deeds may be executed, one to each partner, for an un- divided interest in the real estate equal to his interest in the firm. Since you and your partner are equal partners by your contract, this property may be deeded to you jointly which will give each of you an undivided one-half interest. Note this feature in the form of deed given you in 139 and follow it in the preparation of the deed between the Townsite and Trading Co. and your firm at the present time. When the deed is completed, you will write out the firm's check for $200 as a part payment and will draw up and sign a joint and several note in favor of the grantors, due six months after date, for the remaining $800. This note should be signed in- dividually by each member of the firm. Your teacher will sign for E. H. Wemple. (b) In buying real estate when it is not fully paid in cash, it is customary to give a mort- gage to secure the amount of the note or deferred payment. Take from your business blanks a real estate mortgage form and fill it out similar to the form presented in 140. Observe that in this form you and your partner become the parties of the first part and the Townsite and Trading Co. the second party, and that the mortgage is not to be signed by the Townsite Co. as was the deed, but is to be signed by the individual members of your firm. Note that the mortgage requires the same acknowledgment by the notary as a deed. When your deed and mortgage are properly made out, signed, witnessed by two other persons, acknowledged by the notary public, and approved by your teacher, you will turn over the check for $200, the note for $800 and the mortgage that secures the note, to the Townsite and Trading Co., taking possession of the deed, now the property of the firm, folding it as you did your partnership contract in 108, 2, and filing it in Compartment i of your filing case. Make entry debiting Real Estate, and credit^ ing cash for $200 and Mortgages Payable for $800. Explain, Invested in real estate, buying lot No, in block No. .Observe that this new account, "Mortgages Payable" is the same in effect as Bills Payable, but that the debt being secured by mortgage is of a more permanent nature than notes given in business and paid in 30, 60 or 90 days and may properly be given a separate account. 11. Detach from Prepared Blanks, forms 80 and 81 (a) and (b). Observe that they con- sist of a letter from Van Camp Hardware Company accepting the proposition you made in 137, I, and handing you duplicate copies of the Branch House contract for your signature. Supply your name and the present date in both copies of the contract and sign both, having some student witness your signature on both contracts. File one of these signed copies in your file for Receipts and Papers and reply to the letter of the Van Camp Company, enclosing the other signed copy of the contract and suggesting any articles in the hardware line which you think you might handle to advantage and which are not included in the list mentioned in their letter. Hand this letter with the enclosures to your teacher when you submit youi books for marking, 12. (a) Prove and rule cash as instructed in 136, 7. (b) Make bank deposit. (c) Post carefully from all your books to your ledgers, following instructions given for each in 136, 7 (e), 8, 9 and 10. (d) Prove Bills Receivable and Payable. (e) Take a trial balance proving all three of your ledgers. See instructions under 136, 11, 12. 13. Secure customers' orders for next day's trading, disposing of consignment received in 7 above to some one of your customers, and submit these orders with your books properly arranged for your teacher's inspection, making the usual duplicate copy of the daily report and neatly copying it into the form on page 183. i8o CAMPBELL'S ACTUAL ACCOUNTING 138 GENERAL WARKANTY DEED Cbi$ lndCNlNPC» ^^^^ <"> ^^^ 15th day of April a. D. one Tbousand Nine Hundred and by and between The TOWXlslte and Trad- ing Company of College 01 ty lu the county of Urown state of y s., a corporation organized and doing business under the laws of the State of Y. S., part y of the First Part, and C. W. Burke of College City in the County of Urovn and State of Y. S.. party of the Second Part: mitlt^$$Clb that the said part y of the First Part. In consideration of the mm of Five Hundred 00/100 (600) Dollars, to it paid by the said party of the Second Part, the receipt of which is hereby acltnowledged, does ^V these presents Grant. Bargain and Sell. Convey and Confirm, unto the said part y of the Second Part, hi S heirs and assigns, the following described Lots, Tracts or Parcels of land, lying, being or situate in the County of UrOwn and State of Y. S., to-wit: Lot numbered (17) seventeen in block numbered (123) one hundred twenty three in Rankin's Addition to the city of College City, the plat of which is on file in the office of the Register of Deeds of Urovrn County» Y. S. Co fidVC Jind to fiOld the premises aforesaid with ail and singular, the rights, prlvUegea, appur- tenances and Immunities thereto belonging, or In any wise appertaining unto the said part y of the Second Part, and unto hls heirs, and assigns, forever; the said TOwnslte and Trading Company hereby covenanting that It Is lawfully seized of an indefeasible Estate in feo in the premises herein conveyed, that It ha s good right to convey the same; t^at the said premises are free and clear of any Incumbrances done or suffered by It Self or those under whom it claims and that It will WARRANT AND DEFEND the title to the said t)remises unto the said part y of the Second Part, and unto hls heirs and assigns FOREVER, against the lawful claims and demands of all persons, whomsoever, IN WITNESS WHEREOF, the said part y of the First Part ha s hereunto set Its seal and caused these presents to be signed by Its president and secretary the day and year first above written. Sealed and Deiiuertd fn PreseniM 0/ \ THiC T0WN8ITE AND TAAOINO OOXPANT. ^ ^.t;^^Jl>^ Seanr/iiir STATE OF Y. County of Uxown | On this fifteenth day oi April 191 before me personally appeared Byron F. Burg , the president, and 0. D Burns, the secretary, of the Townsite and Trading Company, a corporation, to me known to be the persons described in the foregoing instrument and duly authorized under by laws of the said company to execute the same for said company, and who executed the foregoing instrument, and acknowl- edged that they executed the same as the free act ana deed of said company. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal at my office In College City the day and year first above written. i J Uy^A^^-^ J\%-^ i^ My term as Notary Public expires August 31 Notary Public. 191 CAMPBELL'S ACTUAL ACCOUNTING . i8i 139 GENERAL WARRANTY DEED CbiS Indenture, "^^^^ °° ^^^ iStll day or April a. D. one Thouand Nine Hundred and by and between The TOWXlfll'te and Trad- ing Company of College City in the county of Uro-wn state of y.s. a corporation organized and doing business under the laws of the State of Y. S., part y of the First Part, and C- W Burke and C. A. Foley, copartners doing business under the firm name of C W. Burke & Company in the County of Urown a°^A ^^-^ J]^ , k=^ Notary Public, My term as Notary Public expire* AugUSt 31 191 •• 1 82 CAMPBELL'S ACTUAL ACCOUNTING £40. MdKvrxi ^<^jEi? iwHitoiie^^rlk'^ C. W. Bnrke and C. A. yoley, Cfrpartn e ra doing buaJTiflim nwdrn* i-hm firm nmn» at C. W. Burke A Co. In nnllflgfl fiity , ^ Orown - ^CYJ/n//^/a^^C^yJc^fj^_ Yonr 3tat< I m II IIIIIIIT M ) V IVXOKTCiAG K.> •^:AK K AJX T •^/ ^ Thft Coll ft gw City Townsite Conpany^ a corporation orpranlzed and doing bnBln««« nndar the law pf tha Stata nf Yottr Stata /€p^- Diu»a Bight Hnndrod (8Q0) Y^^^j;^^<^^f the To aeoiira paymant to the eald College City f o wnaite Comjoany a of Eight Hundred (860) Pollare^ according to the terms a nd eondltlnna nf nne oartaln prnwiw wnyy nnta, In wnrdw and flgiiraw as f ol« 1.0W,^. to-Wlt; _ . -fliX- College City, Y, S., April 15, 191_, >ntha aftwT data «a Jnintly protnlae tn pay tn the nrdar nf The College City ?oi>neAte Company t eoo«oo Dollars Eight Hundred Oo/lOO at their nff tea i n College Cit y, Y. S.. nj th in terest at eight par cent pftr mnnTiiBt Valne re?>ei^e»»1ng ayanutad by aald C> y. Burke and C. A.POley. aa 00- p a rt n er a* ■ Ani the mortgagors expressly agree to pay the sum of money above secured, without relief from valuation laws, and upon failure to pay any one of the notes, at maturity, or any installment of interest when due, then all of said notes and the whole of said debt, are to be due and collectible, and this mortgage may be foreclosed accordingly. And it is farther expressly agreed, that until all of said notes are paid said mortgagors will keep all legal taxes and charges and assessments against said premises paid as the same become due, awrf will keep the building t - thereon in s ured for the b enefit of the mortgagee^ as hie interests may app«av ^ and failing to do so, said mortgagee may pay said taxes and assessments and keep the buildinge on sa id proporty * HHred , and the amount so paid, with eight per cent, interest thereon, shall be a part of his debt secured by this mortgage. 4ay/y^.A— im//:J^^^:3. //L^ fifteenth ,.€/€/j^ /j^- Apr Ll_ ^-9 CAMPBELL'S ACTUAL ACCOUNTING 183 REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; TotaL No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills Heceivable, Ledger Balance Total uncollected in bill book Total value of notes in the safe . Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No,. In safe, Currency In safe, Checks, _ Total Cash on hand. TEACHER'S Respectfuily submitted, .191. STAMP 141. I. Fill orders approved by your teacher and make entry in your sales book, observing that the sale of consignment goods (see 137, 13) will be extended into the Sundries or central column. 2. Enter in invoice book all invoices received since last closing that are unentered. 3. Accept drafts or sign notes that have come to you w'\i\\ invoices received, but let all other invoices received from students remain on account for future settlement. 4. Make entry for payments received and pay all bills payable that are due, following in- structions in 137, 4 and 5. 5. Select some one of your customers who owes you, w^hom we will suppose to be a car- penter, and supposing that you have employed him to re-arrange the shelving in your store, give him a receipt on account for $25.00 for the work done, and make entry in your four-column journal crediting the student in the Customers' Ledger column the same as if he had paid you money. What account do you debit? If you cannot decide consult your teacher. 6. Make a shipment of merchandise to some student to be sold for you on commission and secure a consignment to be sold by you in the same way. Make entry as per instructions in i37» 5- Observe that the only entry made at the time of receiving a consignment is for the cash paid for freight and is made directly in the cash book, General Ledger column. 7. Sell a bill of merchandise to your partner charging the goods at cost to his private account, opened on page 3 of your general ledger, and make entry in your four-column journal crediting merchandise in the General Ledger column in order that it may not appear regularly among your sales, the partners of the firm, and usually the employes, being allowed their goods at cost. When you post these items of merchandise to the ledger, make an explanatory note in the wide column, Sold to partner, as you will need to take a special note of this item when making your proof. 8. Draw a check in your own favor for $100 in cash and either have it certified^ at the bank or exchange it for a certificate of deposit. Make entry for this transaction in your cash book on the 1. Banks do not. in some localities, make a general practice of certifying checks, preferring to cancel t>i° check and to issue their own certificate of deposit for the amount. i84 CAMPBELL'S ACTUAL ACCOUNTING credit side in the general ledger column, charging to your own private account, also opened on page 3 of the ledger, as a half page each for private accounts for yourself and partner will be sufficient. These accounts in the case of retail dealers might easily be as extended as any cus- tomer's account, but we will use them merely for illustrative purposes in the closing of the books. 10. Remit to wholesale companies in full for invoices purchased, taking advantage of the discounts, and place orders for new goods with any of the companies with which you have been dealing. In your letters intimate that you have recently received some very interesting quotations from some other houses in their line and that it will be necessary that they quote their very best prices if they hold your trade. 11. (a) Prove and rule cash (b) Make bank deposit. (c) Post all entries to your ledgers. (d) Prove Bills Receivable and Payable. (e) Secure customers' orders for next day's trading, disposing at this time of goods re- ceived on consignment but mixing consignment goods and some of your own merchandise in each of two sales. 12. Prove Merchandise, following previous instructions and being careful to carry goods sold at cost in a separate department column as instructed in io6, 30 (b), or you might add to the amount of the selling discount deducted on line 8 of your expert report the extra discount allowed on the sale to your partner; but the plan in 106, 30 is the better. Follow the same plan as to shipments that have been made, as these have been charged out also at cost. If you have returned merchandise to some one, treat it in the same manner. If it has been returned to you, it will perhaps be easiest to deduct the amount from both debit and credit of Merchandise ; otherwise it will make a distinct class as it comes back to you at a 3% discount which figures as its cost price in this proof. 13 (a) Make entry as instructed by your teacher for the correction of all errors discovered. (b) Make entries charging each partner with interest on his withdrawals and crediting him with interest on his investment as per contract. (c) Post these additional entries and take a trial balance. (d) Make out a balance sheet as in 114 adjusting the loss or gain on each partner's private account and close your books. (e) Draw the firm's check in favor of each partner for the amount of his gain at this time or if either partner's private account shows a loss, require him to give the firm a note for the deficit that the amount of his investment may not be impaired. If Mr. Wemple should need to give a note, your teacher will act for him in signing it. You will make entry for these notes or cash payments the first thing in your next day's work. Submit your books to your teacher with all papers reserved for his inspection and a duplicate copy of your full report carefully filled out and neatly copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. cf Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. CAMPBELL'S ACTUAL ACCOUNTING 185 NOTES CASH Jiills JReceivable, Ledger Balance Ledger Balance Tn bank, Rtb. Nn. , In safe, Currency In safe, ChenkH, Bills Payable, Ledger Balance Total unpaid ia bill book Total Cash on hand MERCHANDISE Cost of Mdse. bought Present inventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Department A Goods Depnrtment E Goods TEACHER'S MARKING Accuracy . . . Neatness . . . Orderliness. Records Progress. . . . Average. . . . TEACHER S Respectfully submitted, .191.. STAMP 142. I. Detach from your prepared blanks, Forms 82, 83, 84, and 85. Observe that 82 is an invoice of hardware from the Van Camp Hardware Company ; that 83 is the freight bill of the R. R. Co. ; that 84 consists of tickets representing the goods ; and that 85 is your confidential price list. (a) Open in your general ledger on page 35 an account with Van Camp Hardware Company, Parent House, and index it as other accounts. (b) Make entry for the invoice by pasting it into your invoice book among other invoices, but in extending it into the money column note that it must not be. extended with the other invoices. Set apart the left hand money column for this class of goods alone and mark it Branch House Merchandise or Hardware (as you have no Hardware of your own) marking the other column General Merchandise. These columns will be used in this manner while working the remainder of this outline. (c) Pay the freight bill and charge it to a special Freight accoimt which you may open on page 36 of your ledger and designate as Branch House Freight. (d) Place the tickets representing the hardware in a separate merchandise envelope which you will designate as Department B. (e) File your catalog and price list with Receipts and Papers for reference. (f) Rearrange the pages of your sales book so that you will have 4-column pages instead of 3-column, while working the remainder of the outline and mark these columns, Items, Sundries, Special Branch House and Merchandise. Any unused 3-C0I. pages can be transferred to the back of the loose-leaf sales book. 2. Fill orders approved by your teacher and make entry in your sales book, observing that the sales of consignment goods on orders secured as in 141, 11 (e), include some of your merchan- dise in addition to the consignment stock. In billing these orders and in entering them in your sales book, discount the consignment goods and your own merchandise separately, so that the net amount of consignment sales in each bill may be extended into the sundries column and the net amount of merchandise into the merchandise column. A form for this bill which will also serve to suggest the form for the sales book entry is presented on the page following. 1 86 CAMPBELL'S ACTUAL ACCOUNTING (a) *LL CLAIMS FOR SHORTAGE OR DAMAGE MUST BE MADE WITHIN TWO DAYS FROM RECEIPT OF SHIPMENT REFER TO ORDER NUMBER Cf)ester W. ilurfee JOBBER IN GROCERIES AND GROCER S SUNDRIES COLLEGE CITY. Y. S. z^ ^ SALESMAN J^7<^ /" . ' SOLD TO ^, ^/V^2Z-±*< z>^ '^^^iir^ ^jr£>itf^,a^ ^^^/::;^S4l^.9y. A^ £^ ^^^^A^^ Observe that while you have heretofore taken one uniform trade discount off the total of all bills sold, this plan has been followed to prevent your work's becoming too intricate for your skill, and that in business you will be liable to have a different rate of trade discount on each separate item of the bill. In your sales book entry, the first extension in the form above which represents consignment goods would be extended into the Sundries column and the second, repre- senting your own merchandise, into the Merchandise column. Sell Dep't E goods to T. & T. Co, Only those included in proof should be sold if student wishes to keep his work as easy as possible. Selling unproved goods may makd errors harder to find and corrections more difficult but will give better practice. 3. Enter in invoice book all invoices received since last closing that are unentered. 4. Make payments by notes, acceptances (if drafts accompany any bills), or drafts on firms that owe you, for all invoices received ; and make payment in cash for all time paper (notes or acceptances) matured. See 136, 5 (a) and 119, 8. 5. Make entry for payments received as instructed in 136, 6. 6. Make a shipment of merchandise to some student to be sold on commission and secure a consignment of goods from this student or some other to be sold by you on commission. Make entry as instructed in 136, 2 and 3. 7. Render account sales of all consignments that have been sold out and if any goods of any consignments received prior to this day's work remain unsold, make a special sale of them to one of your customers on regular terms. 8. Select some one of your customers who is in debt to you and give him a receipt for $10 on account, explaining that it is a rebate allowed him on account of his liberal patronage. Charge this rebate to Merchandise Discount in your journal. What account do you credit? 9. Exchange your residence lot for a business lot adjoining the one recently purchased by the firm and give your personal note secured by mortgage for the difference in valuation. Your residence lot cost $500, your busines lot is valued at $1,000. Observe that two deeds and a mort- gage must be made out to properly complete this transaction. (a) Take a warranty deed form from your business blanks and fill it out making yourself the party of the first part and the Townsite and Trading Co, the party of the second part, and transferring by exactly the same description the property deeded to you as a residence lot. The only essential difference in form between this deed and the one illustrated in 138, lies in the CAMPBELL'S ACTUAL ACCOUNTING 187 reversing of the parties, the signature, and the notary's certificate, in which respect this deed will more resemble the mortgage form presented in 140. There will, however, be only one signer in- stead of two. (b) When you have prepared, signed with witnesses, and acknowledged before a notary public the above described deed to the Townsite and Trading Co., proceed to prepare a deed in which the Townsite and Trading Co. will be the party of the first part and you, personally, the party of the second part and which will transfer to you a business lot in the same block and adjoin- ing the lot purchased some time ago by your firm. The form of this deed follows the form pre- sented in 138, exactly except as to description of property and amount of money. Prepare it carefully, ready for the company's and notary's signatures. (c) Draw up your note in favor of the Townsite and Trading Co. for $500 and proceed to fill out a mortgage taken from your business blanks making yourself the party of the first part, and the Townsite and Trading Co. the party of the second part, and describing in it the business lot for which you have just traded, that is, the description in the mortgage must be the same as in the company's deed to you. In all other respects this mortgage will be very similar to the form presented in 140, the only difference being your individual signature instead of the signatures of yourself and partner. (d) Observe that as this is an individual transaction, entirely outside of the firm's business, it has no place on the firm's books and there will be no entry. 10. Buy from some one in the room, a note against one of your creditors. Make entry in your cash book charging Bills Receivable and make a record of the note in your bill book. If you can obtain this note for less than its face value, do so; but in that case be careful in making your entry not to place the amount of discount in the Mdse. Disct. column. This belongs to Interest & Discount, and you will be less liable to error if you make the entry in your journal, and post the cash immediately to the cash book. Another form for making this entry would be to enter the face of the note on the credit side of the cash book and the amount of discount on the debit side, both items appearing in the General Ledger column; but the journal entry is the better in this set of books. 11. When you have secured and entered this note as above, transfer it to the maker as a payment on your account paying or receiving the difference in cash. Note in your bill book in the How Paid column what you have done with this note and make entry for the transaction in your journal, posting cash (if there be any in the entry) immediately to your cash book. If this note be interest-bearing, credit Interest & Discount for the interest. 12. Remit to wholesale houses in full for invoices last received, taking advantage of the dis- counts, and place orders with the H. W. Spurr Coffee Co. for coffee and with F. W. Stone & Co. for tea, using your own judgment as to quantities. Write neat business letters stating the amount of your remittance and the discount to which you are entitled and mentioning the new order which you enclose. 