M> »M »j»i . « »M GEORGE W. MINER. iMr*»*#*j*****^*»* nrr»#fc»«»r««^»**H^> * »>i * W«*» W »« l *Mr » * » < GiNN AMD cmmmf »yW^W M «*1t Wj i *WMMWI8W P M» < » *Htrt W * *> »» » »!My ^^ -S - ^ Individual L H'5 BOOKKEKPING. Sheet 1 INTRODUCTORY TO IJUSI :riCE.(?accb Started upiTipi©t?d Tim^ Digitized by the Internet Archive in 2007 with funding from Microsoft Corporation http://www.archive.orgMetails/bookkeepingconiplOOniinerich MOORE AND MINER SERIES BOOKKEEPING COMPLETE COURSE BY GEORGE W. MINER GINN AND COMPANY BOSTON • NEW YORK • CHICAGO • LONDON y>V fVti.-i COPYRIGHT, 1902, BY JOHN H. MOORE and GEORGE W. MINER COPYRIGHT, 1912, BY GEORGE W. MINER ALL RIGHTS RESERVED 913.10 EDUCATION DEWc U. l^y. /t-d^.^S^ZZyCy^'Z^ J^-^^'-Z^.^^ .^^^^^72^ aj^^^t^n..£y-^-^:U^.jy-t^'^>7^^^<^ ^":::>L-£^. ^^ RESOURCE! / ^ i? 2.Z^^ ZOO o .^^^^ il^ iv (^^ <^^ ^^ ^^ ^ UAfilUTIES 2.00 ZO -^ ZZ^j ^ o Co L2- Co MODEL SCRIPT SET Model Ledger Closed 3/ 1^^,%^-i.t^ Xi? ^f 2.ae/La C.S2 /Y-.€^->&kyC--yLy' XiPiP^ j^A. ^^A^f ZOA^f ^ A t e,A^c^ A €t^7^Z^ ^ ''^€^' p. 3 f 3/ J / / ae7 3/ t^>^-«.*t^^'z^Z^^^^ / / / /ZJ-- /d<:^ /^4^-- ^s^ / / S^-tt^C^yty /^— / ^0 -- /^ •J/ / a<^ {.(y i7A Cc ^tiF ^^^zik^j^ ^^ (^a ff^i' ^ ^ CHvcio ithM^Ji.x BOOKKEEPING Model for recording Inventories ^zr, z^' i^-T'—^^T^ sA // 1? ZS C?0 s^// so /JS 60 THE SCRIPT FORMS AND MODELS In connection with the student's prehminary work he is directed to write some of the script forms given on preceding pages. These forms represent the highest excellence in penmanship and may serve as models in writing for the student. The plan, statement, and arrangement of these models may be a guide to the student in all his work throughout the book. The method of placing matter on the page and the complete- ness of explanations are parts of high-grade bookkeeping. While writing these models the student is learning how to place busi- ness transactions on the written page in the most approved manner. Busi- ness records are not only valuable when made, but may be of especial importance years hence ; therefore it is necessary that the statements be clear not only to the writer but to any person who may have occasion to examine them at any future time. If books are introduced into court as evidence, the explanatory part of the records is often the most impor- tant. It is the experience of attorneys that very few books of record that are brought into court have any value as evidence, because of the incompleteness of the explanatory matter. If explanations are not made clearly, a cbrrect entry is of little value as conclusive evidence. Erasures are not to be tolerated, as they not only spoil the neatness of the page, but often make entries look suspicious. FUNDAMENTAL PRINCIPLES EXERCISE 1 For Oral Work *^ A Business Transaction is an exchange of values ; that is, the giving of one value in return for another. A bought of B 20 T. coal at |5 per ton, and paid the money for it. Name the two values in this transaction. Which value did A receive ? Which value did he give ? A sold to C 2 T. coal at |6 per ton, and received the money for it. Name the two values in this transaction. Which value did A receive ? Which value did he give ? Each of the above transactions is an exchange of values. In the first, A receives value, 20 T. coal, and gives value, $100 in money. In the second, A receives value, $12 in money, and gives value, 2 T. coal. A merchant sold a pair of shoes for $4 ; the value received by him was $4^ and the value given was a pair of shoes. A man sold a horse for $100 ; the value received by him was $100^ and the value given was the horse. A doctor occupied a suite of rooms which belonged to another man, for the use of which he paid the owner at the end of one month $50 ; the value received by the doctor was the use of the rooms, and the value given was ^dO. A grocer sold John Bell a barrel of flour for |6, which was to be paid for in 10 da., a sale on credit or on account; the value received by the grocer was the expressed or implied promise of the customer to pay the bill in 10 da., and the value given was the barrel of flour. A manufacturer paid B $2 for shoveling snow off his sidewalks ; the value received by the manufacturer was the services of B, and the value given was #^. C borrowed $100 of D, and at the end of 6 mo. paid $3 for the use of the money to date ; the value received by C was the use of $100 for 6 mo., and the value given was $3. Henry Brown bought a suit of clothes of his tailor for which he paid $40 ; the value received by Brown was the suit of clothes, and the value given was $40. These represent business transactions, for they show that for every value received a value was given. 7 8 BOOKKEEPING EXERCISE 2 EoR Oral Work These items represent the transactions of a merchant, Edward M. Brown, for several days. Name the value received and the value parted with in each transaction. Feh 1, Bought of A. R. Dean for cash, 500 bu. wheat at |1. 2, Sold Fred S. Lay for cash, 100 bu. wheat at ^1.15. 5. Bought of John Barr for cash, 50 bu. beans at $3. 4. Sold Bell Bros, for cash, 30 bu. beans at |3.50. 6. Bought of H. A. Leary for cash, a set of ofi&ce books for |15. This item is called Expense because the supplies were bought to be consumed, not to be sold, — an expenditure to carry on the business. 6. Bought of Thos. M. Day for cash, 200 bu. millet at |1. 6. Sold S. A. Allen for cash, 100 bu. millet at |1.30. 8. Paid John Race, a carpenter, cash for repair work, $6. 9. Bought a delivery wagon of A. R. Meek for cash, |55. 10. Bought a horse of James Crow for cash, |75. 