13. Detach from your Prepared Blanks forms 86, 87, and 88, second invoices of hardware from your Parent House with the freight bill and goods. Make entry as instructed for forms 82, 83 and 84 in 142, i. 14. (a) Prove and rule cash. (b) Make bank deposit. (c) Post all entries. In posting from your invoice book, you will have one additional column representing hardware or branch house merchandise received. Post the total footing of this column to an account in your ledger which you may open in the middle of page 36 and will style Hardware, Branch House Goods. (d) Prove Bills Receivable and Payable. (e) Take an abstract of the personal ledgers and when the sub-ledgers balance, rule and balance the Accounts Receivable and Payable accounts. (f) Take trial balance of general ledger. i88 CAMPBELL'S ACTUAL ACCOUNTING 15. Secure orders for next day's trading, including C. Connick, one of E. H. Wemple's former customers, among your buyers. In filing these orders dispose of all consignment goods that you have on hand and of as much hardware as possible. In making sales of consignment goods, mix these with your own merchandise in each order as in the sale illustrated in 142, 2 (a). In making sales of hardware (branch house goods) observe that your price list quotes a trade discount of 162/3% from catalog prices instead of the usual 3% customary in the school- room. In making out customers' orders for these branch house goods you will discount and extend goods of this class by themselves as in the two items of consignment goods included in the form in 142, 2 (a). Observe, however, that in making sales of hardware to students who are not as far along in their work as you are, you will allow them only the 3% discount and will extend the amount of the hardware into the Sundries column as you have been doing in the sales of con- signment goods. But in the case of students who are up with you or ahead of you in their school work, you will allow the full 162/3% trade discount quoted in your confidential price list, dis- counting hardware items separately and extending the net amount into the Special Hardware column added to your sales book in the interest of this business. Secure 8 or 10 orders ready for your teacher's approval and then submit these orders with your books properly arranged for in- spection and with a duplicate copy of your daily report copied neatly in the form following. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent. Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES £ills Receivable, Ledger Balance , Total uncollected in bill book Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. TEACHER'S Respectfully submitted, .191..., STAMP 143. I. Fill orders approved by your teacher and enter In your sales book. In billing remember to discount consignment goods and branch house goods separately, and in entering remember to extend the net amounts of consignment sales into the Sundries column and the net amount of branch house sales on which you have allowed 162-3% trade discount into the Special Branch House column, extending branch house sales at 3% discount into the Sundries column. In the case of sales of hardware, send out with one half of the bills a draft at 30 days for the buyer's acceptance, and with each of the remaining invoices that include hardware a joint and several note at 30 days for the buyer's signature. See form of note sent out by Mr. Burke in 55 (c). 2. Check and enter all invoices received. CAMPBELL'S ACTUAL ACCOUNTING 189 3. Make payment for invoices as you see fit except when otherwise specified by your cred- itors. 4. Make entry for all payments received whether for notes and acceptances or for accounts, noting carefully this difference in entry, that payments of accounts are extended into the Cus- tomers' Ledger columns and payments of notes or acceptances into the General Ledger column. 5. Make payment for all of your own notes or acceptances that have matured. Enter in cash book, General Ledger column. 6. Make a shipment of merchandise to some student to be sold on commission and draw on him at sight for about one half of the cost value of the shipment. Review information given you on the subject of shipments and consignments in 106 if necessary. Observe that in making this shipment you will deliver to the consignor the shipping invoice only, that the R. R. shipping order will go with the goods to the freight office and that the original^ bill of lading will be trans- ferred to the bank as security for the payment of the draft which you draw. Take your pass book with you to the bank, that the banker may give you credit for the amount of the draft less what- ever interest charge he may make for the time necessary for collecting, and make a corresponding record in your check book. 7. Secure from some student a consignment of merchandise to be sold on commission and if no consignor has as yet drawn a draft on a consignment in your hands, ask your consignor at this time to draw on his shipment for about half of its value. 8. Render account sales of all consignments closed out and make entry according to previous instructions. 9. Sell to the Townsite and Trading Co., for cash less 2^ per cent., all goods in your Depart- ment E envelope. This transaction might be made directly in the cash book but it is more convenient for proof purposes and correct from the standpoint of a history of business done to have your account with the T. & T. Co. show all transactions. (See 83, b). Enter the sale in the sales book and the payment in the cash book. Use Voucher Check as usual. 10. Remit to wholesale houses for invoices last received and place a new order with each and an additional order with the Harmer Produce Company for a large quantity of apples, 25 boxes of oranges, 200 sacks barley, and such other goods offered in their price list as you see fit to order. Write an original letter and secure your teacher's criticisms when you present it for his approval. 11. Detach from your Prepared Blanks forms 89, 90 and 91, making entry, paying freight and putting away goods as in the case of former invoices received from your parent house. 12. Detach from your Prepared Blanks forms 92 and 93. Observe that 92 is a legal notice from the trustee of the Fruitland Grocery Co., one of Mr. Wemple's customers who has become insolvent, notifying you to submit an itemized sworn statement of your account against this company. And that 93 is such a statement already made out in the name of the firm and sworn to by E. H. Wemple, the member of the firm who knows the most about it. File form 92 in your letter file and place 93 in your file of papers to be delivered to your teacher when you present your books for marking. 13. (a) Prove and rule cash. (b) Make bank deposit. (c) Post all entries. For Invoice Book see instruction for previous posting. In posting from the sales book, you will have the footing of the Special Branch House column which you will post to the credit of the Hardware account on page 36, and you may also have a number of hardware items (sold at 3% discount) in your Sundries column which you will post to the Hardware account on page 36 separately. (d) Prove Bills Receivable and Payable. (e) Take abstract of personal ledgers and when these prove, rule Accounts Receivable and Accounts Payable. (f) Take trial balance of general ledger. 1. Use special form, Order Bill of Lading to accompany a draft. See Form 54, in 106, 14, (b). 190 CAMPBELL'S ACTUAL ACCOUNTING 14, Secure orders for your next day's trading, disposing as usual of all consignment goods and making extensive sales of hardware and of your own merchandise but do not sell out your entire stock in any department and be careful to reserve 40 sacks barley and all the oranges for later instructions. Secure 8 or 10 orders and submit them to your teacher for approval with your books properly arranged for inspection and the usual duplicate of the daily report copied neatly into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total.... No. of Invoices bo't of wholesale houses Of students... No. of Payments made in cash ; in notes ; in No. of Payments rec'd in cash ; in notes ; in No. of Letters written.. , Total acceptances , ; Total. acceptances ; Total. No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES 1 CASH JBills Heceivctble, Ledger Balance Ledger Balance Tn hnnk, Rt.h. Nn. , , , In safe, Currency . Total value of notes in the safe .... Tn nafe, Cheoks, Bills Payable, Ledger Balance Total unpaid in bill book . Total Cash on hand TEACHER'S Respectfully submitted, 191 ... . STAMP 144. I. Fill orders approved by your teacher at last closing and make entries carefully, fol- lowing instructions given in 143, i. Deliver the goods and invoice of the sale made to C. Connick into the envelope of papers that will go to your teacher with your books at the end of this day's work. 2. (a) Render account sales of all consignments on hand and sold out. If any are not sold out at this time, make extra sales until you dispose of them and then render account sales and remit by check to the consignors. (b) Make a shipment of oranges to U. R. Teacher & Co., College Center, sending not less than ten nor more than twenty boxes of the oranges bought from the Harmer Produce Company. Render shipping invoice and make out bills of lading in due form. Deliver Invoice and B/L by placing in the envelope of papers to be delivered to your teacher when your books are sub- mitted. 3. Deliver one card each of oranges and barley (reserved by instructions in making up customers' orders in 143, 14) to your teacher, telling him that the oranges are to be put in your cellar for personal use and the barley to be taken to the stable for the firm's delivery horse ; and state what entry you have decided to make for the transaction. 4. Sell the business property for which you traded in 142, 9, to the firm for $1,050; they to assume the note and mortgage for $500 which stands against the property and to pay you cash for the difference less the accrued interest. Compute the interest on the $500 note from its date to the present date and deduct the amount from $1,050. Draw the firm's check in your own favor and place it with your personal papers. This real estate and the note given for it, now CAMPBELL'S ACTUAL ACCOUNTING 191 appear on the firm's books for the first time. Make entry in the journal charging Real Estate $1,050, crediting Mortgages Payable for the assumed note of $500, crediting Interest & Discount for the interest accrued on the note to date, and crediting Cash for the amount of the check to you. Post cash immediately to the cash book, General Ledger column. Make a record of the note in your bill book. Execute a deed from yourself to your partner for an undivided one-half interest in "Lot , Block of the original plat, etc." following out the description in the deed which you hold. In all other respects this deed will be similar to the deed which you executed in favor of the Townsite Co. in 142, 9 (a). Observe that by deeding directly to your partner an undivided one-half interest in the property and retaining an undivided one-half interest yourself, the title to this lot stands exactly as the title to the lot which the Townsite Co. deeded to yourself and partner jointly. It would seem superfluous for you to deed jointly to yourself and partner in this case. Hence the plan of transfer followed above. 5. (a) Detach from your Prepared Blanks Form 94. Observe that it consists of the legal notice from the trustee of bankruptcy in the matter of the Fruitland Grocery Company, informing you that you will receive in settlement of your claim against that company 60% of the $88.50 owed you by the company and that the same will be delivered to you in person or to your order on return of the letter attached to the bottom of the form. Detach this creditor's letter to trustee filling! in the only remaining blank with the words, to me by mail, and sign the firm name as creditor. Place the creditor's letter with papers to be handed to your teacher when books are examined. (b) Detach from your Prepared Blanks Form 95, which you will observe is the trustee's warrant for $53.10 or 60% of the debt. Make entry in the cash book for the cash received, credit- ing the Fruitland Grocery Co. exactly as you would credit any other customer, explaining, 60% of account in full settlement. You will observe that 40% of this account is lost, but since the account is one that Mr. Wemple brought into the firm as a part of his assets and for which he received credit at the time as a part of his investment, this loss will be charged to him personally. Turn to your four-column journal and make entry charging E. H. Wemple in the Sundries column and crediting Fruitland Grocery Company in the Customers' Ledger column for the amount of the loss. Explain, E. H. Wemple is charged for loss on account of Fruitland Grocery Company's insolvency which was a part of his investment as partner. Take up Form 94, the trustee's check for 60% of account, and observe that it is a special form of voucher check with a special receipt attached. Write your name on the face of the check following the words "pay to the order of." Ob- serve that this unnatural writing of your name in papers payable to you is often unavoidable when using prepared vouchers for illustrative purposes. Were this an actual business transaction, your name would have been written in the check by Mr. Archer. Insert the date also in both check and receipt. Antedate it two days to allow for time in transit and sign the receipt without detaching it from the check. Then fold along the dotted line so that the face of the check will be exposed and place in your cash drawer ready for deposit in your bank with other cash items. 6 (a) Endorse and remit to the Van Camp Hardware Company, your parent house, all the notes and acceptances received for sales of hardware and make entry charging the Van Camp Parent House account. (b) Collect all matured notes or acceptances and pay all that you owe. 7. Detach from your page of prepared blanks. Form No. 96, the bill of the College Real Estate and Collection Co., for services in recording deeds and paying taxes. Carefully separate the items that pertain to your residence lot from those that pertain to the firm's business lot and make entry, remembering that the former should be charged to your private account as a per- sonal expense to you, and the latter to the Real Estate Account of the firm. Write your firm name and the present date at the head of the bill and file the item dates giving item, (a), the date of 1. Be careful to fill in your own name and the date In all prepared blanks that require it. 192 CAMPBELL'S ACTUAL ACCOUNTING transaction 137, 9 and 10; and items, (b), (c) and (d), the present date. Pay by check at Real Estate Office or the teacher's desk and have the bill receipted. File with Expense Bills, num- bering the bill consecutively with other expense bills to identify it in entry and explanation. Also detach and pay Water Company's bill, Form No. 97, charging to Expense and numbering and filing as above. 8. Charge Expense and credit each partner's private account for the amount of salary. Charge Interest & Discount^ and credit each partner with 6 per cent, interest for the time elapsed since last closing, counting time as you do for the maturity of notes. Charge each partner^ with interest on withdrawals (as they appear in the respective private accounts) from, the date of the item to the present time. 9. (a) Prove and rule Cash. (b) Make bank deposit. (d) Prove Bills Receivable and Payable. (e) Take an abstract of the personal ledgers and when sub-ledgers prove, rule Accounts Receivable and Payable in general ledger. 10. Take a careful inventory of all the goods remaining in your stock of branch house mer- chandise (hardware), and proceed to prove all merchandise transactions connected with your branch house department. As you will observe by consulting your confidential price list, the profit on these goods is based, not on an original list price, as in your customary dealings with students, but on a basic cost price, as in the business of C. W. Burke. See footnote to price list. You will, therefore, rule a blank form with one total and two department columns similar to the form used by Mr. Burke in proving merchandise in 106, 30 (e). In working out this expert proof, observe that the hardware sold at 162/3% discount, the total amount of which you will learn from the footing of your Special Branch House column in the sales book, will be treated as one class of goods, which you may style Class A, on which the per cent, of profit to be added will be 25% and that the goods sold at 3% discount will be assigned to a separate class or department which you may style Class B, the per cent, of profit to be added in proving this class being 453/2%. See footnote in price list. The total amount of sales in Class B you will learn by deducting the sales of Class A from the total credit of Branch House Merchandise in your ledger. In all other respects this proof will be very similar to that in the former C. W. Burke business referred to. You should be able to work it out without further instructions. 11. When you have completed the proof of your Hardware account, consult your teacher, if necessary, as to the proper entries, to correct any errors that you find, and when these correction entries are made and posted, proceed to render to your parent house a statement of the condition of the branch house business as follows : (a) Enter the inventory of hardware on hand on the credit side of the Hardware account as you would the Mdse. Inventories in closing an account with your own merchandise. Balance the Branch House Freight account with red ink and transfer the amount to the debit side of the Hardware account. The difference between the two sides will then represent the loss or gain of the business. Transfer it by a red ink entry to the account with Van Camp Company, Parent House. (b) Make entry charging the Van Camp Company, Parent House, and crediting your Expense account for the proportion of your rent which they are entitled to pay under their con- tract, counting each day that has transpired as 10 days provided the total time does not exceed one half of the term for which you have paid rent as per lease executed at the beginning of this outline. (c) Make a second entry charging the company and crediting your Salaries account for clerk hire at $100 per month for the time that has elapsed, counting as in (b) above. 1. Another method of making this interest settlement will be presented in Outline V. 2. Observe that interest on the loss on the Fruitland Grocery Company which was pharged to Mr. Wemple, should be counted from the date of his investment as it never came into the firm and its withdrawal therefore dates back to the beginning of the partnership. CAMPBELL'S ACTUAL ACCOUNTING 193 (d) Draw your check in favor of the Van Camp Company for the balance due as shown by the account of the Van Camp Company, Parent House, at this time. Enter in your cash book, on credit side, General Ledger column and post at once to the Parent House account. Render a statement in the form following and attach to it the check you have just drawn, reserving these papers to be presented to your teacher with the books. y^^>^^€:^<:'^^^/t^ ^~^^^-zp-::^'^'Z^;;/^^^g?>:yz^- "^^!5^^£-:>z-y^ yV^ll>-i.^.■<£^^ y^/- ^^^^.^..^^^^ \3^ .^'^}/:^^^Z-<^-^2^^^^32'<£^/— y^^-i'^Z-::'rZ^'C.-^ ^'vC-^2^ Dollars to the capital stock thereof; and will not be responsible for the debts of the firm beyond the amount of the said in- vestment. The active management of the business of this partnership Is to be in the hands of C • W» Burke of College City , who is to receive therefor a salary of On© Hundred Dollars per month. The gains of the business, and the losses, except: in case of bankruptcy, are to be shared ooually. each partner first receiving Interest on his investment for the time it is Invested at the rate of SiX per cent, per annum, provided the rate does not exceed the total rate of gain. This co-partnership shall begin on the first day of May 19 and end on the thirXietll day of April 19 unless otherwise legally dissolved Witness our hands this first day of ^'^y/T) / / h-/^ ^^ f ^-^^^^f^^^^^^^pT^ (Seal.) State of T. S., ) Lg CA..-X.^^/r^\.^C^<^ TSeal.) County of Urown, i s^" \ /f^ On this first day of May in the year 19 , before me ^Veritas SOhelt , a Notary Public in and for the county of ITrOWn State of T» S* , duly commissioned, qualified and active as such, personally appeared C» W» Burke, H. F. Walter, and C. A. Foley personally l^ Notary Public in and for UrOWn County, State of X. b. My commission expires 19 ♦ State of Y. S., ) County of Urown, l ^' C* W» Burke being duly swom, deposes and says That he Is one of the co-partners In the special co-partnership of C* W» BurkO & Compsny ^ that the sums specified in the certificate of co-partnership filed herewith as having l)ecn contributed by each of /^^^r*°'piN^ ^^^ special partneis have been actually and in sood faith paid, in the lawful money of /a^**«**^SV, t''® United States. 5("y^ O lol Subscribed and sworn to before me this firSt day of May i^ «€^/-^ Notary Public in and for UrOWQ County, State of Y» S. My commission expires 191 196 147 CAMPBELL'S ACTUAL ACCOUNTING CASH JOURNAL ACCOUNT CREDITED EXPLANATION CUSrOMERS'LEOGER ^, — 4«is'- ^Y^ --<^ -•^'^«^^^*2^<<[!,'-«*-«r2^«'-««'l'2^»*^^^ tt^^'tSL t^-^T^-,^. "^-^-p^^ ^L-^^2/ yypa^ / / s J' // // // / 7:/ ^^^^^^^i^^ t^*o^,..«!«»«^-^^<^r«^«^ -ic2^^:-3'*^2^*^^7a-^«4^«--4--^t-^ T^sK^^t-s***!*^^ ^^^^^ 2a^ /0 f<^f^9 ^7^3 2.7. -2 ^>>' /2SJ xg yj'a V/77 4^ ///^jr^t <^^gy/aji^ / /^ 2^ A^/ 77 U2. 33o rr 02^ CAMPBELL'S ACTUAL ACCOUNTING CASH JOURNAL 197 ACCOUNT DEBITED EXPLANATION CONSIGNMENTS SHIP- MENTS- CREDITORS' LEDGER E. CASH OR ;^^^Ui^^ .2^^^^i^^^z.^£i^^^^^t^' r f /a /a /a // J^^^^^ t^-^ 1^'^ t^ ^ys; 2. ^^ .. .. S'^ fr *7-2^ „ ,. „ f <^-2/ ,^ ,, ,, 9C f^ )^ '^' : ^-^^ ^fZ(,J3> '^ ^!^i^ Le.^ -^^U u^*/ /^^'.^ 23rs- /^ (C7'»7- :i^^ /^/^ :r 2:3^/ Jfy/ ^--^^^^ ^^-^^^-zv -^^^2 /4^7-S' i?/^-2 :*?? ^«' ^jr^ cT f^ ^ 3fj/ ,1 y;/^ ILL (^^/^ 198 CAMPBELL'S ACTUAL ACCOUNTING 148 COMMISSION SALES BOOK COLLEQE CITY, May 1, 191 B-1 T-X L.P. 10 Anderson & Anderson, A)bla Sale 20, 30d., 2/10 cash, l/lO note 30d. 6 f> H hlf. ohsts. Y. H. Tea, 2S0 # at 37 1/2 ^ less 20 f> 25 bx8. Butter, 2500 # at 30 ^ 25 gross, l-qt. Fruit Jars, at ♦U.OO loss 16 2/3 % Park Grocery Company, Beaoonsfield Sale 21, 50d. Sub. to draft 300 lbs. Armour S. C. Hams, at 15 4 500 " Red Cross Sealing Wax at 2 ^ less 16 2/3 f> 30 eks. Prunes 60-70s 3000 # at 9 1/2 ^ Consignment Or* Dept. B Udse. Cr. Mdse. Cr. Aoo^s. Reoelvable Dr. St 750 83 917 •♦5 S 285 32 U^M. I1035 91 129 255 Cons . Sales 750 285 1035 00 00 00 Dept . B Udae. 83 91 33 33 8«* •+5 00 00 66 129 00 OUTLINE V. 149. I, Organize a special co-partnership for the purpose of conducting a general shipping and commission business. In this co-partnership yourself and Mr. Wemple will be general partners and you will secure a student or your teacher as a special partner, making three in the firm. Consult your teacher in regard to the selection of the special partner. Then take from your envelope of Legal Blanks the special co-partnership form and fill it out in duplicate, following in general form presented in 146. File one copy in your filing case and deliver one to your teacher. 2. The books that you will use while working this outline will differ somewhat from those used while working Outline IV, but the same plan of general and sub-ledgers will be continued The journal, however, will be dropped and the cash book and sales book will contain a number of additional columns. A shipping ledger and a consignment ledger will be additional books used in connection with this business. Study carefully the forms of all these books as presented in 145, 146, 147, and 148. Use your bill book as a book of original entry while working this outline as this will relieve your cash book of practically all journal entries. To do this, carefully enter all notes given or received, directly in the bill book and make no entry in any other book. Then post from the Account Credited column of bills receivable and the Account Charged column of bills payable to the ledger, checking in the L. F. column, but do not post the Bills Receivable or Payable to any account in the ledger. The bill book becomes the ledger for all notes by this plan. When notes are collected or paid, post from the cash journal to the Collection or Paid columns of the bill book the same as to any ledger account, and take the total of unpaid notes in either account to your trial balance. If in beginning this work you have a balance in your Bills Receivable and Bills Payable accounts in the ledger, balance them To Bill Book and con- sider the bill book record as taking their places in the trial balance. 150. I. Draft a memorandum for your opening entry, embodying such statements from your co-partnership contract as you deem necessary. The lease drawn up at the beginning of Out- line IV is still in force and you will pay according to its terms while working this outline. Make your opening entry in your cash book, which as it is used in this outline is usually termed the Cash Journal, following the form shown in 147. CAMPBELL'S ACTUAL ACCOUNTING . 