11. Sold J. H. Morse for cash, 200 bu. wheat at |1.15. 12. Bought of Arthur Way 60 bu. beans at |3, and agreed to pay for them in 10 da. In this transaction the value received is the 60 bu. beans, and the value parted with is the stated or implied promise to pay for them in 10 da. 13. Sold Isaac Mason 40 bu. beans at $3.50, and he agreed to pay for them in 15 da. 15. Gave John Weeks, a clerk, cash, $10, EXERCISE 3 PoR Written Work Take a sheet of paper and draw a line through the middle of the page from the top to the bottom. On the left side of this line write the technical name of the value received, and on the right side of the line write the teclmical name of the value parted with, for each transaction in Exercise 2. The technical term applied to goods bought to be sold is Merchandise ; to any expenditure to carry on the business. Expense; to all forms of money, and business papers which pass as money, Cash. Cash includes gold, silver, paper money, checks, bank drafts, money ordeis, etc. FUNDAMENTAL PRINCIPLES 9 Expense may include rent, fuel, lighting, clerk hire, postage, stationery, adver- tising, and the like. AVhen there is an expenditure to carry on the business, such as the payment of money for rent, the value received is entered under the name Expense. Items of Feb. 1, 2, 8, and 12 will appear as follows, in the order named: Mdse. Cash Expense Mdse. $500 Cash 115 Mdse. 6 Cash 180 Arthur Way EXERCISE 4 Written Work 1500 115 6 180 This exercise is to be worked out in the same form as the preceding one; that is, the names and the amounts of the values received and parted with are to be placed respectively on the left and right sides of a perpendicular line. As a review, the exercise may be used first orally. These items represent the transactions of a merchant, Richard S. Rowe, for several days. March 1. Bought of J. N. Osborn for cash, 60 yd. velvet carpet at |1. 2, Sold Allan Dale for cash, 25 yd. velvet carpet at |1.20. 3. Paid Henry A. Milton cash, for rent of the store for 1 mo., |28. A receipt similar to the one illustrated herewith would be received by Rowe from Milton. T^eceived o f /\^^r^.^^^-^^./{^ i^^^y^v^ yf. /^ yv^^^^.:?, /9 $ Zr^^ . ^^^^^. f^9^^Jt^y 4. Bought of Wm. Jackson for cash, 100 yd. Brussels carpet at f 1.25. d. Sold John Welton for cash, 40 yd. Brussels carpet at $1.50. 6. Bought of John Lane, on account, 20 Smyrna rugs at |3.75. On the right side of the line write John Lane, because the promise was given to him. In this transaction, on account means that the goods bought are to be paid for at some future time. 10 BOOKKEEPING March 6, Sold John Drew, on account, 10 Smyrna rugs at $4.75. On the left side of the line write John Drew, because the promise was received from him. 8. Sold Ira Hicks for cash, 5 Smyrna rugs at $5. 9. Bought of D. K. Pearson for cash, 100 yd. ingrain carpet at 70^. 10. Paid John Lane cash, to apply on account, |50. On the left side of the line write John Lane, because the promise given was redeemed. In this transaction, to apply on account means that only a part of what was owed was paid. 11. Sold A. L. Derby for cash, 50 yd. ingrain carpet at 85^. 12. Received of John Drew cash, to apply on account, $25. On the right side of the line write John Drew, because he redeemed his promise. 13. Bought of Harry Lucas for cash, office books and stationery, $12. 13. Bought of A. F. Service for cash, 200 yd. matting at 45^. 15. Sold Harvey Oilman for cash, 100 yd. matting at 60^. 16. Bought of Harvey Pease for cash, 3 T. coal for office use at $6. 17. Sold John L. Smith for cash, 50 yd. matting at 58(^. 18. Sold Albert Owen, on account, 40 yd. matting at 63^. 19. Bought of Amos Oibson, on account, 100 yd. velvet carpet at $1. 20. Sold Lester Ford for cash, 25 yd. velvet carpet at $1.40. 22. Paid Amos Oibson cash, to apply on account, $75. 23. Received of Albert Owen cash, in full of account, $25.20. In full of account means that all that was owed on a given account was paid. EXERCISE 5 For Written Work In this exercise use the same form as in Exercises 2 and 4. As a review, the exercise may be used first orally. These items represent the transactions of a merchant, James A. Murphy, for several days. April 1. Bought of Ball & Son for cash, 200 bbl. flour at $5. 2. Sold Henry Allen for cash, 100 bbl. flour at $6.50. 3. Paid John Weeks cash, for rent of the store for 1 mo., $50. 4. Bought of Hunt & Co., at 10 da., 500 bu. wheat at 95^. At 10 da. means on account, to be paid in 10 da. 6. Sold Powell & Co., at 10 da., 300 bu. wheat at $1.10. 6. Sold Lane & Son for cash, 50 bbl. flour at $6.50. FUNDAMENTAL PRINCIPLES 11 April 6. Bought of Harper & Co. for cash, 5 T. coal for office use at *6. 8. Sold Lee & Sampson for cash, 100 bu. wheat at |1.08. 9, Bought of Field & Co. for cash, 1 office safe for |65. Transactions for April 9 and 10 may be treated as Expense items. 10. Bought of Derby Desk Co. for cash, 1 office desk for |35. 11, Bought of Wright Bros, for cash, 600 bu. corn at 50^-\2^7r^- ^^-^^A^^j^^r-:^^^..'^^^^^,^^ ~ ■ T>oUars nf >^^^:^^..^^^4^^^^^^^^y^^ - Value received May 4. Gave Brown Bros, a note at 5 da., for $500. Who received value in this transaction ? What is the name of the value parted with? 5. Received of Henry Smith his note at 5 da., for |240. What value was received in this transaction ? To whom was value given ? 6. Sold James W. Hills for cash, 400 bu. corn at 55(^. 6. Paid H. S. Crane cash, for rent of the store for 1 mo., |50. 8. Bought of James B. Williams, on account, 1000 bu. oats at 40(^. 9. Paid Brown Bros, cash, for a note due to-day, $500. The name of the value given in the transaction of May 4 is here the name of the value redeemed. 10. Received of Henry Smith cash, for his note due to-day, $240. The name of the value received in the transaction of May 5 is here the namB of the value parted with. 11. Sold Wm. Jones, on account, 500 bu. oats at 50(^. 12. Bought of Lacey & Son for cash, 2 T. coal, to be used for heating the store, at $5. IS. Received of Wm. Jones cash, to apply on account, $100. 13. Paid James B. Williams cash, to apply on account, $250. 15. Paid Mary A. Brown, a clerk, cash, $20. FUNDAMENTAL PRINCIPLES 13 EXERCISE 8 SUGGESTIONS FOR RULING Good mechanical work is essential in bookkeeping. If good results are to be secured, the pen, the ruler, and the blotter must be used in the right way. Use red ink for all ruling ; always have a blotter at hand ; use a medium pen, not too fine; dip the pen in the ink lightly; avoid getting ink on the ruler. Use ordinary writing paper, ruled; sit facing the desk squarely; place the paper directly in front of you. Place the beveled edge of the ruler just below the first ruled line on the page ; keep the point of the pen away from the ruler. Draw a line across the page, keeping the pen on the ruled line, as follows : Do not lift the pen until the line is finished. Continue this ruling until you have ruled a red line on every blue line of the page. Now rule lines between the ruled lines of the page just finished. Use a second sheet of paper for ruling double lines. Draw a single red line on the blue line ; without moving the ruler draw a second red line just underneath the first. You now have parallel lines across the page. Parallel lines : ' In ruling parallel lines the position of the ruler is not changed, but the hand is pressed slightly forward. Repeat the parallel ruling until both sides of the sheet have been ruled, then rule parallel lines between the lines already ruled. This exercise in ruling should be repeated from day to day until good results are secured. EXERCISE 9 SET A (MODEL SET). GENERAL MERCHANDISE On pages 2 to 5 is a model set, in script, complete in every detail. This set was written from the following memoranda of transactions. Study each transaction in connection with the entry for it in the model journal, both the debit and the credit, also the explanatory portion. Note the name given to each column in the journal. The paragraph in script at the beginning of the journal is the memorandum, setting forth the conditions under which business was begun. The figures in the middle of the script journal page are the dates. 14 BOOKKEEPING When a man begins business he usually makes an investment, so that he may be able to carry on his business. In these practice sets cash investments will be used. In this set the proprietor, James Wilson, makes a cash investment of 12000. Memoranda of Transactions Jan. 1. James Wilson began business, investing cash, |2000. 2. Paid James A. Bird cash, for rent of the store for 1 mo., $50. S. Bought of M. C. Brown for cash : 190 bbl. Flour at #5 4. Sold H. King for cash : 45 bbl. Flour at $6 5. Bought of L. C. Horton for cash : 24 bbl. Flour at |5 120 bbl. Salt at |1 6. Sold D. Simons on account: 30 bbl. Flour at $6 40 bbl. Salt at |1.60 8. Sold A. Mead for cash : 20 bbl. Flour at |5.50 10 bbl. Salt at |1.50 9, Bought of O. Lane on account : 60 bbl. Flour at $5.24 61 bbl. Salt at $1 10, Received of D. Simons cash, to apply on account, |144. 11. Paid O. Lane cash, to apply on account, 1175.40. Inventory, January 31, 19 — Merchandise : 179 bbl. Flour at |5 $895 131 bbl. Salt at $1 131 $1026 just for convenience. The use of the inventory will be djl^ssed in Exercise 23. The fundamentals of bookkeeping are recognized by all bookkeepers, but the forms of record vary. One of the simplest forms of recording business transactions is to write the dates, the debit and the credit titles, a complete history of the transactions, and the money values of the same in a book called the Journal, including the daybook record or explana- tions, and to collect and classify these entries in a book of accounts called the Ledger. This method is set forth in the introductory work. [ k FUNDAMENTAL PRINCIPLES 15 EXERCISE 10 ANALYSIS OF THE MODEL JOURNAL The following is an analysis of each entry in the model journal. Similar analyses should be used in connection with all journalizing. Entry 1. Cash is debited because value was received by the business under the title Cash. James Wilson is credited for the amount he invested in the business. Entry 2. Expense is debited because value was received by the business under the title Expense. Cash is credited because value was parted with by the business under the title Cash. Entry 3. Merchandise is debited because value was received by the business under the title Merchandise. For the credit, refer to the second part of Entry 2. Entry 4. For the debit, refer to the first part of Entry 1. Merchandise is credited because value was parted with by the business under the title Merchandise. Entry 5. For the debit, refer to the first part of Entry 3. For the credit, refer to the second part of Entry 2. Entry 6. D. Simons is debited because he became indebted to the business. For the credit, refer to the second part of Entry 4. Entry 7. Refer to Entry 4. Entry 8. For the debit, refer to the first part of Entry 3. O. Lane is credited because the business became indebted to him. Entry 9. For the debit, refer to the first part of Entry 1. D. Simons is credited because he got out of debt to the business. Entry 