199 2. (a) Pay rent as per terms of the lease signed at the beginning of preceding outline. Enter in cash book General Ledger column as in preceding work. (b) Detach from Prepared Blanks Form 98. Observe that it is a form of circular letter. Write a number of letters similar to this form (not copies of it) adapting the statements to the facts of your own business and send one to each student with whom you have had any dealings. Consult your teacher also as to whether it may not be well to send this circular letter also to other students whose names he will give you. (c) Write a letter at this time to U. R. Teacher & Co., College Center, informing them of the change you have made in your firm and of your decision to engage in the commission busi- ness yourselves, and ask them to render you on account sales of the oranges recently shipped them at the earliest possible date, as you wish to close up all the accounts of the old business. Make this letter a model of neatness and business composition and place it in the envelope of papers that go to your teacher when your books are submitted. Your teacher will place it on file with other specimens of your work. 3. Having decided that the advantage of having your own delivery wagon is not sufficient to justify the expense, you will sell your delivery horse and wagon to the T. & T. Company at 50% discount on cost, or to some student who may be wanting to buy such an outfit at any dis- count from the cost that may be mutually agreed upon. This will also suggest the disposing of the feed recently stored for the horse. See 144, 3. In making entry for sale of the horse and wagon, credit the account that was charged when they were purchased. For the feed, reverse the entry made in 144, 3, detaching Form 99, the tickets that represent the unused feed, and placing them again in stock in the proper department. 4. (a) Detach from your Prepared Blanks Forms 100 and loi, observing that Form 100 consists of an invoice of shipment from F. H. Burns, Girard, and loi consists of the cartage^ bill accompanied by tickets representing the goods. Take a page from your pad of Accounts Sales sheets and copy thereon the items of merchandise received in this consignment, filling all the blanks at the head of the sales sheet, such as Lot Number, Invoice Number, When Received and Date of Invoice. The lot number will be consecutive with the number of the last consignment handled in Outline IV, and should be followed as usual with the name of the shipper for reference. Antedate the shipping invoice to allow sufficient time for arrival, but give the cartage bill the pres- ent date, writing your own name in the forms wherever necessary. Pay the cartage and freight bills, charging to Consignment No. ^, entering the amount on the sales sheet, on the lines marked Freight and Cartage. Mark entry also in your cash book in the column designated. Cash Payments, with the explanation Consignment No. ,^ freight. Place the date of the transaction in the date column and the check-mark ( v^) in the posting column as the record which you have just made on the sales sheet is equivalent to the posting of this item. Detach from the cartage bill the tickets representing the goods and mark in ink on each ticket the lot number, either on face or back of ticket as you see fit, but distinctly and without defacing the Mdse. memoranda as all of this, including the lot number, will be needed for your information when making sales. Place these goods in a separate envelope marked Consignment Goods. Attach the cartage bill to the shipment invoice and file it as you filed such invoices while working Outline IV. (b) The student will observe that the plan of keeping accounts with consignments has been radically changed from the ledger accounts used in the preceding Outline. If all consign- ments received in Outline IV were settled and closed before closing the books at the end of the outline there will be no trouble in your bookkeeping on account of the change. But if some of 1. Having disposed of your own delivery wagon and horse, 3'^ou will hereafter employ a carting com- pany to bring your goods from the freight office, and this company will pay the freight charges and include in the bill. In business they would hand you also the receipted bill of the R. R. Co. as illustrated in 106, 14, (c). See also 109, 5, where the cartage bill does not appear because you have your own cartage outfit. 2. Fill this blank with the lot number which is the next number in consecutive order, following the last consignment already received. 200 CAMPBELL'S ACTUAL ACCOUNTING these consignments have not been closed, it will be desirable to transfer them from your General ledger to your consignment ledger, that is made up of Account Sales Sheets. To do this, take an Account Sales Sheet for each consignment that remains unclosed in the ledger and copy thereon all the items already posted to the ledger, giving this consignment sales sheet the lot num- ber indicated in the ledger. Then close this consignment in the ledger by a red ink transfer entry, carrying the balance to a general Consignments account which you will now open on page 25 of your ledger. Index this account before proceeding. 5. Detach from Prepared Blanks 102, 103, 104, 105, 106, 107, 108 and 109. Observe that these consist of four additional invoices of shipments with cartage bills and merchandise similar to 100 and loi received in 4 above. Detach an additional sales sheet from your pad for each one of the above invoices and proceed to make a record of the goods received and to pay and make entry for the freight or cartage items as instructed in 4 above. Insert these sales sheets in your loose-leaf ledger just following the title page Consignment Ledger. 6. Fill orders approved by your teacher at last closing, accompanying one bill with a draft at 30 days for acceptance and one with a note payable on demand. In writing out the draft and note, remember to deduct the I % from the face of the bills. Make entry in sales book as in previous work. Sell Dep't. E goods to T. & T. Co. as formerly. 7. Enter all invoices received since last closing by pasting them in your invoice book (after checking carefully) and extend the amounts into the Merchandise column directly opposite the name of the seller so that in posting you will not need to lift the loose part of the bill to see to what bill the item belongs. 8. Pay for invoices received as follows : (a) Sign notes or accept drafts when they accompany the invoices, making the entry in your cash book, first on the credit side exactly as in cash payments in Outline IV, placing the discount, if any, in the Discount column and the amount of the note or acceptance in the column designated as Cash or Note. This charges the person paid ; explain as usual. Then on the opposite side of the cash book make an entry in the Sundries column, crediting Bills Payable for the face of the note or acceptance, and explaining as in any journal entry. (b) Pay for one or two bills by drafts at 30 days on some of your customers who are in- debted to you; and for one or two by sight draft on persons who owe you. Observe that in the case of a 30-day draft your Mdse Disct. is 1% and in case of a sight draft, 2%, the latter being equivalent to cash to your creditor, and that the entry on your own books is the same in either case. Make entry for these payments also in the cash book, first charging the person paid, on the credit side of the book as instructed in (a) above, and then crediting the person drawn on, on the debit side of the book in the Cash or Note column. Usually there will be no discount connected with this part of the entry, but if there is, it will go in the discount column as usual. Pay for one or two remaining invoices in cash less the customary discount and make entry on the credit side of your cash book in the Customers' Ledger column, as in former work. (c) Pay all acceptances or notes which you owe that have matured; making entry on the credit side of your cash book. Sundries column, as in former work. 9. Make entry for payments received. (a) In entering payments on account of bills sold, make entry for notes or acceptances received just as instructed in previous work for cash received, on the debit side of your cash book in the Customers' Ledger columns and then make an entry on the opposite side of the cash book crediting Bills Receivable in the Sundries columns. See 7 above. Cash payments are en- tered as in former work. (b) In entering payments received for notes or acceptances enter in cash book. General Ledger column debit side, using one line for the face of the note or acceptance paid and one line or the amount of interest, as in former work. CAMPBELL'S ACTUAL ACCOUNTING 201 10. Remit to your wholesale houses for invoices last received, taking advantage of the cash discounts, and place new orders for merchandise with at least three companies, making these orders as large as you will be able to pay for but within the "limit" prescribed in your price list. 11. If the circular letter sent out, as instructed in 2, has not brought you at least 5 consign- ments of merchandise from students in the room, consult your teacher as to the best means of securing these that they may be on hand for your next day's work. If they have come in, make entry for them as instructed in 4 preceding. 12. Detach from Prepared Blanks Form no, a letter from the Van Camp Hardware Com- pany and reply to it assuring them that in the enlargement of your business, you in nowise con- templated curtailing your efforts in the hardware branch, but that you expected through the wider patronage secured to be able to increase hardware sales very materially. State that you are, however, through your increased capital, in a position to handle the hard- ware department as your own goods ; that you are very glad to accept their proposition and that you enclose your check in full for the stock of goods as inventoried with an order for additional goods which you hope will have their prompt attention and an early shipment. Enclose with this letter an order on one of your own blanks duplicating their first invoice. 13. Secure orders for next day's trading. (a) If requests for shipments (consignment of goods to be sold on commission) have not been received from at least five students, make up five invoices of shipments of goods taken from department A (do not make shipments of department B or E goods) omitting the names of the consignees, and submit them to your teacher with your books as you do your sales orders, requesting him to inform you as to who will handle the goods. (b) Prepare at least five regular sales orders for regular customers, including in each one some of your own merchandise, and a part of at least two consignments. So arrange these sales that the goods of at least one consignment, the one from F. H. Burns, detached form 99, will be entirely sold out. Prepare one additional sales order in which you make sale of part of two con- signments, some of your own merchandise, and some of the hardware or branch house merchandise. 14. (a) Prove and rule cash. This work will be very similar to the closing of your cash book in Outline IV. Observe that the cash items of the debit side will be found in the Cash and Note column of the customers' ledger, the Shipment column and the General Ledger column, and those of the credit side in Cash Payments, Shipments, Cash or Note, and General Ledger columns. While some of these columns include items that are not cash (see 150, 8, a), each of these appears on both sides on the book so that the correct balance of the cash is not thereby disturbed. Add all columns in pencil and prove your cash as in former work before drawing any ruled lines. Then enter the footings in black ink as shown in the form in 146 beneath the addition lines and add horizontally (when necessary) to obtain the total that goes to any General Ledger account, as Accounts Receivable, Accounts Payable, or Consignments, making entry for the footings of the ruled columns as follows, — on the debit side of the cash book credit Accounts Receivable for the total of the Cash or Note and Mdse. Disct. columns, and credit Shipment for the total of the Shipment column, extending both these amounts into the General Ledger column. On the credit side of the cash book charge Consignments for the total of all columns included under the heading Consignment Ledger, adding horizontally as in the closing in 147, and carrying the amount into the General Ledger column. In the same manner charge Accounts Payable with the total of the Cash and Note and Merchandise Discount columns, and Shipments for the total of the Shipment column, carrying these amounts also into the General Ledger column. Then make entry for the journal columns very much as you did in former work. The footing of Merchandise Dis- count debit found on the debit side of the cash book is brought over to the credit side and, diminished^ by the footing of the Cash Discount Consignment column, is entered to the debit of Merchandise Discount on the credit side of the cash book in the General Ledger column. The 1. This subtraction stiould sliow in the closing of the cash book. 202 CAMPBELL'S ACTUAL ACCOUNTING Merchandise Discount found under the title of Creditors' Ledger, is credited to Merchandise Dis- count on the debit side of the cash book in the General Ledger column. The other journal col- umns, as Commission, will be credited to accounts designated by the headings of the columns, making entry on the debit side of the cash book in General Ledger column. If these entries and contra entries are correctly made, the cash balance is not disturbed. When it proves, enter the cash balance as in former work. Complete the closing and bring down the balance below the closing lines. (b) Make bank deposit. (c) Post all entries. Your posting from the cash book will be very similar to that in former work. You will observe, however, that shipment items on both sides of the cash are, or should be, check-marked if the items have already been entered in the shipment ledger; if not, proceed to enter and check as shown by the form in 147. Observe also, that all items included under the Consignment Ledger heading are, or should be, checked in the L. F. column of the cash book, as these items should already appear on the pages of your consignment ledger. Other items, post as in Outline IV. The posting of your invoice book is so similar to Outline IV as to need no further instruc- tions. In posting from your sales book the principal difference will lie in the advantage you now have in using a separate column for each separate class of goods. Observe how the column foot- ings are posted in the form in 148. The customer's debit is of course posted the same as in former work. The separate credits of each consignment (designated by lot number) are to be posted to the sales sheet of that consignment in the consignment ledger in the credit column marked Sales with full explanation of each item and date of sale, instead of being posted to an account in the general ledger. See 106, 21, and Form on page 128. The shipping ledger requires no posting except for the total of Mdse. Column and it may or may not be posted for the purpose of the daily closing, as you see fit, but must be posted in the general closing of the books, and you may post it at this time as a matter of practice. Posting in the shipping ledger consists merely in ruling and adding the Merchandise column and, at the foot of it, making the journal entry, Shipments To Merchandise, and posting to the Shipments and Merchandise accounts in the general ledger. A careful study of the forms of the books presented in 145 and 147 should make further instructions entirely unnecessary. (d) Prove Bills Receivable and Payable. (e) Take an abstract of your sub-ledgers and prove and rule Accounts Receivable and Pay- able. (f) Take an abstract of your consignment ledger (Account Sales Sheets) and prove its agreement with the Consignments account in the general ledger. (g) Prove the agreement of your shipping ledger (the total cost and credit columns) with the Shipments account in your general ledger. Take a special page of your trial balance book on which to record these proofs. (f) Take a trial balance of the general ledger. 15. Submit your books to your teacher for approval, arranged as instructed in 98 with your prepared shipping invoices and customers' orders and with a duplicate copy of your daily report copied neatly in the form following : REPORT "Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. CAMPBELL'S ACTUAL ACCOUNTING 203 NOTES Bills Receivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe . Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe. Checks, _ Total Cash on hand. TEACHER'S Respectfully submitted, . 191 ... . STAMP 151. I. (a) Your first business in this day's work will be to send out shipments of goods to be sold on commission to the persons indicated by your teacher when your books were approved. But before doing this, it will be necessary to close the shipment accounts kept in your ledger while working Outline IV and transfer them to the shipping ledger, which is the plan of keeping shipment accounts in the work of this Outline. Turn to your accounts with shipments in the general ledger and copy into your shipping ledger all the items of each inclosed shipment, making the record in the shipping ledger as nearly like the record shown in the form in 147 as possible. Rule and foot the merchandise column and post-check the total, since these shipments have all been closed out of merchandise. Then in your ledger, balance each one of the former shipment accounts (which you have just transferred to shipping ledger) with red ink, and transfer the balance to a general accovmt with Shipments on the page following the account which you opened with Consignments as instructed in 150, 4 (b). (b) Now proceed to send out shipments of goods to be sold on commission to the persons indicated by your teacher when the books were approved. First make entry of the items and cost amounts of each separate shipment in the shipping ledger as shown in the form in 145. Pay to your teacher (or at the insurance office) insurance on each of these shipments at i/^ % on the cost value. Enter in your cash book, credit side. Shipment column. Transfer this amount immedi- atelyi to the shipping ledger, placing it on the debit side beneath the cost items of the shipment with the explanation Insurance and check the entry in the cash book in the L. F. column, as in the form in the cash book in 146. 2. Fill orders approved by your teacher at last closing, making the entries in your sales book and being careful to follow the forms presented in 148. In the billing work of this out- line, it will be necessary that the items of each separate consignment, also of your own merchan- dise and of hardware, should be discounted separately, and you must remember that hardware sold at 3% ofif is extended in the sales book, into a column separate from that discounted 162/3%. See Illustrative sales in 148. Your ownership of the stock will not release you from keeping it in a separate department. 3. Enter all invoices of merchandise (not invoices of shipment) receiv^ed since last closing, by pasting them into your invoice book after checking them carefully and extend the amounts into the merchandise column opposite the name of seller as usual. 4. Render account sales of all consignments that were closed out as instructed in 150* 13 (t>). To know whether a consignment is closed out or not it is not necessary that you 1. It may not always be convenient and need not be considered necessary to transfer this item imme- diately to the shipping ledger. When the student is familiar with his work this can be done at the same time as the regular posting. In the heginning of his practice in this set of books, it is best, however, that this trans- fer be attended to while the matter is directly in hand. 204 CAMPBELL'S ACTUAL ACCOUNTING should look through your warehouse (envelope of goods) to see whether any of the goods of that lot remain in stock, but you should be able to tell from the sales sheet of each consignment in the consignment ledger exactly when the entire lot is sold out. To do this, observe, first, that a record of the quantity and kind of goods received appears at the top of each sheet and that an itemized list of the quantities and kinds of goods sold is shown in the sales column on each sheet. Carefully add together the quantities of the goods sold and when it equals the quantity of the goods received, it indicates that the consignment is entirely sold out and that you are ready to render an account sales. The next step is to take from your pad of Account Sales Sheets a duplicate blank and copy thereon all the items, receipts, sales, charges, etc., appearing in the con- signment account in the consignment ledger. Then proceed to enter on this duplicate sheet, commission at 2% on sales, and on the line next following, guaranty at 1% of all time sales not collected. Balance and close the account as indicated at this point to show the net proceeds as all charges strictly incident to commission sales are already entered. Bring down the net proceeds as a balance below the closing lines. The next item in the charges column is, as you will observe, advances already paid and charged. Next below this you will compute and enter interest on all advance payments made on account of this consignment whether for drafts or freight, from the time made to the present date, and on all time sales from the present date to the date of maturity of the sale.^ Deducting these additional charges from the net proceeds brought down as above, you have the amount of remittance, if made by check, from which exchange at regular bank rate will be deducted to show the face of the draft if remittance is to be made in that manner. Turn to your cash book, and on the first blank line on the credit side charge to the consignment designated by its lot number, the items just entered on your duplicate sales sheet, namely, commission in the Commission column, storage at ic per week per unit (barrel, case or crate, etc.,), guaranty and interest in Sundry Charges column and the remittance in the Cash Pay- ments column. If the remittance be made by draft, the cost of exchange being also paid in cash, the same amount goes into the remittance column though it is separated in the entry on the Sales Sheet.2 Post these items from the cash book to the consignment ledger, making the consignor's account exactly like the duplicate sheet on which you have been making entries and from which you took the cash book entry. If this posting exactly balances and closes the consignment account in the ledger, your consignment is closed and you may draw your check for the amount of the remittance, or may purchase your draft at the bank and enclose it with the duplicate sales sheet to the consignor. Observe that as all cash payments are placed in one column in the cash book, there will be no difference in the entry whether payment be made by check or by bank draft. Enter the present date in the date line at the head of the Account Sales Sheets, both the duplicate and the one retained in the ledger. 5. Detach from your Prepared Blanks Forms iii (a) and (b), the letter of U. R. Teacher & Co. in reply to your letter written as instructed in 150, 2 (c), together with the account sales of your shipment of oranges. Reply to the letter enclosing shipping receipt for 1,000 lbs. of prunes and 500 lbs. of pears and instruct the consignee to charge the deficit on the orange shipment against this one. Draw a draft at thirty days on this shipment for its cost value less the deficit on the shipment of oranges and discount the draft at the bank assigning the original^ B/L as security. In making entry for this shipment remember that it will be known as "U. R. Teacher, Shipment 2," the orange shipment having been designated as "U. R. Teacher, Shipment i." Credit this shipment on the debit side of the cash book with both the deficit on the orange shipment, and with the $90-draft, placing the figures in the Shipments column. Then on the credit side of 1. These charges cover all the interest to which the consignee is any way entitled. In many instances the consignee elects not to charge interest except on advances, and when the time is short not even on that item, preferring to give his customer the advantage of interest and to charge a higher commission. 2. If it is desired to reserve the Cash Payment column for payments on account of Net Proceeds alone the sundry charges column can be labeled Cash charges and used for Freight, Cartage, Exchange, Insurance and all expense paid in cash, an additional column being used for the charges now assigned as Sundry. Storage is often included in the sundry group. 