10. O. Lane is debited because the business got out of his debt. For the credit, refer to the second part of Entry 2. EXERCISE 11 SUMMARY OF PRINCIPLES In the study of the preceding exercises it has been seen that we DEBIT AND CREDIT 1. That which is bought 2. That which is sold 3. That which costs value 4. That which produces value 5. All moneys received 6. All moneys paid out 7. Persons who owe the busi- 8. Persons whom the busi- ness ness owes 9. Other persons' notes re- 10. Other persons' notes when ceived paid by them 11. Our notes received (paid) 12, Our notes given (issued) 16 BOOKKEEPING The foregoing principles may be summarized as One General Principle for Journalizing, as follows : Debit, under their appropriate names, all values that are received by the business. (See Debit, Appendix B.) Credit, under their appropriate names, all values that are given by the business. (See Credit, Appendix B.) These principles are not to be memorized, but should be referred to frequently until their meaning and application are well understood. By the skillful application of this principle the debits and the credits of every business transaction may be determined. EXERCISE 12 !FoR Written Work Make an exact copy of the model journal, page 2, on a half sheet of loose journal paper. If journal paper is not available, rule a sheet of ordinary writmg paper for a journal. This copy must be exact in every detail. In making this copy omit the figure 1 in the page column of the model journal. In the money columns at the right, when writing an even number of dollars, put a dash in the cents column. This shows that an omission has not occurred. Keep this copy for a subsequent exercise. EXERCISE 13 DIRECTIONS FOR POSTING An Account is a collection of debits and credits under one heading. An account may contain but one debit or one credit. A number of accounts may be seen in the model ledger, page 3. The Ledger is a book containing the accounts of the business. Posting is a process of transferring debit and credit items to their re- spective accounts in the ledger. At present, all posting is from the journal. The posting of the model journal is on page 3. This page is the model ledger. Each different name that appears in the model journal requires an account or a heading of the same name in the ledger ; therefore there are FUNDAMENTAL PRINCIPLES 17 «ir accounts in the model ledger. The Proprietor's account is usually the first in the ledger. To Open an Account, write in the ledger, as a heading, the name to which items are to be posted. Note that in the model journal the debits and the credits of merchandise are dis- tributed over the entire page. Then note that in the model ledger the debits and the credits of merchandise appear under the heading of Merchandise in one section of the page, entirely apart from other items on the page. Posting brings about this classification of debits and credits under appropriate headings. The left and the right side of the ledger have the same ruling; the left is the debit side, and the right is the credit side. Now examine the posting from the model journal to the model ledger. By referring to the script set, the student has an opportunity to study posting in just the form in which it will appear in his own work. In the model journal, in each entry, the name that is debited appears first, and the credit appears second. The^rs^ money column records the amount of the debit, and the second money column records the amount of the credit. All items in the first money column will be posted to the left (debit) side of the ledger ; all items in the second money column will be posted to the right {credit) side of the ledger. Now trace the posting of each debit item in the model journal to the model ledger. The first item in the journal is Cash. Turn to the Cash account in the ledger, debit side, and note the amount^ the page of the journal from which the item was posted, and the date. Above the date the year is written. The page of the ledger is placed at the left of Cash in the journal. The placing of these page numbers in both ledger and journal checks the posting ; that is, shows that the posting has been completed. The next debit item is Expense. Turn to the Expense account in the ledger and trace the amount, the page, and the date. Note that the ledger page is placed at the left of Expense in the journal. In this manner trace the posting of each debit item in the journal. The first credit item in the journal is James Wilson. Turn to his account in the ledger, credit side, and note the amount, the page, and the date. Above the date the year is written. The page of the ledger is placed at the left of James Wilson's name in the journal. The next credit item is Cash. Turn to the Cash account in the ledger, credit side, and note the amount, the page, and the date. Remember to place the page of the ledger at the left of Cash in the journal. In this manner trace the posting of each credit item in the journal. Review until all is clearly understood. 