3. To accompany draft, use special form. Order Bill of Lading. See Form 54, in 106, 14, (b). CAMPBELL'S ACTUAL ACCOUNTING 205 the cash book charge Interest and Discount in the General Ledger column for the discount on the draft and U. R. Teacher's Shipment No. i in the Shipment column for the deficit on the orange shipment. This would end the entries, but, as you will remember, this shipment of oranges was a part of the resources of yourself and Mr. Wemple when you took in your partner for this commission business and you two should bear the entire loss. To adjust this, turn to your shipping ledger (you were instructed in 151, i (a), to copy all items of unclosed shipments into this ledger) and adding to the debit of that shipment as it appears in the ledger the deficit just now charged against it, divide the amount into two equal parts and make entry, first on the credit side of the cash book, charging one-half each to the private accounts of Mr. Wemple and yourself on separate lines in the General Ledger column. Then on the opposite side of the cash book credit U. R. Teacher Shipment No. i in the Shipments column for the total that has been charged to the two partners. File the account sales in your filing case and place invoice of Shipment No. 2 and your letter in the envelope of papers that are to go to your teacher with your books. 6. Detach forms 112, 113, 114, 115, 116, and 117. Observe that you have three additional invoices of shipments with the cartage bills and goods. Detach a page from your pad of sales sheets for each one of these shipments and proceed to make entries as instructed in 150, 4. 7. If you have received any invoices of shipments from students, proceed to make entry for them exactly as for the detached forms in 6. If no shipments have as yet come in, consult your teacher as to securing them for without his permission you must not close this day's work until you have received and entered between 5 and 10 incoming shipments of merchandise for com- mission sales. 8. Pay for invoices received and make entry as instructed in 150, 8 (a and b). Pay all matured paper that you owe and make entry as 150, 8 (c). 9. Make entry for payments received, whether on account of invoices or for notes and acceptances. Follow instructions in 150, 9 (a and b). Remit to wholesale house in full for all invoices that have matured and place orders with at least three houses for additional merchan- dise. Make daily closing, proving consignment ledger and shipping ledger and proving and ruling your Accounts Payable and Receivable before taking your trial balance. See order in 150, 14. 10. (a) Secure usual customers' orders for next day's trading, mixing these orders (as would naturally occur in many orders in business) so that each will contain parts of more than one consignment and either some of your own merchandise or some of your branch house mer- chandise or both. If possible sell out one or two consignments entire, but not all to one cus- tomer. (b) Prepare also five invoices of shipments out of goods taken from your merchandise, but not Department E. (c) Submit these customers' orders and proposed shipments to your teacher, who will suggest buyers and consignees as usual, presenting at this time your books arranged in the usual form for his examination and approval, accompanied with a duplicate copy of your daily report first neatly copied into the form below. 152. I. Render account sales of all consignments that are sold out and make entry accord- ing to previous instructions. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written „ No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total „ No. of Sales made: To T. & T. Co ; to students ; Total No $ „ No. of Entries made Average per hour Time on trial balance hours. 2o6 CAMPBELL'S ACTUAL ACCOUNTING NOTES CASH Bills Receivable, Ledger Balance Ledger Balance Total uncollected in bill book In bank, Stb. No. , In safe, Currency In safe, Checks, Bills Payable, Ledger Balance Total unpaid in bill book Total Caeh on hand Respectfully submitted, TEACHER'S ,191.... STAMP 2. (a) Send out today's shipments, making out bills of lading carefully and pay insurance at the usual rate. (b) Bill sales orders approved by your teacher and enter in your sales book, being careful both in the invoice and in the sales book to compute discount separately on items belonging to separate departments, as consignments and hardware. 3. Check and enter all invoices received. 4. Make payment for invoices, by cash, note, or draft as you see fit, except when otherwise required by your creditors. 5. Make entry for all payments received whether they be payments on account, or pay- ments of notes or acceptances, noting carefully this difference in entering, that payments of accounts will be extended into the Customers' Ledger columns with the merchandise discount in the Discount column and that payments of notes or acceptances will be extended into the General Ledger column with their interest entered on the second line in the same column, or their discount (if they be discounted) entered on the opposite page of the cash book and extended into the General Ledger column. 6. Make payment for all notes and acceptances that have matured, entering in the cash book. General Ledger column. For the largest one of these notes or acceptances, do not pay cash in full but draw your check for about 60% of the note and interest, and for the balance give a new note with an endorser, that is, get some one to write his name on the back of the note. 7. Make a payment of some note that is not matured, securing the discount. Observe that in making the entry, the face of this note will go in the General Ledger column on the credit side of the cash book and that the discount will not go into any discount column but will be credited to Interest and Discount and entered in the General Ledger column on the opposite page of the cash book, the difference between the two entries being the amount of the payment. 8. Detach from your prepared blanks Form 118 and reply quoting coffee at 15 to i8c less trade discount. Reply by Western Union Telegraph paying at the rate of 37c per word^ at the telegraph office or at the teacher's desk. File this form (which you observe consists of a letter and a bill of lading enclosed) in your letter file. Then detach Form 119, which you will observe consists of tickets representing the coffee consignment, accompanied by the cartage company's bill for cartage and freight advanced. Pay the bill making entry as usual, and open the usual account with the consignment. 9. Detach from your prepared blanks Forms 120, 121, 122, 123, observing that they consist of a letter with three enclosures from U. R. Teacher & Company. Fasten the account sales and statement together and file with other account sales. File the letter as usual. Place the draft 1. Better use the exact rate from your city to this point. CAMPBELL'S ACTUAL ACCOUNTING 207 in your cash drawer and make entry on the debit side of the cash book in the shipment column for the net proceeds of the account sales, less the $4.91 deficit on the orange shipment and the $90 draft, both of which have been entered in 151, 5. Then on the opposite side of the cash book charge to Interest & Discount the $1.35 and the entry is complete. 10. Detach from your Prepared Blanks, Forms 124 and 125, observing that you have an invoice from the Van Camp Plardware Co. followed by the goods and a bill for the freight and cartage. (a) Pay freight bill and make entry charging to the former B. H. Freight account, not because these are branch house goods, but because these goods form a separate department, and you can conveniently use this freight account to keep the freight on these goods separate from the freight on other goods. You may change the name of the account to Freight on Hardware. Charge the invoice to Hardware and post to the former Hardware account. (b) Draw your check in payment for this invoice, taking advantage of the cash discount and remit by placing it in the envelope of papers to go to your teacher. 11. Remit to wholesale houses for invoices last received and place a new order with each for such goods offered in their price lists as you see fit to order. Write an original letter and secure your teacher's criticism when you present it for his approval. 12. (a) Prove and rule cash, (b) Make bank deposit. Post all entries. Prove bills receivable and payable. Prove shipping and consignment ledgers. Take abstract of your personal ledgers and prove and balance accounts receivable and (c) (d) (e) (f) pavable. ^ (g) (h) Take your trial balance. Secure customers' orders for next day's trading, making such sales of consignment goods as will close out all consignments received, and submit these orders to your teacher with the envelope of papers reserved to be presented to him at this time and with your books properly arranged for inspection, accompanied with the usual duplicate copy of your daily report also neatly copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Averqs;e per hour Time on trial balance hours. NOTES Bills Jieeeivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe. Bills Payable, Ledger Balance Total unpaid in bill book , CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. Respectfully submitted, TEACHER'S .191..., STAMP 208 CAMPBELL'S ACTUAL ACCOUNTING 153. I. Render account sales of all consignments sold out during your preceding day's work. 2. Fill orders approved by your teacher at last closing. 3. Check and enter all invoices received. 4. Make entry for all payments received. Distinguish carefully between payments of account and payments of notes or acceptances. 5. Make payment for invoices received, either by cash, or note, or by draft on persons that owe you unless otherwise specified in the terms of the bill. 6. Make payment for all your own notes or acceptances that have matured. 7. Detach from your Prepared Blanks Forms 125 and 126, paying freight and cartage and making entry as instructed in 152, 10. 8. Remit to wholesale houses as usual, in full for preceding orders, placing new orders for merchandise. 9. (a) Prove and rule cash, (b) Make bank deposit. (c) Post all entries. (d) Prove Bills Receivable and Payable. (e) Prove shipping ledger and consignment ledger. (f) Take an abstract of personal ledgers and balance Accounts Receivable and Payable. (g) Take trial balance of general ledger. (h) Secure customers' orders for next day's trading, disposing of all consignment goods on hand and as far as possible of your own merchandise and submit these orders to your teacher for approval with your books properly arranged for inspection, accompanied by the envelope of special papers and the usual copy of the daily report first carefully copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES CASH Sills lieceivable, Ledger Ealance Ledger Balance . . . Total uncollected in bill book In bank, Stb. No. In safe, Currency . . . In safe, Checks, Bills Payable, Ledger Balance Total unpaid in bill book .... Total Cash on hand Respectfully submitted. TEACHER'S 191 ... . STAMP 154. I. Render account sales of all consignments on hand and sold out. If any still remain unsold, make special sales to persons named by your teacher. 2. Fill orders approved by your teacher at last closing and enter all invoices received. CAMPBELL'S ACTUAL ACCOUNTING 209 3. (a) Collect all matured notes or acceptances and pay all that you owe. (b) Discount at the bank all notes or acceptances which you hold that are not matured. (c) Pay all your own outstanding paper, securing a discount at regular bank rate for the imexpired time. If creditors hesitate to accept payment, it will be sufficient to tell them that you are going to sell out the business, and that you do not wish to be responsible for payment. Observe that all these instructions under 3 apply only to notes and acceptances between your firm and other students present in the schoolroom. Any paper which you hold or owe which is made with ficticious persons or with students who have dropped out of school, may remain on your books for the present. 4. Settle in cash all accounts payable including your debts to wholesale houses and collect all accounts receivable outstanding with students actually in school. All accounts with ficticious persons and absentees you will permit to remain on your books for later instructions. 5. Detach from your Prepared Blanks Form 127, observing that it is a memorandum from Mr. Wemple addressed to you and your partner in which he expresses a desire to dissolve the partnership and offers either to buy or sell on certain terms which he specifies. Consult with your partner and if he wishes to buy the business, make the sale to him, Mr. Wemple and yourself taking your shares in cash. But if he does not wish to buy out the business for himself then write a memorandum note addressed to Mr. Wemple in which you accept hi$ proposition and have your special partner sign this with you. Place this memorandum in the envelope of papers that are to go to your teacher with your books. Whether this sale of the business should be made to your partner who is actually a student in the schoolroom or to Mr. Wemple, the method of procedure will be exactly the same, the only difference being in the names of the parties con- cerned. The instructions following, which we will base on a supposed sale to Mr. Wemple, will suit equally well for a sale to your other partner simply by exchanging their names. Mr. Wem- ple's proposition as expressed in his memorandum note is as follows: (a) All merchandise in stock at cost. (b) The firm's real estate at 10 per cent, advance on cost. (c) All furniture, fixtures and chattels belonging to the firm at 50 per cent, below cost. (d) All Bills Receivable and Accounts Receivable held by the firm at a discount of 10 per cent, to cover bad debts and collection. Payment to be made in cash, at least to the extent of the firm's cash balance, the buyers to give their notes at three, six and nine months respectively at 6 per cent, interest for the remainder, the said notes to be secured by a chattel mortgage on the stock and fixtures. 6. Pay partners' salaries. Detach Form 128, your monthly water bill, from Prepared Blanks and pay at office or teacher's desk. 7. Make interest entries to adjust investments. These may be made as in 144, 8, but the student has been promised another method. We will illustrate it by an example. A, B and C are partners. A's capital is $5,000, B's $3,000, and C's $2,500. The joint capital therefore is $10,500. One third of it, or the capital which each should have to make their invest- ments equal, is $3,500. A's investment exceeds this amount by $1,500. It is evident therefore that if A should lend $500 to B and $1,000 to C, their investments would be equal. Therefore if we charge B with interest on $500 for one year at 6% and C with interest on $1,000 for the same time at the same rate and credit A with the sum of both we have made the adjustment. When there are withdrawals also to be considered the question is more complicated. The simplest method of presentation is perhaps as follows : Let the total interest which A owes on withdrawals be $15, the total that B owes $12.50, and the total that C owes $13. If these were car- ried into the Loss and Gain account there would be a credit total of $40.59 in Interest and Dis- count and each man would be entitled to one third of it under the contract, hence, A, who owes $15, owes net, $15 less $13.50 or $1.50 which may be deducted from the $90 otherwise due him 2IO CAMPBELL'S ACTUAL ACCOUNTING making his credit $88.50; B, who owes $12.50 and will be entitled to $13.50 from the Interest and Discount account, is entitled to the difference of $1.00 which may be deducted from the interest that he would otherwise be charged with, making his interest debit $29.00; and C, who owes $13.00 and will be entitled to $13.50, will be entitled to deduct 50c from the $60 that he would otherwise be charged with, making his interest debit $59.50. The two credits of $1.00 and 50c allowed B and C make the $1.50 charged against A. Adjust your investments and withdrawals in the manner illustrated. Study will discover brevity and practice will give facility. 8. Proceed with the work of closing your books in order to make the transfer: (a) Prove and rule cash. (b) Make bank deposit. (c) Post all entries. (d) Prove Bills Receivable and Payable. (e) Prove shipping ledger and consignment ledger. (f) Prove sub-ledgers, then rule Accounts Receivable and Payable. (g) Prove Merchandise, following previous instructions and watching carefully for items that are handled on irregular terms. See 141, 12. 9. Make entries as instructed by your teacher for the correction of all errors discovered in proving your work ; sell Dep't E goods to T. & T. Co., then post these entries and take your trial balance. 10. In order that no errors may be passed in your work at this time, you will fill out your duplicate report, copy it neatly in the form below, and submit your books and papers for teacher's approval before closing your ledger. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills JReceivable, Ledger Balance , Total uncollected in bill book , Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book , CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe. Checks, _ Total Cash on hand. MERCHANDISE Cost of Mdse. bought Present inventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Department A Goods Department B Goods TEACHER'S MARKING Accuracy . . . Neatness . . . Orderliness . Records Progress. . . . Average. . . Respectfully submitted, .191.... TEACHER'S STAMP CAMPBELL'S ACTUAL ACCOUNTING 211 155, Take inventory of Merchandise, Furniture and Fixtures and Chattels according to your proposition to your partner and proceed to make out a balance sheet as in the supposed balance sheet of C. W. Burke & Co., presented in (a) below, observing that the 10 per cent, discount allowed by Mr. Wemple's proposition on Bills .Receivable and Accounts Receivable will appear in the Losses column, and that" the net valuations placed on these notes and accounts are treated as inventories and appear in Resources column. Note also how the partners' private accounts are handled in the balance sheet. When the balance sheet is prepared, submit it to your teacher for approval before proceeding. Observe that H. F. Walter in the form below takes the place of E. H. Wemple in your own work. (a) BALAITCB SHB3T OF C. W, BURKB ft CO., MAY SI, 191 . L.F. Trial Balanoe Losses A Qains ReBOurees & LlabilitlOB 1 1 1 2 2 2 3 4 5 5 6 6 7 8 9 9 10 11 12 13 14 Burlce, Stock Walter, Stook Foley, Stook Burke, PrlTate Walt<^r, Private Foley, Private C. W*. H. F. C. A. C. W, H. P. C. A. Cash Mdse. (Invent, $9786.05} ExpeoEe Udss. Dis. Int. & Dls. Collection & Bxehanee Loss & Gain Shlpmont No. 1 Storage Guaranty Comraisslon Bills, Rec. (Lesfl Bills Payable Accts . neo . ( L^f sn Acots . Payable 10^, $657.98) 10^. $823.95) C, W,- Burke's N«t Gain H. F. Walter's •♦ •• C. A. Foley's •• " C. W. Burke'8 Stoftk Credit " " " Private Debit " " " Net Gain " •• " Het Private Gain " " " Present Worth H. F.,Waltflr'B Stock Credit " private Debit " " RetGain " Hot Private Loss " " •• Present Worth C. A. Foley's Stook Credit " " Private Debit •• " Het Gain " •• " Net Private Gain " " " Present Worth 6000 00 49 50 100 00 33 00 3600 65 12107 13 105 00 14 25 7 64 200 00 731 09 915 50 17863 76 49 50 90 52 100 00 90 51 33 00 90 51 5000 00 5000 00 2500 00 2633 38 105 00 51 69 14 7 101 284 3 2 6 1500 00 779 59 73 11 91 55 17863 76 291 65 90 52 90 51 90 81 312 30 51 69 3600 65 9786 05 101 84 3 2 6 5000 00 41 02 563 09 5000 00 9 49 2500 00 57 51 657 98 823 95 563 09 14868 63 563 09 14868 63 (b) Your balance sheet having been approved, close books following the plan presented in your balance sheet ailid take a trial balance of your ledger im- mediately after closing, submitting your ledger and this last trial balance with your text-book to your teacher for approval before proceeding. 156. Adjustment of Capital by Interest — Balance Sheet Method. 1500 00 779 69 2279 59 6041 02 4990 51 2557 51 14868 63 TEACHER'S STAMP In any case in which the adjustment of investments by interest has been forgotten until the closing has progressed so far 212 CAMPBELL'S ACTUAL ACCOUNTING that it is not desirable to make a cash book or journal entry, the investments may be equalized by red ink entries in the closing of the stock accounts, computed on the plan presented in 154, 7, and represented in the balance sheet as shown below. c. w. Burke's Hat Gain H. P. Walter's " " C. A. Foley's " " #90.51 C. W. Btirlce'B Stook Credit • " •• Net GRin $90.52 •» •• " Int. on $833.33 exoess Invaet. 50.00 " •• " Private Debit •t It H » Gain •» •• •• present Worth H. P. Waltor'n Stook Credit " - n Het Gala no I* Int. on $633.33 excess. Invest. 50.00 » " •• Private Debit » " * " Gain •• •» •> Present Worth C A. Foley's Stock Cr«dit " » •• Private debit $ 33.00 " « It Dr. to Int. on nnder invest. 100.00 •♦ •• •• Private Debit total •♦ •• " Het Gain Credit •t « It It Private Loss " •• " Present Worth 17863 76 17863 5000 76 00 391 90 90 90 66 52 51 61 563 09 663 o9 563 09 140 49 52 50 91 02 5000 00 140 100 61 00 40 51 2600 00 133 90 00 51 42 49 14668 63 14668 63 2279 59 5091 02 5041 51 2457 51 14868 63 157. Naturally the one purchasing the business purchases also the books of accounts. But since you, as a student, desire to retain possession of the books in which all your work is writ- ten, we will require Mr. Wemple to provide himself with a new set of books, allowing him, how- ever, access to your books for any reference that he may need to make to the old accounts ; and we will proceed to make entries which will show the sale of the business and at the same time clear your books of all accounts and inventories transferred to your partner in the sale.^ (a) Form Illustrating Entries for a Sale of Business to Partner and for Closing All Accounts in the Ledger, the figures being taken from the supposed balance sheet of C. W. Burke & Co. at the close of their business May 31, 191. ., (see 155, a) with interest adjustments as in 156. C W. Burke and C. A. Foley sell out to H. F. Walter. The following entries, presented in journal form that they may be the better understood, entirely clear the books. All the cash of the firm is left to Mr. Burke and Mr. Foley, and H. F. Walter is to give three notes for the balance of $3,947.88 secured by a mortgage on the stock of merchandise and the store and office furniture and fixtures. The notes are not included in the entries below, being considered a personal transac- tion between the partners. They might, however, be introduced as in the form (b). 1. If H. F. Walter retained the books in the illustration in 157 (a), entries (1) and (2) in the form under (a) would be omitted and entry (4) would credit the Bills Payable instead of H. F. Walter, showing the notes which Mr. Walter gives in settling the contract. 2. This line (see plate on page 213) including figures should be in red ink. This item is not to be posted. All other items are posted. 3. The student should observe that the entries given in the plate on page 10, not only close out all ac- counts transferred to, or assumed by, Mr. Walter, but that they also close out the accounts of the other part- ners. Mr. Burke retaining the books, all of these entries become necessary except (4) in which Mr. Burke closes out his own account. This entry would not be made if Mr. Burke intended continuing business in the same set of books. Naturally the entry that he would make instead would be the one presented in 157 (b), (1) which would turn Mr. Walters' account into a Bills Receivable and leave on Mr. Burke's books Cash and Bills Receivable as resources and his stock account as his only liability. He desires, however, to indicate in his books his retirement from business, leaving no record to connect his past business with any future busi- ness in which he may engage. This furnishes the reason for, and indicates the result obtained by, the entry (4) in 157 (a). CAMPBELL'S ACTUAL ACCOUNTING 213 (a) ILL //c2^^fy /:5rc?^y 7/f^^ JL4/:^j:5r/ ^t^/'pM y<^^l^'-^-^'-**^»2<«^^>)^ - .^^^v/^^ M^. -^^.<*^.^^e£^ ^I/y .^^V. \ / f'^p^ ^^^z-^-*^ ^ y £> 2 & 3. For these footnotes see preceding page. . 777 tr // 158. To Sell Out Your Business To Your Partner and Make Entries That Will Clear The Books of All Accounts. I. Compare the balance of your Cash account with the net credit of your Stock account. As E. H. Wemple is to pay you in cash or notes you will reserve the firm's cash for yourself and your special partner to the full amount of your net credits, provided there be that much cash on hand. If there be more, the balance will be transferred to E. H. Wemple by the firm's check. If there be less, you will draw up a note in your favor at six months, interest 6 per cent., and present it to your teacher who will affix E. H. Wemple's signature. It will be well to pay your special partner in cash, if there be not cash enough for both yourself and him, taking the note of Mr. Wemple for yourself, but any plan of settlement that you agree upon will be satisfactory and the more original the better, provided you can make a correct entry. 