18 BOOKKEEPIKG EXERCISE 14 ANALYSIS OF THE MODEL LEDGER The posting of the model journal has been completed. The following is a full explanation of each account in the model ledger. Each account having more than one item has been footed. (The minute figures in the accounts show this footing.) These footings should always be written in pencil. (See model ledger, page 3.) James Wilson's account : The credit shows that he invested $2000 in the business. The debit shows that he has withdrawn nothing from the business. Cash account : The debit shows that the business has received $2539. The credit shows that the business has paid out $1415.40. Expense account : The debit shows that value was received, — the use of the store, which cost $50. Merchandise account : The debit shows that the business has bought merchandise to the amount of $1565.40. The credit shows that the business has sold merchandise to the amount of $639. D. Simons's account : The debit shows that he became indebted to the business to the amount of $244. The credit shows that he paid $144 on his indebtedness. O. Lane's account : The credit shows that the business became indebted to him to the amount of $375.40. The debit shows that the business has paid $175.40 on such indebtedness. Similar analyses of ledger accounts should be made frequently. The ledger is the book of accounts in business and is referred to very frequently for information that is wanted immediately ; therefore one should be able to understand an ordinary account almost at a glance. For this reason, strong emphasis has been placed on the analysis of ledger accounts in the very earliest stages of the student's work in bookkeeping. EXERCISE 15 TRIAL BALANCE OF THE MODEL LEDGER The script trial balance, page 4, is a trial balance of the model ledger. The trial balance is simply a list of the names and the totals of each open ledger account and shows that the debits and the credits are equal. Study this trial balance carefully, and then take a trial balance of the model ledger and compare it with the script trial balance. FUNDAMENTAL PRINCIPLES 19 EXERCISE 16 For Written Work Each student has made a copy of the model journal on a sheet of journal paper. Post this exercise, using a half sheet of loose ledger paper. Allow ten lines for each account. Write the accounts in the same order as in the model ledger. Post the model journal a second time. In posting, write the name of the month and the year at the head of each account only once, and do not use ditto marks. Post all the debit items first, and then all the credit items. After the journal items have been transferred to the ledger, the post- ing may be rechecked. This checking is usually done to locate an error. Determine whether the first debit item in the journal has been posted correctly to the ledger. If it has, place a small check ( \/ ) in pencil at the left of the first money column in the journal, and at the left of the folio column in the ledger. Use a pencil for checking, and make very small check marks. These marks should not be erased. The following script illustrations will show how this checking should be done. C^L^^24.^^ C, /f- 3 / ^ Z^ 3/^ ZS /3 J/^ ZJ Jl.c7: ^^/ '3 3/^/ZS Take trial balances of the ledgers just posted. Keep this work for a subsequent exercise. \ 20 BOOKKEEPING EXERCISE 17 For Written Work Journalize Exercise 2, page 8, in the same form as the model journal. The names and the amounts are different from those in the model. Under Feb. 1 the proprietor, Edward M. Brown, makes a cash invest- ment of llOOO. (An additional item.) Make the memorandum and the entry for this investment, and then journalize the other business transactions. When goods are bought, an invoice is received by the buyer and placed on file ; for this reason the items of the invoice need not be recorded in the explanatory portion of the journal. When goods are sold, an invoice is sent by the seller, and a copy of it is not always kept on file ; for this reason the items of the invoice should be recorded in the explanatory portion of the journal. These explanatory portions of the journal are held to be of great value in courts of law. Use loose half sheets of journal paper and ledger paper. In the ledger allow ten lines for each account. Recheck the posting. Take a trial balance. Pass all work to the instructor. EXERCISE 18 For Written Work Journalize Exercise 4, page 9. Under March 1 the proprietor, Richard S. Rowe, makes a cash invest- ment of 11200. (An additional item.) Post to the ledger and then recheck the posting. Take a trial balance. Pass all work to the instructor. EXERCISE 19 For Written Work Journalize Exercise 5, page 10. Under April 1 the proprietor, James A. Murphy, makes a cash invest- ment of ^1100. (An additional item.) Post to the ledger and then recheck the posting. Take a trial balance. Pass all work to the instructor. FUNDAMENTAL PRINCIPLES 21 EXERCISE 20 For Written Work Journalize Exercise 7, page 11. Under May 1 the proprietor, Wm. L. Martin, makes a cash invest- ment of J1250. (An additional item.) Post to the ledger and then recheck the posting. Take a trial balance. Pass all work to the instructor. EXERCISE 21 SET B. FURNITURE Journalize the transactions in this set, as in the model journal, on a half sheet of journal paper. As a class exercise, each transaction may be journalized orally. Give the reason for each debit and each credit named. Memoranda of Transactions Feb. 1, Wm. A. Morton began the Furniture business and invested cash, 11800. 2, Paid E. R. Law cash, for rent of the store for 1 mo., $35. 4. Bought of Henry Burke for cash : 16 Library Tables at $25 6, Sold Case & Co. for cash : 8 Library Tables at $30 8. Bought of Henry Ellis on account : 12 Library Tables at $22.50 10. Sold John E. Smith on account : 10 Library Tables at $27.50 13. The proprietor withdrew cash for personal use, $50. When the proprietor makes an investment the business receives money from him, and when he withdraws money for his own use the business gives money to him ; therefore the entry is just the same as for any other person to whom money is paid. Id. Bought of John Hastings for cash : 20 Library Tables at $25 22 BOOKKEEPING Feb. 19. Sold E. W. Harris for cash: 15 Library Tables at ^30 23. Paid Henry Ellis cash, to apply on account, tl50. 