2. You might introduce a page of four-column journal paper into your binder for these closing entries, but it will be better accounting and show more skill if you handle them in your cash book. The entry of 157 (a), i, made in the cash book, would require a debit to H. F. Walter on the credit side of the book and credits to the other accounts on the debit side, while if any cash were transferred either way, it would appear as the difference between the entries on the two sides. Observe that Accounts Receivable would be credited by entering the per- sonal credits, at full value, itemized in the Cash, Customers' Ledger, column, followed by the Less 10% Discount, in red ink, to be subtracted from the black total of the column when added and carried into the General Ledger column for posting. This will credit Accts. Rec. for the inventory amount only and each personal account for its full amount. The explanation (see 157 (a), i) can be made in the cash book by taking more than one line, if necessary. 3. Make entry in the same manner for the liabilities of your business at this closing, crediting E. H. Wemple for the total and debiting Bills Payable and Accounts Payable (see Accts. Rec. in 2 above) respectively. Explain. 4. Now refer to 157 (a) (3) ; make entry charging your special partner on the credit side of the cash book for the net credit of his stock account, and draw the firm's check for whatever cash he is to receive, crediting on the opposite side of the cash book whatever account supplies the balance, if the payment be not all cash. This will be E. H. Wemple, Stock, if he is to accept a note from E. H. W., as part payment ; or it may be your own Stock account if you see fit to take the Wemple note yourself and to give the special partner your own note in settlement. It may be CAMPBELL'S ACTUAL ACCOUNTING ^ ' 215 well to post your entries thus far before proceeding, that you may see exactly what still remains to be cleared up by your last entry. 5. Now make entry charging yourself and crediting the resources which you are to take in payment for your interest in the firm. If this be cash in full, make the entry on the credit side of your cash book. If it consist of cash, and a note from E. H. Wemple, make the entry first on the credit side of the book crediting cash for the whole amount; then on the debit side of the cash book crediting E. H. Wemple's Stock account for the amount which he pays by note.^ Explain (Your Name) retired from business zvithdrawing resources as above. This is illustrated in the entry marked (3) in the form in 145. Another plan for making this entry would be to let E. H. Wemple put his note into the firm and then let C. W. Burke take it, crediting Bills Receiv- able. See 157 (b) (i) and (2). But the facts are best represented if the notes be considered as outside of the firm and merely between the partners. 6. Post all entries to your ledger and rule up accounts that balance. If all work has been correctly performed, every account in your ledger will balance at this time and should be neatly ruled. 7. Prepare to transfer to E. H. Wemple the property turned over to him in this dissolution of partnership as follows : (a) Endorse all Bills Receivable, Pay to E. H. Wemple or order and sign the firm name, as it appears on the face of the paper, per your own name. (b) Make an itemized statement of account against all persons owing you and write at the the foot of each statement, Pay to E. H. Wemple or order, who is authorised to receipt in full, signing the firm name, as in (a). (c) Make a bill of sale of all Furniture and Chattels either rendering a simple invoice or executing the legal form of a Bill of Sale (which may be found in any text on commercial law), as your teacher may direct. (d) Prepare a quitclaim deed for the signature of your special partner in which he releases and quitclaims to E. H. Wemple "all his right, title and interest in the following described real estate, to-wit: Lots numbered and in Block numbered in the original plat of the city of College City" filling the blanks as indicated in the form in 159, being careful to insert the correct numbers of the lots and block. These may be learned from the deeds which you hold. Have your special partner execute this deed in perfect form. (e) Make out a full warranty deed transferring all your right and title to the real estate to E. H. Wemple. This will be a personal transfer signed by yourself and will be in form very much like the deed in 144, 4, except that you deed your entire interest instead of a one-half interest. Make the description of property the same as in your partner's quitclaim deed. (f) Prepare a list of personal accounts payable and a list of your bills payable to be handed to Mr. Wemple with other papers and make a record in your bill book, both for the bills payable and receivable, noting that the bills receivable have been Turned over to Mr. Wemple, and the bills payable Assumed by Mr. Wemple. (g) Make out as many copies of the following Notice of Dissolution as may be necessary to send one to each of your creditors, and then post or publish one for the benefit of your customers. Fill all blanks carefully and correctly. Sign it and have your special partner sign it. Mr. Wemple's signature may be affixed by your teacher. The signatures should be in the order in which the partner's names appear in the body of the notice. 1. The student should study out carefully the reason for crediting E. H. Wemple's stock account in this transaction, it being evident that if the student had taken any of the negotiable paper of the firm as part pay- ment the credit would have been Bills Receivable. If the reason be not clear, discuss the proposition with your teacher, or make the entry as illustrated in 157 (b). 2l6 CAMPBELL'S ACTUAL ACCOUNTL\G HOTICE OF DISSOLUTION The co-partnership heretofore existing "between and bas this day been dissolved hy mutual consent. and retiring from the huslness. All dehts owed hy the firm of ^ will he paid hy who will continue the business tmder the name of due the firm must be paid to the said Is authorized to receipt for the same. and all debts who alone Dated 191 (h) Lastly draw up three notes in your own favor for Mr. Wemple's signature, dividing the amount that he owes into three equal parts and drawing one note for each separate amount. Make the time of these notes respectively, po days after date, i8o days after date, and 270 days after date. Make the rate of interest 6%, making your notes in other particulars conform in general to the notes described in the mortgage in 160 given by E. H. Wemple to C. W Burke. Then take from your legal blanks a form of mercantile chattel mortgage and fill it out as indicated in the form in 160 ready for Mr. Wemple's signature. 8. When these notes and the mortgage and all other papers described TEACHER'S in 7 are prepared as instructed, present them to your teacher for his approval with your ledger ruled and closed as previously instructed and your text- book opened at this page of the work for your teacher's stamp of approval. Place all papers, merchandise tickets and other property or evidences of property transferred to Mr. Wemple in an envelope bearing his name and place it in compartment 8 of your filing case until you receive further in- structions concerninsf it. STAMP ..ie5?Si^^*^^^*^ ;^-^«s<^^^ ';;^«z^^^^ ":^§-ts?-^z>-^ i^L^^££^ J^ / 2.0 2Z 9a / 2^yt> /^yfff a-/^ •^syi aa- y^aT-/ ^y3,S, /a^rjr'y CAMPBELL'S ACTUAL ACCOUNTING 221 (b) 1 .Sv 3a //f~ <^/ ^^r. ^i' 7>«- jt^ /^a^/ (9^ i'.s? 9. Post your opening entry at once, opening accounts in the ledger with the personal accounts and observing that these accounts are all that are kept in single entry books. A cash account, even, is not essential, but as every business man that keeps books at all likes to keep track of his cash, we will add a cash account to our list of accounts, but will keep it in a cash book which you will open on a single page, entering your cash balance taken from your opening entry as shown at the top of the left hand column in the form on page 216. ID. To obtain possession of your inventories, detach from your page of prepared blanks, Forms 128 and 129, observing that Form 128 is an order on the College Commercial Company, which will secure your merchandise when your teacher has signed below the printed signature of the Associated Officers, and that Form 129, consists of tickets representing the items included in your Inventory of Store and Office Furniture. When you get possession of these goods, place the merchandise with your wholesale stock and the other tickets in an envelope marked, Store and Office Furniture. 11. Fill your orders and enter them in your journal as illustrated in the form in 8 (b). 12. Secure cash payment, if possible, for several of the sales just made and enter the cash in the Cash Book, marking the journal entry Paid as illustrated in the single entry forms in 8 (b) preceding. 13. Remit to F. W. Stone & Co. and to the Spurr Coflfee Co. for the amounts in their favor assumed by you on purchasing this business. Observe that you are entitled to the usual dis- 222 CAMPBELL'S ACTUAL ACCOUNTING counts, and deduct the amount of discount from the respective bills when you remit. Accounts having been opened with these firms in your ledger, you will make journal entry charging them for the amount of the cash and discount as illustrated in 8 (b), June 20. You will also make entry in the cash book for the amount of cash paid out, as illustrated in single entry cash in the form on p. 216, June 25, 14. Make out statements against each of the Accounts Receivable turned over to you by H. D. Fay & Co., and draw a draft on each in your own favor for the amount of the statement. Present these statements and drafts to your teacher who will retain the statements as specimens of your work and will accept your drafts payable at the bank, or will send you to the manager of the Assoc. Offices to have your drafts accepted. 15. If you have not yet received at least six invoices of merchandise for your Department E, report to your teacher and follow his instructions in regard to securing them. 16. Place your orders with the Spurr Coflfee Co. and F. W. Stone & Co. for new goods equal in amount to the sales you have made out of your original stock. In these letters state that you have recently purchased the stock and good will of H. D. Fay & Co., and will be pleased to con- tinue business with them, if prices are favorable. 17. Make payment for invoices received from students as follows: (a) For two invoices make payment in cash, making entry in the cash book as illustrated on p. 216, June 2. If these invoices are not already entered in the journal to the credit of the sellers, the journal entry may be omitted both for the invoice and for payment, but if the invoice has been entered to the sellers' credit, entry must also be made in the journal, charging them with the payment as in 13 above. (b) Pay two invoices by giving notes. If the invoices have been entered to the credit of the sellers, the sellers must be charged in the journal for both the note and any cash discount. If the sellers have not been credited for the invoices, no charge is to be made for the payment, but in either case the note must be recorded in the bill book. (c) Permit remaining invoices to remain on account. 18. Post all entries in your journal to your ledger and then take an abstract of all accounts of your ledger and verify it by adding together separately the debits and credits of your journal. See illustrations in form (a) and (b). (a) (b) 7^ yi^/a f^ ^3^/f 4saf(3_ €^ ^^=2^^€^^-y^ 2/4^yg dr/3/ j^££liX 'Z^.^-^t^ 2SO- u- 23/c ^J.^/ ^/3/ Z^^ S^ ^2. When your statement is completed work out a proof of accuracy of your work as illustrated in (d) following. If your work is correct the resources of your statement will correspond to the black ink footings of this proof and the liabilities of your statement to the red ink footings. Ob- serve that in the proof, C. W. Burke's Present Worth in red includes the net gain shown by the statement. If your work does not prove in the merchandise account as indicated by your proof above, it will appear in the fact that your inventory does not agree with the black ink footings of the merchandise column. If this should be the case you will need to work an expert report and prove your merchandise as in double entry. e 00 10 00 10 37 50 37 50 11 9g 02 98 02 12 129 99 129 99 5261 52 250 op J771 01 417 r^ I'+s? 67 10?? S7 648 47 1253 96 1000 00 66 00 37 50 II 1 1 1 Note. — Observe that in the proof above the plan is to take each entry, or group of similar entries, and ar- range the results on the basis of double entry. Line 1 above presents the first part of the illustrative opening entry presented on p. 220 in which C. W. Burke's credit, and the 10% profit allowed him on his accounts receiva- ble appear in red to indicate credits and his resources in black ink to indicate debits. Observe that the debits and credits of this line are equal. Line 2 presents C. W. Burke's debit and his liabilities in the same man- ner, and again the red and black figures of the line are equal. Line -3 is from the illustrative journal pre- sented in 11 and groups in one sum all the time sales as a credit in Merchandise, and a debit in Accounts Receivable. Observe that the credit placed to Merchandise is the cost value of the sales, the profit being placed in Loss and Gain. Line 4 groups in the same manner the cash sales. Line 5 is from the journal, t»eing the total of all credits to personal accounts for cash received. One side of this line, as also in the line 224 CAMPBELL'S ACTUAL ACCOUNTING preceding and in 6 following, is found in the cash book and should be checked that it be not considered again. Line 6 groups from the journal the debits to personal accounts and the credit is found In the cash book. If no cash book were kept it would be supplied as was the merchandise in lines 3 and 4. Observe that the credit shown in the Loss and Gain column is the Merchandise Discount. Line 7 may be taken either from the cash book or the bill book and should be checked in each, as the debit is from one and the credit from the other. Line 8 is obtained in the same manner. Line 9 is obtained from the cash book, the inventory supplying the debit found in Expense column and the difference going into Loss. Line 10 is from the inventory of salaries unpaid and gives a liability or credit in Salaries and a Loss of the same amount. Line 11 is a readjustment. As all accounts receivable on which the 10% ($112.04) of gain in Line 1 have not been collected that is not yet certainly gain. The proportion of that gain that belongs to those not yet col- lected is the $98.02 which is entered in the Loss and Gain column as a loss and deducted from Accounts Re- ceivable. Line 12 represents the profit. This is entered in the Loss and Gain column in black to balance the column and is carried into C. W. Burke's column in red to increase his net capital. The footing line pre- sents the difference between the debits and credits of each column shown in the color representing the larger amount and presents, as you will observe, the resources and liabilities of C. W. Burke in the illustrative statement presented in (c) above. 19. When your work is proved and satisfactory, enter your statement in your journal next following the Abstract of Ledger and submit your books with your proof of accuracy to your teacher for approval, with the usual duplicate copy of your report and your orders secured for an- other day's trading. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written. 162. Single Entry. — Method II. In your previous work we have given the simplest or fundamental style of single entry. While this method of keeping books might be presented in as many different forms as there are different kinds of accounts in one's ledger and might present every variation between the simplest single entry and full double entry bookkeeping, we will present just one other method which you will observe is considerably more complete than what you have studied and which would cer- tainly be more satisfactory if single entry were at all to be recommended for business purposes. I. Open a double page Cash Book, an Invoice Record Book and a Sales Book or Order Book following the forms in (a), (b) and (c). The journal which you will continue to use will be similar to the journal which you have used except that debits will be placed in the left hand column and credits in the right, all itemizing being done in the wide center column, as in double entry journalizing. SINGLE ENTRY CASH BOOK (b) y^/ ~^^^ / 2. '7 3/ 9/ / PObTED ITEMS OSE DIS C«SM RECEIPTS ^ff ^ ^^ ,2^i^P^ /2S2C 3C^<^^ g'2^ /^S 7^ <^^f 22as /j~ /^gJZ. ^>- CAMPBELL'S ACTUAL ACCOUNTING 225 No. of Invoices bo't of wholesale houses No. of Payments made in cash ; in notes. No. of Payments rec'd in cash ; in notes. No. of Sales made: To T. & T. Co No. of Entries made Average per hour... ...Of students , Total. ; in acceptances ; in acceptances to students ; Total No Time on trial balance Total Total $ hours. NOTES Bills Heceivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book , CASH Ledger Balance . , . , In bank, Stb. No.. In safe, Currency In safe. Checks, _ Total Cash on hand. TEACHER'S Respectfully submitted, .191.... STAMP (a) INVOICE RECORD BOOK. NAME AND ADDRESS AMOUNT OP INVOICES GENERAL SPECIAL 7^- ^ 3o ^ ^ i t3-t^, I ^/2 3c /<:>sosy y72^/^ /3ssa rg 77^ f^ /J -eriSi^^ (b) SINGLE ENTRY CASH BOOK POSTED ITEMS vw- JU^ / / /o 3/ c9/ /SfZ /Sf. 777^^ yyffC 2 3 7-27/ 77f /2-. f^ /z/^j S2- 2^i^-^?^ <^. ^-^^pe^- ^^rf ^^ /^// 7-< S^y^/7^ Transfer the cash as above to the debit of your cash book, and post to your ledger all the items marked Dr. and Cr. Then compare this entry with the opening entry you made in 161, 8, observing that in the above entry the personal debits and credits are posted from the items of the investor's entry instead of being entered separately as in 161, 8; and the investor's net credit only is posted instead of posting his debit and credit separately. Post the personal items of this entry to two Petty Accounts, one in the customers' ledger and one in the creditors'. Petty Ac- counts Payable would then appear as follows: 7<^f7^ 230 CAMPBELL'S ACTUAL ACCOUNTING Note. — Petty accounts (usually Petty Accounts Receivable) are opened in any business when it is not ex- pected that there will be continued dealings with the persons or firms included in the entry. When payment is made the amount of payment is posted to the opposite side of the account on the same line with the first entry, not on the first vacant line on that side of the page as in other posting. 2. Fill orders approved by your teacher at last closing. 3. Render account sales of all consignments. Observe that your records in the consignment ledger will be as in double entry. But since you keep no loss and gain accounts in single entry, you will have no accounts with commission, storage and similar charges, and will make but one entry in the cash book Totals column for the amount of your remittances, whether by check or draft. Observe carefully, in taking an abstract of your ledger for proof purposes, to what extent the consignment ledger is taken into consideration. 4. Enter all invoices received and unentered. Make payment for invoices bought by cash, notes, or sight drafts as may be convenient . 5- to you 6. book. Pay all your notes that are matured, making entry in the Total Cash column of your cash If there be interest on these notes, include it in the cash book entry using one line only for the amount paid and explaining. Paid note and Interest. Be careful to mark these notes paid in your bill book. 7. Pay some note which you owe that is not due, securing a discount. Make entry in cash book as in preceding transactions, observing that the entry will be for the amount of cash paid, not for the face of the note. Compare this with double entry as illustrated in previous work. 8. Collect all bills receivable which you hold that are matured, with interest from date. Make entry in total column of the cash book and mark the notes paid in your bill book. 9. Unless otherwise instructed by your teacher, discount at the bank all the notes which you hold that are not due. Make entry in the cash book for the amount of cash received. Turn to your Bill Book and mark these, Discounted at Bank. 10. Detach from your prepared blanks Forms 131, 132, 133 and 134, and make payment at office or teacher's desk. The first items being expense items, the only entries are cash book entries in the Total column. The bill presented in 133 is a charge to your personal (private) account. 11. Post. Collect the footings of Posted Items columns into your journal and prove the abstract of your ledger. Rule this work neatly as in former daily closing, 12. Take separate inventories of merchandise, chattels, office furniture, and other property in your possession and make out a statement similar to the statement made in 161, 19, except that the loss or gain will be divided between yourself and your partner, making the latter part of that statement appear as in the form below. ^^^^i^^^^y$^,t^/*,€^^kJ^ jT^jT^ ££jL7£. ^-/JJ'— ^v3-- ^ v5^c5'<5 c^y- '(^'y/ y^ /ip ^7^7 y^/^/ 7 ^^i^ •^Sjlj _^£^^ y^^^T/ 7<^ 'a CAMPBELL'S ACTUAL ACCOUNTING 231 166. I. Post the loss or gain shown by the above statement to the respective partners* accounts. This finishes the closing of your books. Now proceed to verify your records. 2. The first step in verifying records will be to prove merchandise. As your invoice rec- ord book and sales book furnish you the total amount of sales and purchases and as you have complete records of inventories and itemized vouchers for all sales and purchases, you will be able to make out your expert report and prove your merchandise as in former double entry work. Complete this proof and if it does not discover all probable errors, proceed as below. 3. (a) Take one of the large proof sheets of merchandise and arranging columns in pairs, as debit and credit,^ proceed to enter in the first horizontal line across the page all resources and liabilities as shown by your statement at last closing. (b) Take up your journal transactions, carefully supplying the missing half as if each were a double entry. Thus if your journal entry credits a customer for a note you will enter the credit in the columns marked Accounts Receivable and a corresponding debit in the columns marked Bills Receivable, etc., aggregating wherever you can items that are alike until all journal items are transferred in totals, to the proof page. Take a trial balance of your proof page. If you have performed the above work correctly it will balance the same as a ledger. If it does, — (c) Take up the invoice record book. Enter in the debit of the Merchandise columns total amount of merchandise bought. Place in the credit of Accounts Payable all that was bought on account ; in the credit of Cash, the total of bills paid in cash ; and in the credit of Bills Payable, the total of those for which you gave notes or accepted drafts. Again your proof should balance. (d) Proceed in like manner with your sales book, obtaining therefrom a credit for merchan- dise and a corresponding debit for Accounts Receivable, Bills Receivable or Cash. (e) From your cash book, debit side, take a cash debit, balancing it with credits to Accounts Receivable, Bills Receivable or other accounts as may be shown by the cash book entries that are not already included under the instructions above. Observe that you are to omit from the cash debit, items already included in the proof of other books. Proceed in like manner with the cash book credit side and again trial balance your proof. 4. Reduce this trial balance to a statement of losses and gains and resources and liabilities. The latter should be identical with the resources and liabilities of your statement in 165, 10. or should show you your errors. In preparing this statement of resources and liabilities be sure to have your personal accounts grouped into Accounts Receivable and Payable as in the opening entry of Outline IV. 167. To Change Books to Double Entry. Open an account in your ledger for each item of the preceding Resources and Liabilities Statement which is not already represented by a ledger account. Post from this statement, to the accounts just opened, all the unposted items of the statement, and proceed to take a trial balance as in former double entry work. When this balance proves, your books are success- fully changed to double entry. Submit all your books to your teacher for grading with orders for your next day's business that will dispose of all the merchandise that you have on hand and entered in your books (except Dep't E goods), submitting also the usual duplicate of your full report, a copy of which you will carefully enter below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total 1, Instead of debit and credit columns the student may use red and black ink as in the proof in 161, 18, (d), which will be a valuable guide in making this proof. 232 CAMPBELL'S ACTUAL ACCOUNTING No. of Sales made: To T. & T. Co „; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES JBills Receivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe Bills Payable, Ledger Balance . . . , Total unpaid in bill book CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe. Checks, _ Total Cash on hand. MERCHANDISE Department A Goods Department E Ooods TEACHER'S MARKING Cost of Mdse. bought Accuracy . .• Neatness Orderliness 3 2 2 2 1 Present i nventory Cost of goods sold Sales of merchandise Records Gain, red ink ; IJoss, black. . . . Progress Errors: Ourfvr.red; cont. black Averacre Respectfully submitted, .191.... TEACHER'S STAMP OUTLINE VIL i68. I. Do not make an opening entry in your books at the present time. As has been explained previously, when business is continuous and especially when continued in the same set of books there is no occasion for an opening entry at any time after the beginning of the business; and the changes of business that have been given you, and the opening entries that have been required of you, have been for purposes of practice. At this time your practice will be in continuing the work in the old books without any formal opening entry to mark the beginning of this Outline. In continuing your business records in double entry form in the books which you have been using for single entry, it will be necessary to make some slight modifications in method of using the books. (a) Use your cash book as you did while working Outline IV, using the Posted Ac- counts columns for Customers' and Creditors' Ledger columns respectively, and the Total Cash column for General Ledger. You have, perhaps, observed while working single entry, especially in making entry for prepared blank form 133, that all items posted in single entry were entered in the columns that in Outline IV were reserved exclusively for personal accounts. Such items now go into the General Ledger column when not personal. (b) Rule your sales book completely and post-check the total of merchandise footing as that has now been carried to your ledger in the change to double entry and will not be carried forward farther in the sales book. (c) You will make entries in your invoice record book, and will post the items to the credit of each personal account as you did in single entry, posting also the footing or total of merchandise bought to the debit of Merchandise and the credits of Accounts Payable in the gen- eral ledger as you posted from the invoice book kept in Outline IV. CAMPBELL'S ACTUAL ACCOUNTING 233 (d) The Journal might be dispensed with as was done in Outline V, but in view of the fact that it is the best book in which to study the debit and credit relations of entries, and that the work of this Outline will present a number of new entries for you to study, we will retain the journal, using it as in Outline IV. 2. Make entry for all invoices of merchandise that have been received and not entered. 3. Fill orders approved by your teacher at former closing, selling all merchandise on hand except Department E goods. If your orders do not include all wholesale stock on hand and entered, secure additional orders to dispose of all your stock and present them to your teacher for approval before filling. 4. Make a sale to the Townsite and Trading Company of all Department E goods in your possession, billing them on account subject to draft. 5. (a) Detach from your prepared blanks form 135, observing that it is a letter from the Associated Offices. Reply to this letter accepting the proposition and place your reply in en- velope of papers to be submitted to your teacher with your books, filing the letter of the As- sociated Offices in your letter file. Then (b) Detach from prepared blanks form 136. Observe that it is an order from the Asso- ciated Offices directing their selling agency at College Center to supply you with the goods of certain firms at the special discounts offered you in their letter. 6. Prepare four orders for merchandise, addressing one to each of the four companies with which you are to have dealings and ordering in each case the full quantity of goods per- mitted by the schoolroom "limit" as per your contract with the Associated Offices. Forward these orders to the College Commercial Company, addressing a letter to the Commercial Com- pany in which you will state that you are enclosing them herewith four orders for merchan- dise from companies represented by them, accompanied with a letter granting you special dis- counts on all these goods. Ask them to please give the matter their prompt attention and bill goods accordingly, on 60 days with usual cash discounts. 7. You will observe that while this special proposition from the Associated Offices will give you an opportunity to make a great deal more money than you have been making in any previous business, it will also require the employment of more capital. The orders you have just placed being probably very much in excess of your cash on hand, it will, therefore, be necessary that you devise some way of increasing your capital. This might be done by taking in another partner (or several partners) as you have done on previous occasions ; but the loose methods of management which partnership necessarily permits and the unlimited liability of partners in general to third parties, argues in favor of the incorporation of your business, and the increasing of your capital by selling stock. 8. With this in view you may (a) Clear your books of all dead and ficticious personal accounts by collecting those that owe you and paying those that you owe at the teacher's desk. These will include all items of Petty accounts. (b) Post ; prove all accounts and records ; take trial balance ; make out balance sheet ; and close books preparatory to the organization of a corporation. 9. When all work is completed as instructed in 8 preceding, secure orders for another day's trading large enough to dispose of most of the goods purchased and submit them to your teacher with your books for approval, accompanied by the usual duplicate report carefully copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students ^ , Total 234 CAMPBELL'S ACTUAL ACCOUNTING No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total... No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES CASH Bills Receivable, Ledger Bala nee Ledger Balance In bank, Stb. No. , Total value of notes in the safe. Bills Bay able, Ledger Balance Total unpaid in bill book In safe. Currency In safe, Checks, 1 Total Cash on hand Il . . ■ MERCHANDISE Department A Goods Department E Goods TEACHER'S MARKING Cost of Mdse. bought Accuracy 3 2 2 2 1 Present 1 n ventory Neatness Orderliness Cost of goods sold Sales of merchandise Records Gain, red ink ; Loss, black Progress Errors: Ourfvr.red; cont. black Average 169 (a) INVOICE RECORD BOOK. cu^ /z /2 2/ J./ <2Z^-*<^«^^^^T^ y^^g'zz .A^,^,^- i^.^ ^^ ^ .z^ ^/ ^j ^^ /az^ ^ Al /^ 2A /^O ^£> o (b) DEPARTMENT SALES BOOK. 0^ ^7 // ^? '7 // ^7 ^!a-d^S^z^ /2 ^s ^ .^^ //^ 4t-^ _ty- *NTA CLARA /Xf^ ^7 >sa /^ // :i2. /£ J2.yc^- ■0»^ JJL 2.a - S^£> 7^=- Jio o CAMPBELL'S ACTUAL ACCOUNTING 235 (c) You will need for the regular business of this Outline a new form of invoice record book and similar form of sales book (see form of invoice record in 169). Then readjust sheets of your loose-leaf books of original entry to insert pages of these two books following the invoice record and sales book pages respectively of Outline VL You will also need a number of specially ruled stock record books. Except in speculative stocks in large companies where there is much buying and selling of the stock, record blanks are usually bound into one book and in this form, they are furnished for your work. They will consist of a Stock Subscription book and Installment book combined arranged for the payment of stock in two installments (the book might be planned for any number of installments), a Certificate Book, a Stock Ledger, and a Dividend Book. A Stock Transfer Book is often used for the purpose of mak- ing a permanent record of the transfer of stock, but in your work this book will be omitted, the record of transfer being kept in the stub of the certificate book. A Stock Journal is an- other book frequently used for keeping a consecutive record of all stock certificates issued and cancelled, the items of this record being transferred to the stock ledger. It is, however, quite practical, though it would not be as convenient in handling the stocks of a company where there was much buying and selling, to transfer the record of certificates issued and cancelled directly from the stub of the Certificate Book to the Stock Ledger INVOICE RECORD BOOK, VEGETABLK SOUPS BORDKAII CATSUi' EXTRA TOMATOES FAMrLY SIZE MILK JAPAN TEA OOLONG -TEA ENG. BREAK. TEA CEYLON TEA REVERB COFFEE LEXINGTON COFFEE CONCORD COFFEE CONTINENTAL COFFEE K3 J2 ^^ ' ^a ' 7^ — S}? - ^ - ^7 52) /r 7> // ra ^2 /4^ ^a 3:5 - s92. - ^-2 - 2.if- //?0 - fjf — ^/ ra •^7 ra ^Jl f"" Ja - 7^ - ^^ ys^ ^^ y - y^s^ - /^^ ^ 7'^ — -^c ZJ a-2. =^ £j!^ — ^^ - 7-^ - 2:2. 2^ j2(^ ^y ^0 sS2- ^>^ .9C v^i" '<^a ^<2_ 4^4^ DEPARTMENT SALES BOOK. CONTINENTAL o 2.2. 3^ 72 2^2 /-2^ /^g- 2^ 3^0 y2a A^2a 2jr 2-^8 33 X? ^ 3^f ^^>^/7 ^3 di. Sz 4^^^ 7. /2.^- 74 ^^ 32^ /J ^J-^3 ^^0 y2a 7^ ^ '2a ^a 2//? ^2 2jr2 4y.z /<7 ^^ 2341^^^ rr 236 (d) CAMPBELL'S ACTUAL ACCOUNTING Stock Subscription and Instalment Book. We the underaiffned hereby subscribe for and a^ree to take the number of shares of stock In the Peoples' Telephone and Telegraph Company set opposite our respective names and to pay for the sajne at the par value of FIVE DOLLARS per share, one-half of said payment to be made on the completion of the organization, and one-half in six months thereafter. FIRST INSTALMENT OF 50% SECOND INSTALMENT OF F.07,, SIGNATURES OF SUBSCRIBERS WHEN PAID WHEN PAID /CO So 2-s-a ■ A^''^^<^e;t^. / 7 yji-a - /-2 (e) ^f/- 0^ /^ /^ /J.S V^- (^^(^ /J- /J- yfi^^^^^a^^ . 1 Cert, tiaued Ort. Cuicelled Balance of Share* Held EXPLANATION OP TRANSACTION R«f. SUBSCRIBED No. ShBi«s No. Shares Shares Value / / / / cT/y / / / /^i^ araa — — >^ai) __ ^aa _ ^^f^^. (f) Dividend No of % Declared 19 STOCKHOLDERS- NAMES AND ADDRESSES (g) When stock companies are organized for the purpose of pushing some ordinary mercan- tile business, the fewer the books used, and the simpler the method followed in keeping the CAMPBELL'S ACTUAL ACCOUNTING 237 238 CAMPBELL'S ACTUAL ACCOUNTING ably be not less than $20,000. When your Articles of Incorporation are correctly filled out, they should be signed by yourself and partner, or partners, and by two or three other persons who expect to become stockholders in your corporation. These signatures should be acknowl- edged before a notary after which the paper may be filed at your teacher's desk.^ 2. (a) Open your Subscription Book. Each member of the old partnership should sub- scribe for enough capital stock to cover, approximately at least, his interest in the partnership and he may subscribe for as much more as he is able personally to pay for. You may subscribe for a little more than your partnership interest and Mr. Wemple, or whoever is your partner at this time, may subscribe for a little less. Your teacher will sign for Mr. Wemple as in for- mer work. Secure other subscriptions until you have five^ or six stockholders but do not dis- pose of all your capital stock. Leave some to be sold later. (b) Observe that each subscriber must write his own name in the Subscription Book, this being his agreement to take the shares of stock specified. When 3/ou have secured as many subscriptions as you desire, you may fill the column entitled Certificate Number with consecu- tive numbers, one after each subscriber's name, and at your leisure may write up the certificates and stubs in the certificate book (omitting dates) ready for the signatures of the officers of the company when the certificate is to be issued. You will not issue certificates until the stock is fully paid, which means not until the second installment of subscriptions is collected. The principal advantage in assigning certificates to the subscribers in the order of their subscrip- tion, is that the certificate stubs will be numbered in the same order as the stockholders' names in the subscription book. Otherwise any subscriber who would be first to make full payment of his stock would be entitled to Certificate No. i and any other in the list might in the same way become entitled to No. 2. (c) Omitting all the legal details of the organization, you may assume that you have been elected president of the company and that your former partner has been elected secretary. Or since your duties as bookkeeper, etc., will more nearly coincide with those of the secretary you may reverse the assumption and use your partner's name as that of president and your own as secretary. The principal stockholder is, however, usually the president. If Mr. Wemple is one of your stockholders let him hold one of these offices and to save your teacher the time re- quired to affix Mr. Wemple's signature to the necessary papers, he may if he sees fit delegate that authority to you. 3. Since some of the features of your business as a special selling agency will necessitate, in part at least, a new set of books, you will proceed to make such entries as would be necessary in closing entirely the partnership books, to be followed later by a set of entries opening new books for the corporation. The closing entries will be made in your journal and will be similar to the entries made at the dissolution of your partnership in 157-158. (a) Debit the new company by name and credit the accounts that make up the resources of the partnership as per last statement. Explain Your surname here Commercial Company is charged for resources of Name of your partnership tiim ed over to said company at organization. (b) Credit the new company and charge the accounts that make up the partnership lia- bilities including the partner's stock accounts, explaining Your surname here Commercial Com- pany is credited for liabilities of Name of Partnership assumed by them at organisation and for the partners' stock accounts for zvhich the partners are to receive compensation in the stock of the company or in cash. 1. State law prescribes where these articles are to be filed, usually with the secretary of state, who grants permission (usually by issuing a certificate) authorizing the persons filing the Articles to open a sub- scription book for the sale of the stock of the company. 2. The law in some states requires at least five stockholders. In other states, organization is permitted with three. CAMPBELL'S ACTUAL ACCOUNTING - 239 (c) Endorse all notes held by the partnership in favor of the company. Make out state- ments against all your accounts receivable in the name of your partnership, accompanying each with a statement of the organization of the new company and requesting a settlement by check in its favor. Then write out and hand to your teacher an announcement to the effect that the firm of Your firm name here has incorporated under the name of Your surname Commer- cial Company and that the new company will assume and pay all debts of the partnership and is authorized to collect the liabilities. This should be signed both by the partnership signatures and by the signatures of your corporation by its president. You should also attach a corpora- tion seal^ as evidence of the signature of the corporation. (d) Post the entries made above and rule all accotmts. This should TEACHER'S entirely close the books of your partnership. Submit to your teacher all your books in which you have made entries since last closing for criticism and approval and when he has placed his stamp in the form to the right, you will proceed to open books for the new corporation as suggested be- low. STAMP 171. I. To open books for your corporation, enter in the wide column of your journal the following memoranda, Your surname Commercial Company has this day been organised to succeed the partnership known as Your partnership name its capital stock being oivned and subscribed as follozvs. Then debit Subscriptions for the total value of shares subscribed, itemizing beneath the title. Subscriptions, the names of the subscribers and the amount which each has subscribed. Beneath the itemized debit to Subscriptions, debit Treasury Stock for total value of the unsold shares and complete the entry by crediting Capital Stock for the amount of the capital of the company. The entry should balance as any journal entry. In posting the part of this entry pertaining to Subscriptions, post the separate amounts subscribed, writing the name of each subscriber in the wide column and omitting one line between each name, giving the account the form of petty accounts receivable (see 165, i) and leaving room for two credits, amounts paid on installments. 2. Debit the resources taken from the partnership books for their respective amounts and credit the liabilities, making an additional credit to Subscriptions (itemized) for the amount of each partner's interest that is subscribed in stock, and giving either partner credit on personal account (the same as any other personal account credit) for any balance of partnership inter- est that exceeds the amount of his stock subscription. See that these entries balance. Then explain. The above resources and liabilities are transferred from the books of Your firm name to the books of Your Surname Commercial Company. Open an account with Capital Stock on a new page toward the back of your general ledger ; on the page following, open an account with Subscriptions ; follow this on the next page with Treasury Stock ; leave the page following Treasury Stock blank until further instructions and arrange pages for your general ledger resources and liabilities to suit yourself, being methodical in your arrangement and following in general the order given in the first opening of your books. 3. Collect the first installment of subscription in cash from all subscribers except the partners and give receipts therefor, making entry to the credit of Subscriptions in the cash book and in the First Installment column in the subscription book. Also at this time indicate in the subscription book the settlement of all installments of the partners' subscriptions so far as the amount of their partnership interest is large enough to cover thesubscription. This under the instructions given in 170, 2, will credit your partner's installment in full and will credit your installments to the extent of your partnership interest. How nearly the installments of your subscription are covered by your partnership interest depends, of course, upon the number of shares for which you subscribed. 4. Open in your stock ledger an account with each subscriber, posting thereto from the sub- scription book as a debit the amount each has subscribed and as a credit or credits the amount or one for each installment. 1. A corporation seal is usually a die that stamps into the paper the full name of the corporation. The name of the company is signed by its president or secretary or both, or by some one else specially delegated to act for it, this authority being specially granted at a lawfully held meeting of the directors and duly entered in the minutes. 240 CAMPBELL'S ACTUAL ACCOUNTING 5. Since one at least of the partners has paid for his stock in full by his partnership interest (which should now be shown by the record in the stock ledger), you will immediately issue him a certificate of stock, transferring the stub record to the column marked Certificates Issued in the stock ledger. 6. Fill the orders approved by your teacher at your last report. Make entry in your sales book using but a single line for each sale and carefully filling and referring to the order blanks, which you will file in the proper compartment of your filing case to complete the sales record. 7. Make entry for all invoices received, entering invoices from the wholesale houses in the new Invoice Record Book and invoices of Department E goods (bought from students) in the Invoice Book used while working Outline IV. If the pages of this Invoice Book should be full, you can use pages of the Invoice Record Book used with Outline V^I. 8. (a) Make payment for all invoices received, giving notes or accepting drafts where de- sired and in other cases making such payment as you see fit according to the terms of the invoice. (b) Make payment for all your notes or acceptances that have matured, making entry in your cash book as in former work, a matter that should be perfectly familiar to you at this stage of your progress. 9. Make entry for all payments received, whether payments for goods sold or for notes or acceptances, making the entry in your cash book as in former work. 10. Make remittance to the College Commercial Company for goods bought according to the terms of the respective invoices, and if you have not sufficient cash consult with your teacher and make arrangements to borrow at the College Bank such a sum of money as will enable you to take advantage of the cash discounts of your bills, while waiting for collections on your sales. The note which you give the bank should be in joint and several form, signed by yourself and some other student acceptable to your teacher and the bank. Your teacher's approval of this form will be indicated by his stamp when the paper is presented to be vised. In the same letter in which you enclose cash remittances for your wholesale houses (you need write but one letter at this time, ad- dressing it to the College Commercial Company as the representative of the four houses with which you are dealing) you will include one additional order for each of the four houses, making it as large as the school "limit" will permit, but not omitting the sam6 ticket from two consecutive orders. 11. Detach from Prepared Blanks Form 137 and pay at the office or teacher's desk. 12. Post, prove cash and notes, make bank deposit and trial balance your books. Then se- cure orders for your next day's trading, making it a point to include in each order some of the goods of each of the companies whose goods you are handling and submit these orders to your teacher for approval, together with your books and a duplicate copy of your daily report neatly copied into the form below. REPORT V Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of :^ntries made Average per hour Time on trial balance hours. NOTES Bills Receivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe . Bills Payable, Ledger Balance Total unpaid in bill book , CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. CAMPBELL'S ACTUAL ACCOUNTING 241 TEACHER'S Respectfully submitted, 191 ... . STAMP 172. I. Draw a draft at 30 days on the Townsite and Trading Co. for the amount of your last sale of merchandise and discount it at your bank. 2. Fill orders approved by your teacher at last report. 3. Sell some of your treasury stock, at a premium if possible, and if not, at a discount. Have purchaser sign the subscription book and collect the first installment and the premium in cash. If the stock be sold at a discount, it would be good business to leave all discount to come out of the second installment, but for the sake of getting the entry at this time, you may take at least half the discount out of the first installment. Give the purchaser a receipt for the payment as in transac- tions with other stockholders. Since you sell at a premium or discount, you will need to open an account for the amount of premium or discount as the credit to Treasury Stock must be at par value. Make entry in your journal debiting Subscriptions and crediting Treasury Stock for the par value of the shares sold. In debiting subscriptions, remember to use the name of the stock- holder as a sub-entry title exactly as in preceding sales of stock. Now make entry in the cash book crediting Subscriptions for the amount of the first installment and Stock Commissions (if the stock was sold at a premium) for the amount of the premium ; if the stock was sold at a discount, debit Stock Commissions on the credit side of the cash book for the amount of the discount. 