25. Received of John E. Smith cash, to apply on account, J175. 27. Paid Howard Green, a clerk, cash for his salary, J 20. Inventory, February 28, 19 — iVTpt*p nfiTiri isf^ * 15 Library Tables at |24.50 $367.50 Note. The use of the inventory will be discussed in Exercise 23. Post to the ledger ; allow ten lines for each account. Take a trial balance. Keep all this work for a subsequent exercise. EXERCISE 22 ^ SET C. GRAIN AND SEED Journalize the transactions in this set in the same form as the model journal, on a half sheet of loose journal paper. As a class exercise, each transaction may be journalized orally. Give the reason for each debit and each credit named. Memoranda of Transactions March 1. Student begins the Grain and Seed business and invests cash, 11500. 2. Pay Harold Brown cash, for rent of the store for 1 mo., $40. 3. Buy of H. H. Morley for cash : 400 bu. Corn at 48^ 350 bu. Oats at 35^ 4. Sell Smith Bros, for cash : 200 bu. Corn at 60^ 100 bu. Oats at 42^ 6. Buy of Grace & Co. for cash, office books and stationery, |14.50. What is the name of the account that is debited ? 8. Buy of Wm. A. Cannon, on account : 250 bu. Wheat at $1 15 bu. Clover Seed at |6 10. Sell James A. Butler, on account : 150 bu. Corn at 61^ 200 bu. Oats at 43^ FUNDAMENTAL PRINCIPLES 23 March 13. Pay Wm. A. Cannon cash, to apply on account, J 200. 15. Buy of the Larkin Coal Co. for cash, 2 T. coal, for office use, at t5.50. 17. Receive of James A. Butler his note at 10 da., to apply on account, |100. What name is given to Ms note ? 20. Sell A. R. Burton for cash : 8 bu. Clover Seed at $7.50 22. Give Wm. A. Cannon your note at 30 da., to apply on account, JIOO. What name is given to your note ? . ~" 23. Sell Henry A. Barker, on account : 120 bu. Wheat at $1.20 24. Receive of James A. Butler cash, to balance his account, $77.50. 25. Withdraw from the business cash, for personal use, $75. 26. Receive of Henry A. Barker cash, to apply on account, $100. 27. Receive of James A. Butler cash, for his note due to-day, $100. What is the debit in this transaction ? the credit ? 29. Buy of Johnson & Co. for cash : 100 bu. Corn at 500 100 bu. Oats at 350 30. Sell Harding & Co. for cash: 50 bu. Corn at 620 50 bu. Oats at 440 31. Pay James A. Norton, a clerk, cash, for his salary, $22.50. Inventories, March 31, 19- Merchandise : 100 bu. Corn at 500 100 bu. Oats at 350 130 bu. Wheat at $1 7 bu. Qlover Seed at $6 $50. 35. 130. 42. Expense : Office Books 1 T. Coal $10. 5.50 $257. $15.50 Note. The use of the inventory will be discussed in Exercise 23. 24 BOOKKEEPING Post to the ledger ; allow fifteen lines for the Cash account, and ten lines for all other accounts. Before taking a trial balance rule the accounts in the ledger that balance. The script illustrations herewith show how to rule them. Rule the accounts of James A. Butler and Bills Receivable. ^i ' f- III '"" .A^ 6 3 2/^ //[^-^ y 3 /OO — /z ^ / /^ ZO 4^ z6o ^^ 2J J- ^6 S(P J(P ^ ^A ^f 6 / ^0 — c=. so/. 7J 4. X^(^ 7J ^ ^c \ ?^ '7- /^ 3 ZC7/ iz ' f — 2^ ^ 2-/7/ u. ' Take a trial balance. Keep all this work for a subsequent exercise. EXERCISE 23 For Oral axd Written Work IKYENTORIES AND THE CLASSIFICATION OF ACCOUNTS The student may verify the inventory given in Set A, as follows : How many barrels of flour were bought ? How many barrels were sold ? How many barrels should be on hand ? How many barrels of salt were bought? How many barrels were sold ? How many barrels should be on hand ? An Inventory is an itemized statement of the value of the goods on hand. An inventory is usually taken at cost prices. An inventory of merchandise is never found by taking the balance of the merchan- dise account. This is true because the cost prices and the sale prices are not the same, and the true condition of the account can be shown only by using the inventory. FUNDAMENTAL PRINCIPLES ' 25 Expense and other items are inventoried frequently. This is true because only a part of that which was charged to Expense may have been consumed or disposed of. The inventories in each set should be copied into the journal imme- diately following the last journal entry. Unless otherwise instructed, date each inventory under the last day of the month in which the set was written. The inventories are recorded in the journal as a matter of convenience. In busi- ness, it is a common practice to make out the complete inventory on sheets of paper ; these sheets are then bound and filed for subsequent use. In working out the following classification of accounts, refer to the model ledger and the model trial balance on pages 3 and 4. In the Merchandise account, what are the total purchases? the total sales ? What is the value of the goods on hand (the inventory) ? Now it can be determined if any gain has been realized. By putting together the amount of the goods sold, the credit, and the value of the goods on hand (the inventory), the money value of the Mer- chandise account at the close of the month is shown : |639 -f $1026 = 11665. These goods cost (the debit) |1565.40 ; the difPerence ($1665 - $1565.40) is $99.60, the gain. To summarize, using two methods : No. 1 No. 2 Merchandise : Merchandise : Cr. $639. Cr., sales $639. Inv. 1026. Dr., cost $1565.40 Total $1665. Less inv. 1026. Dr. 1565.40 Cost of sales 539.40 Gain $99.60 Gain $99.60 In the work of this text the first form will be used. Note the working out of this result in the model statement, page 4. Refer to the Expense account. What was the expenditure to carry on the business for the month ? This is a loss. Why ? If the gain on merchandise is $99.60 and the loss on expense is $50, what is the net gain, that is, the excess of the gain over the loss ? Find the net gain in each of the following, and make a written state- ment according to the model, page 4. 