4. Make entry for all invoices received, entering your wholesale invoices in your new in- voice record book and the invoices of Department E goods received from students in the invoice book used while working Outline IV. (See 171, 7.) 5. Make payment for all invoices received from students, giving notes at 60 or 90 days whenever you can, that you may reserve a good cash balance for payment of wholesale invoices. 6. Make payment for all notes on acceptances matured, and collect all you hold that are due. If you hold any that are not due which are likely to be difficult of collection at maturity, discount them at your bank. 7. Collect the second installment of capital stock from all subscribers and issue certificates. Credit each in the second installment column of subscription-installment book and post to the stock ledger. Make entry for the cash required in the cash book, debit side, crediting Subscrip- tions with each subscriber's name as a sub-entry title in place of the explanation, and post the amount (when posting from the cash book) to the general ledger. If you have not enough per- sonal cash to pay any balance on your own second installment, you may give the company your note. Next post to the stock ledger from the stub of the certificate book a record of each cer- tificate issued at this time and from the subscription-installment book post the payments on stock. The money columns of each subscriber's account in the stock ledger should now balance, show- ing all stock paid up in full. This being the case, the money columns of the accounts in the stock ledger may be ruled if you so desire, as there will be no further entries in the money columns of these paid up accounts. This would be different if we were considering assessable stock, but that feature of stock work will not be presented in this outline. 8. (a) Sell the balance of your treasury stock, if possible, to some one not now in the com- pany, at 5% premium, taking merchandise in payment. If necessary to get this transaction, you can aflford to pay a higher price than usual for the merchandise, so long as it does not exceed the 5% stock premium.^ 1. If you do pay an extra price for the merchandise, it will be most convenient for you in the proving of your merchandise account later, if you enter the merchandise at regular price and deduct from the stock premium the amount of any excess price of merchandise. Otherwise, do not extend this invoice into the money columns of the invoice book, but make a journal entry for the amount explaining carefully in the ledger when posting. 242 CAMPBELL'S ACTUAL ACCOUNTING (b) If your purchaser is willing to pay for the stock in full at this time it will not be neces- sary to pass the transaction through the subscription-installment book, as you may make entry properly in your journal, Merchandise (Dr. to), Treasury Stock and Commissions, but for the sake of keeping in one place a consecutive list of your stockholders, it will be well for this purchaser also to sign the subscription book, and in that case you will make entry as in transaction 3, except that the second entry also will be in your journal instead of the cash book, and will debit Merchandise instead of Cash. 9. Sell ten shares of your own stock at a premium if possible, but at a discount if necessary, to some one not now in the company. As this is your own paid-up stock, you will (a) Observe that the company does not get the money for it and you will place what you receive in the envelope used for your private cash and other papers. If you receive payment by a check have it certified before placing it in the envelope. (b) Although the financial part of this transaction receives no entry in the books of the company, the stock transfer will require entry in the stock records. First, you will cancel the certificate which you held, filling the blanks on back of the certifi- cate and making a record on the original stub of the same number. Second, you will issue to the purchaser for the number of shares which he has purchased the first certificate not issued, numbering it consecutively with the certificate preceding and will issue to yourself for the balance of the shares which you hold, the next certificate in consecutive order. Third, you will open a new account in the stock ledger for the new stockholder, if he be one outside of your company, and will post to it the record of the issue of the new certificate with- out any record whatever in the money columns of his account, since this is paid-up stock. If your stock be sold to a former stockholder, this same record will follow on the first vacant line in his present stock account. Fourth, post to your stock account in the stock ledger, the record of the cancellation of the certificate which you held as well as the record of the issue of your new certificate and extend the correct amount into the Balance of Shares Held column. Again there will be no record in the money columns of the stock ledger account. File your cancelled certificate in an envelope marked Certificates Cancelled or perhaps you may find a convenient place for it in the back compartment of your invoice file. If you were not using your certificate stubs as a book of entry and refer- ence, the cancelled certificate could be reattached to the original stub with paste, but this would make your stubs so inconvenient for reference that it will be best to file the cancelled certificates elsewhere, making a reference on the cancelled stub to the place of filing. 10. Ask some other stockholder to make a sale of part of his shares. If he cannot find a purchaser in the schoolroom without difficulty, buy this stock yourself. The records for the transaction will be very similar to the records of 9 preceding. You can give your personal note for payment, or if you receive money enough from the sale of the stock in 9 above, you can use that in paying for this stock. 11. Make remittance in cash to the College Commercial Company in full for invoices of mer- chandise received from the four houses with which you are dealing and place new orders as large as the schoolroom limit will permit. Do not, however, exactly duplicate your last orders, but let the omitted ticket be something different from that omitted the last time. 12. Secure orders for your next day's trading, being careful to secure one order from some one of your stockholders (preferably one who is probably short of cash) for enough merchan- dise to cover the amount of his stock. Make the terms of this order, note payable on demand^ giving the usual trade discount with 1% for the note. 13. You are now ready to declare your first dividend. (a) Post, (b) Prove cash, (c) Make bank deposit, (d) Prove Bills Receivable and Payable. CAMPBELL'S ACTUAL ACCOUNTING 243 (e) Prove Merchandise, taking your inventories in all departments carefully. Observe that the accounts with the different lines of goods classified into departments on the basis of the per cent, of profit will condense the wholesale stock into four Departments, which with Depart- ment E will just fill the columns of your expert report blanks. (f ) Close Freight and Taxes on Mdse. into the Mdse. account and take a trial balance. (g) Take inventories of all accounts, such as Expense and Salaries, unless all items in- cluded in these accounts are considered a total loss at this time, and (h) Make out a balance sheet showing enough of the loss and .gain transferred to Divi- dend No. I to make a 5 or 10 per cent, dividend on your capital stock, the balance of loss and gain being transferred to an account which we will style Undivided Profits. For form of the balance sheet see 173. (i) Close your books. Transfer loss and gain items to the Loss and Gain account as in former closings. Then distribute the loss and gain by an entry in the journal, in which you will debit Loss and Gain for the total amount of gain and credit Dividend No. i for the amount indi- cated in the balance sheet and Undivided Profits for the balance of the gains. Observe that Capi- tal Stock is not touched in the closing entries as were the partners' stock accounts in keeping part- nership books. 14. Post this loss and gain entry to your ledger, opening accounts with Dividend No. i and Undivided Profits on consecutive pages next following the page assigned to Treasury Stock and submit your books to your teacher for approval, with an analytical form of statement as in 173, submitting therewith all papers reserved for his inspection, your customers' orders for merchandise and a duplicate of the full report carefully copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co '. ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills Receivable, Ledger Balance Total uncollected in bill book , Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book , CASH Ledger Balance In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. MERCHANDISE Department A Goods Department B Goods TEACHER'S MARKING Cost of Mdse. bought Accuracy 3 2 2 2 1 Present inventory Neatness Cost of goods sold Orderliness. Records . . . Sales of m^r'^hap'lisfi . . . . Gain, red ink ; Loss, black .... Progress Errors: Ourfvr.red; cont. black Average ' Respectfully submitted. TEACHER'S ,191. STAMP 244 CAMPBELL'S ACTUAL ACCOUNTING ^73 statement of the C. W. Barke Commerolal Company* Jan. 1« 19_ Trial Balance, Faoo of Ledger „ 1 Capital Stook 50000 00 2 Treasury Stook 5000 00 CB Cash 40924 39 13 Merchandise (laveatory #3936.01) 51464 34 58147 54 23 Merohandise DlBootiut 425 87 457 44 24 Expense (Inventory $36.00) 1302 00 34 Advertising 542 00 25 Salaries (Liabilities Inventory, $37,50) 550 00 25 Interest & Blsoouat ^ 7 44 18 Bills Reoelvahle 5324 43 1675 96 18 Bills Payable 195 00 1488 12 29 UoConnell & Company 4365 97 648 47 40 Anderson & Anderson 2250 63 1386 96 50 F. E. Bams 2214 78 102 00 61 The Van Camp Packing Company — — Resources & Liabilities 744 00 1389 18 11SS03 41 115303 ^ Resources Treasury Stook 5000 00 Cash 40924 39 Merchandise, per Inventoiy, 3936 01 Expense, per Inventory, 36 00 Bills Receivable, per list attached. 3648 47 MoConnell & Company 3717 50 Anderson & Anderson 863 67 F. B. Bums Total Assets 2112 78 60238 82 - Liabilities Salaries (Earned but not charged, Lla*. Inv.) 37 50 Bills Payable, per list attached. 1293 12 The Van Camp Packing Company 645 18 Total Liabilities Met Resources. C. W. Burke Commercial Co., Pres. Worth 1975 80 58263 02 "-"■""""""- iiOsses & vsina --------- -- Gains -- Merohsdidlse Sales $68147.54 Merchandise Cost* total #51464.34 Dednot aoods on Hand (Inventory) 9936 0^. aives Cost of Goods Sold Subtracting from Sales gives Mdse. Gain 47528.33 10619 21 Merohandise Discount, on Invoices Bo't $457.44 Allowed on Sales Eet Gain In Mdse. Discounts 426.87 31 57 Interest & Discount, Int. Col* on notes Total Gains 7 74 10658 52 -- Losses — £3;pense. Total, debit ♦1302.00 Inventory deducted Fet loss in Expense 36.00 1266 00 Advertising 542 00 Salaries, Ledger debit $550.00 Earned but not charged, (Ida. Inv.) Total loss In Salaries Total Losses C. W. Burke Commercial Company's ITet Gain —Disposition of Gain — 37.50 587 50 £395 50 526^ 02 Dividend So. 1 (10 ^ of Capital Stook) Cr. 5000 00 tmdlvlded Profits Capital Stock of Conqpaay C. W. Burke Commercial Company's Present Worth Cr. 3263 02 8263 50000 02 00 5826^ CT" CAMPBELL'S ACTUAL ACCOUNTING 245 174. I. Make a sale to the Townsite and Trading Company at list price on account sub- ject to draft of all Department E goods on hand, entering this sale in the journal and itemizing it carefully. We make this entry in the journal for two reasons, one because the sale is so infre- quently made that it was not desirable to use a column for it in the sales book, and the other be- cause we have no itemized order to file for reference and must therefore copy, in connection with the entry, an itemized list of the goods sold. 2. Fill orders approved by your teacher when books were submitted. 3. (a) Open your dividend book and on the first page write up Dividend No. i, placing opposite the name of each subscriber the amount of dividend to which he is entitled and proceed to draw the company's checks for the amounts. In delivering these checks, take with you your dividend book and when you deliver the check, have each subscriber sign for the dividend, in the signature column on the line opposite his name. (b) Make entry in your cash book, credit side, debiting Dividend No. i explained by the name of the stockholder as a sub-title, and post to the account with Dividend No. i in the general ledger, entering the name of the subscriber in the wide column of the ledger account. When these dividends are all paid, the dividend account will balance and should be ruled. Have the check that is issued in your favor certified, and then place it in the envelope containing your private cash and papers. 4. When you have secured the demand note from the stockholder to whom you are in- structed to make special sale of merchandise in 172, 12, present it to him for payment, offering to take his stock in part or full payment as the case may be. As this stock becomes the property of the company, make entry, debiting Treasury Stock and crediting Bills Receivable. The debit to Treasury Stock must be made for the par value of the stock. If in your transaction with the student you have bought at either a premium or a discount, adjust that by an entry crediting or debiting Stock Commission. 5. Buy this stock from the company for yourself, giving the company your individual note on demand for the amount. 6. Take the money which you received from the company for dividend and apply it to the payment of your note on demand given as instructed in 5, and transfer to the company enough of your stock to pay the balance due on your note. This entry would be best made in your journal, debiting Cash and Treasury Stock and crediting Bills Receivable for the amount of your note, and then posting Cash to the cash book. Observe that the surrender of stock to the com- pany on your part will necessitate the cancellation of your present certificate, or one of your certifi- cates, if you hold two (the purchase of stock which you made in 5 would give you two certifi- cates), and the reissue of a new certificate to yourself for the balance of shares held. Complete the stock records carefully, consulting your teacher if necessary, to be sure that they are correct. 7. Pay for all invoices bought from students. In payment for some one of these invoices from some one not a stockholder (preferably the largest invoice received from a non-stockholder) give the company's note payable on demand. Make other payments as usual. 8. (a) Pay all notes and acceptances that you owe that have matured, or if you are short of cash, pay the interest and give new notes with an endorser in each case. (b) Collect all notes and acceptances which you hold that are due. Draw on T. & T. Co.^ (c) Pay the note on demand given as instructed in 7 above, insisting that the holder take stock in the company for it. You may sell the stock at a discount if necessary, but it would be better to talk the stock up so as to induce him to take the stock at a premium. If there is not enough treasury stock on hand to pay the note, put in some of your own stock and be careful not to get tangled in making the entry. 9. Write to the College Commercial Company including cash remittance for invoices last re- ceived (borrow at the bank as before if necessary) and including in your letter new orders for mer- chandise as before. 1. Include with each bank deposit in this Outline a draft on the T. & T. Co. for some amount in round num- bers, as $500, $1000, or $1500, but not exceeding 95% of their net credit on your books. 246 CAMPBELL'S ACTUAL ACCOUNTING 10. If the amount of money set aside to Undivided Profits when your last dividend was paid, together with the gains on the sales just made, will be sufficient to pay a 25% dividend, you are ready to make another closing of your books. If the gains are not large enough, secure orders for another day's trading large enough to insure the desired profit. Present them at once to your teacher for approval and fill them as soon as approved, placing additional orders for merchan- dise with the wholesale houses that your stock may not be depleted when you need it for future sales. 11. When you have continued your trading to the extent sufficient to insure you a 25% divi- dend, close your books, taking inventories and proving all accounts, carefully following the out- line in 172, 13. 12. Presuming that the company has voted to increase the capital stock and that you have taken the legal steps necessary, you will, in distributing loss and gain in your balance sheet at this time, distribute an amount equal to the 25% of the capital stock to Stock Dividend No. i and the balance to Undivided Profits as before. 13. Close books as before, transferring the loss and gain when collected, by a journal entry to Stock Dividend No. i and Undivided Profits, provided your gains at this time exceed the 25% desired for stock dividend. If the gains should be less than 25% of the capital stock, this entry should transfer all of the gain to Stock Dividend and another entry should be made in which you will debit Undivided Profits and credit Stock Dividend No. i for enough additional to make the 25% Stock Dividend. If this should throw the balance of undivided profits on the debit side let it so appear and we will adjust that later. The account with Stock Dividend No. i you will open immediately following the account of Dividend No. i, and the entry to Undivided Profits you will post to the account already opened under that name. When your books are properly closed, submit them to your teacher for approval, with a statement made out in analytical form, with orders for another day's trading and a duplicate copy of your full report as copied into the form below. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES 1 CASH Ledger Balance Tn bank, Stb. No. , In safe, Currency 7otal value of notes in the safe Tn Hafe, Chftf^ks, jBills Payable^ Ledger Balance Total unpaid in bill book Total Cash on hand MERCHANDISE Cost of Mdse. bought Present inventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black . . Errors: Ourfvr.red; cont. black Department A Goods Department E Goods TEACHER'S MARKING Accuracy . . . Neatness . . . Orderliness. Records . . . . Progress. . . Average . . . . CAMPBELL'S ACTUAL ACCOUNTING 24? TEACHER'S liespectfully submitted, 191.... STAMP 175. I. Sell to T. & T. Co. all goods of Department E included in last closing and draw at sight in favor of your bank for the last preceding sale. 2. Make an entry in your journal debiting Treasury Stock and crediting Capital Stock for the 25% increase of stock made at this time, then (a) Write up your Dividend Book for Stock Dividend No. i of 25%. If in any case this would make fractional shares (as it will do if a stockholder's shares are not multiples of four) you may assign him a number of shares in the dividend book, the nearest number larger or smaller than the exact value due him, making sure that the total assignment is not more than the treasury stock to be distributed and consulting him, if the assignment be larger than his 25%, to know that he is willing to pay cash for the excess. (b) Take up your certificate book and issue certificates to each stockholder for the new shares assigned to him in the dividend book. In delivering these certificates, collect in cash for the difference from all who receive certificates for more shares than the amount of their 25% divi- dends, and pay in cash the difference to all who receive less stock than the exact amount of their dividends. Have each subscriber sign the dividend book when he receives payment, and from it make journal entry, debiting Stock Dividend No. i and crediting Treasury Stock sepa- rately for each individual transaction, balancing the ent:-y for the amount of cash^ paid or re- ceived in the stock settlement. In posting these credits to the Treasury Stock account, remem- ber to use the name of the stockholder in the ledger account just as you have previously done in the entries to Subscriptions account. Post the record of certificates issued from the certificate stubs to the Stock Ledger account. If the fractions should be largely minor fractions so that the assignment of shares of stock does not entirely take up the full 25% increase, the above entry will leave the balance of unassigned stock as a debit to Treasury Stock and the amount of cash paid out in distributing the dividend will exactly equal the treasury stock remaining. This stock may be sold later. 3. If you have any treasury stock on hand, sell it at as high figures as possible and make entry debiting Cash, crediting Treasury Stock for the par value, and debiting or crediting Stock Com- missions if there be a difference between the amovmt received and the par value of the stock. 4. A fire breaks out in your store and the loss not covered by insurance amounts to about 20% of your capital stock. Deliver to your teacher as destroyed and damaged goods a quantity which at cost price will equal 20% of your capital stock. You may take these goods from De- partment E, if you have sufficient of them, if not, take from the wholesale goods until you have made your loss aggregate the amount indicated. In making entry for this loss in your journal charge Loss and Gain and credit the different departments to which the goods belong, carefully itemizing the destroyed and damaged goods. 5. Fill customers' orders as far as you can with the goods remaining and enter in sales book. 6. Stockholders vote to meet the loss by fire by a 20% reduction of the capital stock. Make entry closing Undivided Profits into Surplus Fund (a new account), then call in all certificates and issue new, for 20% less than the former holding. As you issue each certificate, debit Capital Stock and credit Surplus Fund, using the name of the subscriber as an explanation. If fractional 1. Instead of issuing only full shares of stock to each stockholder as has been done in declaring this stock dividend, it is the custom with some companies declaring frequent stock dividends to keep a separate record in the stock ledger for the exact amount of stock dividend of each stockholder, issuing certificates only for the full- shares represented, and allowing the fractional shares of stock held to be represented by a receipt until the declaring of another dividend increases the fractional amounts to a full share. This method has the advantage of giving every one exactly his proportion of stock and might be insisted on by stockholders who were unwilling to pay for additional fractional shares or to sell to the company at par the fractional shares to which they were entitled, as we have supposed them to do in the settlement made above. 248 CAMPBELL'S ACTUAL ACCOUNTING stock results, handle it in the same manner as you did when declaring your stock dividend. Make the debit to Capital Stock in every case the exact 20% of reduction, and if ow^ing to the fraction, the stockholder's new certificate is issued for less than the exact stock, the extra fractional share will be debited to Treasury Stock, Treasury Stock being credited in turn when a stockholder accepts a certificate for a larger number of shares. As you cannot issue stock in excess of the total re- duced capital, you cannot let every one take extra stock to make his shares even, so it will be wisest to. adopt the rule of buying into the Treasury all minimum fractions and selling the extra stock in minimum fractions to those entitled to maximum fractions. Observe that the increase of capital stock when stock dividend is issued is directly the reverse of the present transaction in which we reduce capital stock to meet a loss. When all certificates have been exchanged, the capital stock account may be balanced and the balance brought down and should then show just 80% of what it did before the fire, or exactly the same stock with which you originally incor- porated. 7. Close all accounts showing loss and gain into loss and gain account, taking inventories as usual and proving your merchandise account. In making this proof remember that the goods lost by fire must be taken into consideration the same as sales to partners made at cost. See previous work for instructions. 