1. Merchandise account: debit, $655.20 ; credit, $503.50 ; inventory, $254.25. Expense account : debit, $55. 26 ' BOOKKEEPING 2. Merchandise account: goods bought, 1732.50; goods sold, $525; goods on hand, $310. Expense account: debit, $45. 3. Merchandise account : debit, $1235.25; credit, $894.75; inventory, $521.50. Expense account: debit, $75. 4. Merchandise account: goods bought, $1052.60; goods sold, $825; goods on hand, $410.15. Expense account: debit, $60. EXERCISE 24 For Oral and Written Work CLASSIFICATION OF ACCOUNTS In working out this exercise refer to the model ledger and the trial balance on pages 3 and 4. Refer to the Cash account in the trial balance. What is the total cash received ? the total paid out ? the balance on hand ? Is this balance a resource (property on hand) or a liability (amount owed) ? What is the condition of D. Simons's account? Does he owe the business, or does the business owe him ? Is the balance a resource or a liability ? If he owes the business, the amount owed is a resource. What is the condition of O. Lane's account ? Does the business owe him, or does he owe the business ? Is the balance a liability or a resource ? If the business owes him, the amount is a liability. Is the merchandise on hand (inventory) a resource or a liability ? For the present, treat all inventories as resource items. The difference between the resources and the liabilities is the capital, or the present worth. In the Proprietor's account, James Wilson, what is the total invest- ment ? the total withdrawal ? the net investment (the balance of the Proprietor's account) ? If James Wilson's net investment is $2000 and the business has gained for him $49.60 above all losses, what is he worth on January 31 ? In the above exercises it is clear that each open account (an account that does not balance) has a positive bearing on the condition of the business, and if these results are properly classified, both what has been accomplished by the business and the present state of affairs may be determined. In business, these results are usually set forth at stated periods, either once or twice a year. FUNDAMENTAL PRINCIPLES 27 EXERCISE 25 TERMS DEFINED AND EXPLAINED Books are kept for the purpose of determining the results and the condition of the business. The Results are shown by the gains realized, or the losses sustained. A formal statement of losses and gains is usually called a Business Statement. The Condition is shown by the resources and the liabilities. A formal statement of resources and liabilities is usually called a Financial Statement. The Net Gain is the excess of gains over losses. The Net Loss is the excess of losses over gains. Resources or Assets are property belonging to the business, or amounts due the business. Liabilities are amounts owed by the business. The Present Worth or Capital is the excess of resources over liabilities ; the excess of liabilities over resources is Insolvency. In all loss and gain accounts : If the credit, including the inventory, is the larger, the account shows a gain. If the debit, including the inventory, is the larger, the account shows a loss. Gains are realized : If resources increase and liabilities remain unchanged. If liabilities decrease and resources remain unchanged. If resources increase and liabilities decrease. Losses are sustained; If liabilities increase and resources remain unchanged. If resources decrease and liabilities remain unchanged. If liabilities increase and resources decrease. In personal accounts : If the debit is the larger, the account shows a resource. If the credit is the larger, the account shows a liability. If a personal account is given up as not collectible, it then shows a loss. In the introductory part of the text all inventories are resources. A trial balance is a copy of the ledger, only in a more convenient form. The bookkeeping thus far explained is in double-entry form, and the cardinal principle of double-entry bookkeeping is Equal Debits and Equal Credits. 28 BOOKKEEPING EXERCISE 26 A Written Review Herewith are a number of trial balances from which statements of conditions are to be made, using loose sheets of journal paper. As an oral exercise, it piay be first determined which accounts show resources or liabilities, losses or gains. Note. Unless otherwise instructed, use the form of statement given on page 4. Then make the statements, as follows : 1. Copy the trial balance at the head of the journal page. 2. The Loss and Gain Statement, showing the 7iet gain. 3. The Resource and Liability Statement, showing the present worth. 