8. When you have completed the closing of your books, prepare an analytical statement showing the exact condition of your business and submit all books to your teacher for approval accompanied by duplicate copy of the report below. REPORT Report of School Duties: I take bookkeeping , Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries made Average per hour Time on trial balance hours. NOTES Bills Receivable, Ledger Balance Total uncollected in bill book Total value of notes in the safe Bills Payable, Ledger Balance Total unpaid in bill book CASH Ledger Balance . . . , In bank, Stb. No.. In safe, Currency In safe, Checks, _ Total Cash on hand. MERCHANDISE Cost of Mdse. bought Present i n ventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cent, black Department A Goods Department E Goods TEACHER'S MARKING Accuracy. . . Neatness . . . Orderliness. Records . . . . Progress. . . . Average. . . . Respectfully submitted, .191., TEACHER'S STAMP CAMPBELL'S ACTUAL ACCOUNTING 249 176. Original Work. You have now followed your stock company through a sufficient variety of transactions to cover all cases likely to arise in any mercantile organization in which the stock is non-speculative. If you desire further practice you cannot do better than to dupli- cate the work given in sections 172 to 175, not limiting yourself to text-book instructions as to quantities, but conducting the business at will and proving carefully every transaction. Consult 3'our teacher in regard to this step and unless instructed to the contrary, proceed to order mer- chandise, make sales, declare dividends out of your profits ; and in such ways as seem conven- ient to you, to bring in all the stock transactions which you have just studied. This should thor- oughly qualify you to handle any stock work that may come to you in any business position out- side, in which you are likely to be placed. At the close of this original work, you will take in- ventories, prove all your transactions, close your books and make out an analytical form of bal- ance sheet similar to the one just submitted to your teacher, submitting your books for approval with duplicate of your full report carefully filled out as in former closings. REPORT Report of School Duties: I take bookkeeping Hours a day. Hours worked since last report , Absent Total No. of Letters written No. of Invoices bo't of wholesale houses Of students , Total No. of Payments made in cash ; in notes ; in acceptances ; Total No. of Payments rec'd in cash ; in notes ; in acceptances ; Total No. of Sales made: To T. & T. Co ; to students ; Total No , $ No. of Entries Made Average per hour Time on trial balance hours. NOTES CASH Bills Beceivahle, Ledger Balance Ledger Balance. . Total uncollected in bill book In bank, Stb. No. Total value of notes in the safe In safe, Currency Bills PoiV able Ledger Balance In safe, Checks, Total unpaid in bill book Total Cash on hand MERCHANDISE Cost of Mdse. bought Present i n ventory Cost of goods sold Sales of merchandise Gain, red ink ; Loss, black Errors: Ourfvr.red; cont. black Department A Goods Department E Goods TEACHER'S MARKING Accuracy. . . Neatness . , . Orderliness, Records . . . . Progress. . . . Average ... TEACHER'S Respectfully submitted, 191.... STAMP 177. Dissolution. Omitting all legal requirements you may prepare for the dissolution of your company by collecting in cash all assets and paying in cash all liabilities shown in the statement submitted to your teacher. In settling with the Townsite and Trading Company use the Equitable Settlement Blank supplied in your outfit, working it out as illustrated in the form following. If you hold any property (such as real estate, store and office fixtures, or chattels) that is sold at a loss, or if you have merchandise on hand which will sell either at profit or loss, it will be necessary when these sales are made to make another closing of your books. Before doing this, however, pay all expense bills, detaching from your prepared blanks all remaining numbers, and 250 CAMPBELL'S ACTUAL ACCOUNTING when you have completed your closing, submit to your teacher a statement showing the present worth of the company, the assets of which should now be only cash, the amount that the stock is above or below par being represented in the Surplus Fund account ; when this is approved, pro- ceed to pay stockholders in cash, drawing the company's check in favor of each stockholder for the par value of his certificate plus the per cent, of premium which the stock bears, or less the per cent, of discount. As you deliver each check take up the certificate, having the student sign his name in the transfer blank on the back or endorse on the face Surrendered to the Company, with the date and his signature. Then make the entry debiting Capital Stock for the par value of the certificate, crediting Cash for the amount of cash paid and debiting or crediting Surplus Fund for the difference according to whether your stock at dissolution is at a premium or dis- count. Make these entries separately in your journal^ and post the cash item of each entry to the cash book. EQUITABLE SETTLEMENT BLANK IN ACCOUNT WITH THE TOWNSITE & TRADING CO. INTEREST RATE When all certificates have been called in and paid for as instructed above, your Capital Stock, Cash and Surplus Fund accounts in your general ledger should all be in balance, and when you have posted the cancellation of certificates to your stock ledger, the stock ledger accounts should also balance. Lastly, take your cancelled certificates from the envelope file in which you have held them and paste each one carefully to the stub from which it was taken in the certificate book. Care- fully erase all disfiguring marks of any kind in your books and submit the books to your teacher for final approval, filling out the blanks following and handing him with your books a check for the balance of your cash account. 1. The student will observe that these entries might be made in the cash book as in the sale of treasury stock in 172, 3. The journal form of entry is suggested here as giving a clearer understanding of the trans- action, and when the student has mastered this theoretical knowledge he will easily be able to devise for him- self the most convenient and practical methods of entry. CAMPBELL'S ACTUAL ACCOUNTING 251 FINAL STATEMENT. I, , entered the College on , 19. . . ., beginning with a cash capital of $5,000. At the end of a term of months and days I have completed the course and herewith return my present capital amounting to $ I submit also for final examination and approval the books I have kept during my course, with my check book, bank pass book statements and other papers of record. Respectfully submitted, Dated at i9---- The student who desires to pursue the study of stock company bookkeeping farther, taking up the consolidation of companies and the handling of assessments and other problems incident to speculative stocks, is referred to Campbell's Advanced Accounting, now in preparation to follow this text. While business colleges are doing the best that possibly can be done to equip students in from three to six months with knowledge sufficient to enable them to earn a living in the commercial world, no student should ever imagine that in any six months' course he can possibly learn enough to enable him on going into business to compete with accountants of greater ex- perience or to handle unaided any situation that may arise in business. Less than a year's work cannot be sufficient and two years' work, and hard work, has been done under the author's super- vision by some of the young men who made the records referred to in the testimonials concerning this course of study. Every young man, whose brain will stand the cultivation and is worth the expense, should, if he can possibly afford it, prolong his business college course through from twelve to twenty-four months, at the end of which time he should have no difficulty in doing any- thing that any accountant can do even though that accountant may have had much longer experi- ence in business than the student has had in school. OFFICE PRACTICE THE WHOLESALE OFFICE 178. I. This office may be organized as a corporation in which the students of the school hold the stock or it may be capitalized by the teacher, but it should have sufficient capital to enable it to guarantee collections and settle with each of the consigning houses periodically, carrying the uncollected accounts of customers until maturity. The rate of commission charged for selling should be between 2% and 5%, according to the risk involved in guaranteeing sales. Perhaps 3% will be a good rate in most schools, 2% going to the manager for his services and 1% being carried into Surplus Fund to provide for losses. This is, however, a matter to be ad- justed to suit-each individual school. 2. The Name given to the office in this text is the College Commercial Company. The books used follow in principle the books of Outlines IV and V, but with some modifi- cations. 3. The Business is that of a General Selling Agency for a number of manufacturing and im- porting companies. The student's remuneration is a commission on sales, at a rate fixed by the teacher according to the amount of business transacted. It is computed and charged to the re- spective companies when account sales are rendered and remittances made as shown in Cash Journal under date of Sept. 15. 4. The Journal and Cash Book of Outline IV are combined in one book similar in rulings and use to the Cash Book of Outline IV, except that the Merchandise Discounts column on the 252 CAMPBELL'S ACTUAL ACCOUNTING (a) L F NAME OF ACCOUNT CREDITED Order No CUSTOMERS LEDGER DATE KERCHANOtSE DISCOUNTS DISTRIBUTED TO CONsK.noRS. »EC*e!ve„ CENERAL Oltl (• U. Ri. (a. 1 Limi (• ■ PiM (•. l» Slmilt tir (jut (0 •mil K* (1. ^^se^ / / / /2n 3a J-^ g-L -?^^r/^ s'a / / / "^^. :^^g^^4o*<;/ /2-g'f /2fo 2/ // ■ ^ 4-Z 3/^2 /23 ^Zf^J f4 <^4^rf ^j/rf?s ?g //-^a^A'f^ ^^ff^f ^Sj!4>Sy and at each statement period an inventory of goods in stock is entered beneath the total receipts, and the difference between the former inventory and the receipts on the one hand, and the new- inventory and returned goods on the other, is made to agree with the total sales for each com- pany respectively, as shown by the Sales Book. When they do not agree, the student will take one of his specially ruled broad proof sheets and will arrange four separate columns for each sepa- rate kind of goods, one for the quantity of goods sold, one for rejected goods, one for the trade discount allowed and one for the value of the goods at list price, distributing the sales to these different columns as in the double page form in 179. The totals of these several columns will enable you to prove the quantities of your inventory, and to locate any error in computations, by comparison with the Receiving Stock Book, whether that error be in extensions or in dis- counts.^ 6. The Sales Book is loose-leaf, arranged with a separate sales column for each house rep- resented by the Agency and planned to be used with a wide carriage billing and entering type- writer, the rulings having been carefully made to conform to standard machines, and at the same time be suited for making entries with a pen, if the student be not qualified to use the typewriter. The illustrative sales book page shown in 181 (b), furnished from the regular work of the Com- mercial Department of Tarkio College, through the courtesy of Prof. E. V. McCollough, was pre- pared for the use of this text on a Condensed Billing and Entering Typewriter, carrying a loose- leaf sales sheet fourteen inches wide. An illustration showing the machine with such work in- serted is presented in 181 (a). 1. The student who carefully compares the account sales with the proof of sales of the Quaker Oats Co. in 179, will obsei've a slight difference in the discounts owing to the giving or taking of the half cent. In the work above, these differences balance each other or are easily adjusted. Where they will not adjust them- selves in any way, it indicates some degree of error which the student should correct and then avoid in his future work. 254 CAMPBELL'S ACTUAL ACCOUNTING 179. net QUAKER PATEKT PLOU p^ QUAKER WHOLE WHEAT PLOUH 11 IHTOiC* sold Hejctd |Di8C't iliet Arat. Sold Rejctd. 3)lBC»t List Amt. 179 64 lObrls 6 87 55 00 15o&se8 6 56 52 50 176 00 8 " 2brl6 5 50 44 00 15 •• 6 56 52 60 175 44 10 " 6 87 55 00 12 " Soases 5 25 42 00 171 50 10 •• 6 88 65 00 16 • 6 56 62 50 179 64 10 " 6 87 55 00 16 • 6 56 62 60 176 00 8 •• 2brl6 5 50 44 00 16 • 6 66 62 60 175 44 10 - 6 87 56 00 12 « SoasoG 6 26 42 00 171 60 10 » 6 88 55 00 15 • 6 56 52 60 179 64 10 - 6 87 55 00 16 •• 6 66 62 60 176 00 8 - 2brl6 5 50 44 00 15 - 6 56 52 60 176 44 10 " 6 87 55 00 12 • Soases 5 26 42 00 171 50 10 •» 6 88 55 00 16 •• 6 66 52 50 169 69 10 * 6 87 55 00 16 • 6 66 52 50 165 46 10 » 6 87 55 00 12 • Soases 6 26 42 00 166 46 10 •• 6 87 55 00 12 •• 3 - 6 26 42 00 175 44 10 •» 6 87I 55 00 12 » 3 - 6 25 42 00 Z770 79 154brls 6brls ■ 105 84 847 00 222ea8e8 18oa6e6 97 10 777 00 j 180. In the routine work of the office, the student should need but little special instruction, especially if he has completed acceptably all the work of the course, and no student should be detailed to the work of the office until he has completed the course at least through Outline IV. Any one placed in this office with less preparation will need the special instruction of the teacher and will even then be learning chiefly by rote, and will lose much of the very excellent drill in original accounting that this office affords. Study the following instructions, including the Re- port and footnotes, very carefully before beginning the work of the office. 1. No order is ever to be filled for any student for the full quantity of goods represented by the tickets attached to the invoices. 2. The tickets not included in the student's order are to be placed in an envelope bearing the name of the firm from which they were received that they may be deducted from the inventory and returned as damaged goods at the next settlement. 3. No order is ever to be filled for any student unless it is stamped. Vised, by the teacher. 4- On entering the office the student should check up inventories, cash, notes, etc., and see that everything is correct. 5. While in the office he should keep all orders, notes and other papers properly filed and the office at all times in perfect order. "Have a place for everj-thing and everything in its place." 6. (a) The first student to act as manager, on the opening of this office in any schoolroom will, on entering the office, supply the office at his own expense with a pad of invoices for each house represented in the Agency and will renew an}'^ stock that becomes exhausted, although no student should ever need to remain in the office long enough to exhaust any pad of invoices. (b) Immediately upon receiving his stock of invoices (to which tickets representing the goods are attached) he \\-ill make entry on a separate sheet of the Receiving-Stock book for the goods received from each companj- as shown in the form. (c) Upon the transfer of the office to a successor, the incoming student will check up all in- ventories as instructed in 4, and will pay the outgoing student for the stock of invoices remain- ing, the value of each pad being estimated proportionately to the first cost of the invoices by counting the remaining sheets. 7. If an error be made in making out an invoice for any customer, the invoice must not be sent out with any erasures or blots of any kind, but a new invoice must be made out and the merchandise tickets of the spoiled invoices placed in the Rejected Goods envelope of the com- pany to which they belong to be returned at settlement. All office work must be perfect. CAMPBELL'S ACTUAL ACCOUNTING 255 QUAKES PUTPSD WHEAT QUAKSH R0LL3D OATS sold He Jctd. i Disc • t List . kmt. sold Hejctd- Dlao't |Llst . tnt. 25case8 !l 9 38 75 00 Seases ^cases 2 85 , 22 80"^ 25 • 9 38 75 00 10 - 1 3 56 28 50 25 - 9 36 75 00 10 - 3 56 28 50 20 " Scases 7 50 60 00 10 •• 3 56 26 50 25 • 9 38 75 00 8 - 2ca8e8 2 85 22 60 26 " 9 38 75 00 10 " 3 56 28 50 25 » 9 38 75 00 10 " 3 56 26 50 20 " Seases 7 50 60 00 10 " 3 56 28 50 25 • 9 38 75 00 8 » 2ea8e8 2 85 22. 80 1 25 » 9 38 75 00 10 •• 3 56 28 50 25 •• 9 38 75 00 10 • 3 56 28 50 20 " Scases 7 50 60 00 10 " 1 S 66 28 50 25 * 9 38 75 00 25 •• 9 38 75 00 6 - 4case8 2 14 17 10 25 - 9 38 75 00 6 - 4 " 2 14 17 10 25 " 9 38 75 00 10 " 3 56 28 50 365case8 IScases [144 44 1155 00 136cases 1 14caaa8 48 43 387 60 8. The student will observe that freight expense bills are attached to invoices, following the merchandise tickets. If the college maintains a freight office, these freight bills with the goods attached as per order* will be delivered by the wholesale office to the freight office, the wholesale manager making out the regular triplicate bills of lading as required by the school and delivering the merchandise invoices only to the customer. The freight office will then fill out the expense bill attached to the merchandise tickets and will deliver the goods, collecting the freight. But if there be no freight office, then the manager of the wholesale office will fill out the freight bill at- tached to each invoice and will deliver invoice, goods and freight bill to his customer at the same time. As the customer pays the freight at the teacher's desk or to some other office, the wholesale house will make no entry whatever for the freight; he makes out the expense bill merely as ac- commodation^ work, 9. (a) The work of the "Daily Closing^ should be performed daily in this office, that is, the cash balance and trial balance should be taken and the bank deposit made. (b) At the end of each week of the student's office practice a settlement should be made for the compan)', verifying the footings posted from the sales book by the sales shown in the Receiving Stock book. (c) On the student's leaving the office, he should make a complete closing of the books and submit to the teacher a copy of his statement in the analytical form, the original being left on record in the books of the office, and should fill out for the teacher's approval and acceptance the following report, preparing a duplicate form on typewriter. Report on Closing the Wholesale Office : I take bookkeeping hours a day. Entered the Wholesale Office .19 Have received and filled orders as follows : The Quaker Oats Company, No , $ , The American Biscuit Company No , $ The Riverdale Fruit Company, No , $ 1. The student managing the wholesale office win remember to detach tickets not ordered by the customer and place them in the Rejected Goods envelope. 2. By accommodation work we mean work daae by a student for the accommodation of the room, rather than for the special advantage of the one doins it. In many tablet courses a great deal of the office work Is of this nature. This is, however, the only instance where this author has thought it necessary to ask any student to perform a work not properly bel. 25# tas. loot Sks. 25f bzs. 50f " R. C. Johaaon, 2/10 Ranoy Apricots, Choice S. C. Prunes Brap. Fears Malr FacAhes #1333 M. M. Carton, 90 de. 3/10 brls. Mich. Apples bzs. Cal. Lemons tncs. Cal. Naval Oranees Sks. Oruahad Barle; Choice Fotatoes, 60 In, Leas 12 1/2^ Mar. 18 1911 Cash 625# looof 400# 6oo# Leae 12 l/sf Mar. 18 1911 Cash »1334 M. R. Miller, fio ds. 3/10, 2/20, 1/30. Lees 12 l/£j( Var, 19 1911 brla. Quaker Fatent Plour eases " Whole Wheat ?lour Purred Wheat Rolled Oats t, E. BrcvB, 90 ds. 3/10 hlf. chts, Japan Tea " Oolong " Gng. Break. Tea Chesta Ci^lon Less 12 l/23( VMT. 23 1911 Cash 450f 300# 540# 300# Leaa 10^ M536 Mar. 30 I9IJ J. H. Kemper. Go d8.3/l0 Cash 1/10 note 30d hgi, O.C. Java Coffee 798! Arabian Uoeha, 119B# Golden Rio 1996* bxs. Revere eiend_ 750f teea 10^ J1337 C. D. Bumc, 60 da. 3/aO, i/20, 1/30 Bar. 30 1911 brls. Quaker Patent Floor oases " Whole v/heat Flour " " Purred Jhoat ** " Rolleil Oat9 Less 12 1/2^ Footlnca carried foxvaxd 126 1 26 125 25 o6i 08 J 10 fa 50 '^ 45 550 350 3 00 285 550 350 3 00 S'i' 15 25 93 104 128 # 17110 I85"!? 23 150 147 337 112 w 74 219 290 22b 'S? 555 50 2429 165 175 2770 1260 107 50 46 44 7} 1368 56 4200 3«9 06 4569 3805 13 4033 80 6323 03 422 S4 672 30 1053 87 53 14227 97 4706 7377 01 CAMPBELL'S ACTUAL ACCOUNTING 259 THE ASSOCIATED OFFICES 182. I. This association of offices, spoken of elsewhere in the text as the General Offices, and best known to the student through one of its most prominent members, the Townsite and Trading Company, is the official headquarters of all fictitious persons and for all offices and firms for which no other offices are provided in the schoolroom. It may be organized as a corporation with student stockholders, but as its business is to stand all losses in order that the students and the C. C. Co. and other selling agencies may make a profit, its stock would never be marketable at par ; and while stock selling below par might be a desirable feature in the work of some schools, it is sug- gested that the teacher capitalize this office as sole proprietor, ranking as president and appoint- ing the manager and secretary. The capital of this association of offices should be large enough to enable the College Investment Company, a member of the Association, to furnish $5,000 invest- ment for each beginning student and to allow and carry profits of at least half that amount for each student, for from six to eight months, or until his investment is returned with its accumu- lated profits at the end of his course. A capital of $500,000 is about the right amount for the aver- age school. 2. The chief business of these offices is perhaps that of the T. & T. Co. in furnishing a mar- ket for the student's Department E goods. Other business besides the investment work of the College Investment Company, which has been mentioned, is collecting rents through the College Real Estate and Collection Company; selling city lots for the Townsite and Trading Company; collecting for the sales made by the College Center Office Supply Company; collecting freight charges for the C. C. R. R. and cartage charges for the College Transfer Co. ; transacting the busi- ness of the U. R. Teacher & Company; receiving the goods and accepting the drafts drawn against them, in all sales made by students to fictitious persons, as in Outline V; receiving and making entry for the account sales rendered by the C. C. Co. to the seven wholesaling companies and such other business of a similar nature as the teacher may find it desirable to assign to these offices. The plan of the work of the associated offices may be made as simple or as intricate as the school management may desire. (a) All students may be allowed during their entire course to sell Department E goods to these offices at the list prices on four months' time (see 91, 8) and to draw drafts on their re- spective accounts at will, making an equated settlement at the close of each Outline, as at the close of Outline VII. This plan, however, makes heavy work for the office and is only to be com- mended when heavy advanced work is needed for postgraduate or second year students. (b) The better plan for the average school is that prescribed in the text by which all work is put on a cash basis and easily handled in a cash book and ledger. See journal form following. We have, however, provided a special book for the business of this office, which, since it contains a sepa- rate column or columns for each general ledger account, will enable the accountant to dispense with the general ledger entirely, posting only the personal accounts and closing his books on the face of the Ledger-Journal as shown in the form on the pages following. This special form, which is properly called a Ledger-Journal, follows the modern idea of spectal books, in that it has been specially devised for and adapted to the needs of the office in which it is to be used. The student will observe that footings are carried forward as in a six- column journal, or that by cutting the pages short at the top and bottom alternately, footings of one page may be "dropped" onto the next and thus carried forward without rewriting them. He will also notice that when the books are to be closed, the Accounts Payable column is the only one that contains any items to be posted, unless the plan of schoolroom work requires more gen- eral ledger accounts than are planned for in this work, in which case it will be necessary to use the Surplus Fund columns for Sundries of General Ledger columns and to open a general ledger to which the footings of all the columns should be posted. In that case it will be proper to keep the Capital Stock account in the general ledger altogether, it being brought into this Ledger-Jour- 26o CAMPBELL'S ACTUAL ACCOUNTING STOCK tH I Saaeoo s'aaceo — BILLS RECEIVABLE ^cC — /7k> fan fa^^p- i676 6f /.fO £313 2igi^ fift&'rz a^ ^3 Z3 <^S.'^ ^3. «>*>