4. The proof or verification of the statements. Date each statement Jan. 31, 19 — . Pass all work to the instructor for approval. No. 1 Student Cash Mdse. Expense R Gross M. King J. Howe F. Young $200 1685 2470 75 310 342 219 524 12200 750 1873 100 250 452 200 Student Cash Expense Mdse. C. Mason D. Koe S. Miller E. Lane No. 2 1100 1755 85 2250 325 485 505 $1900 1325 1935 235 110 $5825 $5825 Inventory : Merchandise $725 No. 3 Student $200 $2500 Cash 1680 844 Mdse. 2640 1850 Expense 75 A. Ward 300 800 E. Dunn 420 120 L. Jones 360 60 M. Martin 800 100 B. Lewis 299 500 $6774 $6774 $5505 $5505 Inventory : Merchandise $475.25 No. 4 Student $100 $1700 Cash 1425 610 Expense 65 Mdse. 1820 1260 A. Crane 380 120 S. Adams 100 400 C. Lyman 450 130 D. Owen 200 500 H. Howe 180 $4720 $4720 Inventory : Merchandise $921.40 Inventory : Merchandise $742.50 FUNDAMENTAL PRINCIPLES 29 EXERCISE 27 For Written Work In this exercise use the trial balances the student has made in Sets A, B, and C. Follow the directions given in Exercise 26. This work should be done without reference to the textbook. After each statement is approved by the instructor, keep all work for a subsequent exercise. Make statements from the following trial balances ; the inventories will be found in the textbook at the close of each set: 1. Exercise 9, Set A. 2. Exercise 21, Set B. 3. Exercise 22, Set C. The Expense Inventory The Expense inventory is made up of items which when bought were charged to Expense ; the unused portion, at the time of making the statements, constitutes the inventory. Illustration : If 10 T. coal were bought at the beginning of the month, and 4 T. were unconsumed at the end of the month, the 4 T. would constitute the inventory. When there is an expense inventory, the loss on Expense is found as follows: Expense : Dr. $65.50 Inv. 15.50 Loss $50 The loss is the difference between the debit of the account and the inventory. In making the resource and liability statement, record the expense in- ventory as a resource^ just the same as the merchandise inventory. In the loss and gain statement, subtract the inventory from the debit of expense, as shown in the above illustration. It is unusual for the Expense account to have any credits. If some item that was debited to expense when bought should be sold, then expense would be credited. If a man bought a safe for $80, his entry would be : Expense., $60, Cash, $60; if he sold it for $50, his entry would be: Cash, $50, Expense, $50. After posting these entries, there will be both a debit and a credit item in the ledger account of Expense. 30 BOOKKEEPING ElfERCISE 28 For Written Work The results and the condition of the business in Sets A, B, and C have been shown by the statements just made. The next step is to show the results of the business in the ledger. To do this it will be necessary to close the Loss and Gain Accounts in the ledger. To close the ledger it is necessary to close only such accounts as affect the results shown by the business ; • that is, the accounts that show loss or gain and the Proprietor's account. Preparatory to closing the ledger the student should have some exer- cises in ruling. The ruling of the following ledger page is the same as the ruling re- quired in closing a ledger account. Practice this ruling until it is done well. Use red ink for this exercise. Notice that the single line extends over only the dollars and cents columns, while the double lines cover all the perpendicular columns, the explanatory column excepted. In business it is customary to show actual results, that is, make business and financial statements only once or twice a year. The ledger is closed after such statements have been made. • EXERCISE 29 CLOSING THE LEDGER The following script page is an illustration of a ledger closed prop- erly. Study the following explanations in connection with this page. To close the Merchandise account : 1. Enter the inventory on the credit side, in red ink. FUNDAMENTAL PRINCIPLES. 31 Ledger Closed '^. 0.^A^-rr>-U/-1?^:;^^. JiU'''^^ 2J J/ Jf -:^^^. yhf-^^€^ S.V24^ J2 74i / « ,11^ , ?^^^,7/ JZ/^c^(a / ZZ 3/ / X J- 3 -^(ja^^^^U^f'ZyC^^ ,?^r7 r^ 3^7^^ ...^ / ' /S(^S z^ Closing an account by balance has nothing whatever to do with closing the ledge^. After closing the above account the condition of it is shown as a single item, the balance. It is sometimes a great convenience to close an account by balance when it covers a large part of the ledger page, even before it is necessary to transfer the balance to a new sj^ace. Any account may be closed by balance when the space assigned to it is filled and it is necessary to transfer it to a new space. It is often desirable to close any account when it balances ; this form of closing is shown on page 24. Bed ink is used commonly for rulings of all kinds, for closing entries in the ledger, and for records that require emphasis. In closing, the ledger entries to be transferred to some other place are usually Avritten in red ink, and entries that have been transferred from some other source are always written in black ink. The transfer is necessary to preserve the balance or equality of the ledger. The use of red ink is largely a matter of custom. Many bookkeepers use no red ink at all, insisting that it is a waste of time to change from one color to another. The use of red ink is advised for exercises in this book. 11^ vPu:npamental principles 37 EXERCISE 33 SET D. HARDWARE Journalize the following transactions, post, take a trial balance, make the two statements, close the ledger ; close the Cash account by balance, and then take a second trial balance. Write on loose sheets of journal paper and ledger paper. If the student is able to do this work without assistance, he is ready for sub- sequent work ; if not, he should rewrite one or more of the preceding sets. Memoranda of Transactions . April 1. A. W. Tenny began the Hardware business, investing cash, ♦3000. 3. Bought of E. M. Chase & Son, on account, their complete stock of hardware, which inventories at |2500. 5, Sold A. S. Osborn for cash : 5 doz. Coal Hods at $7.50 10 doz. Hammers at |6 8. Sold A. L. Sanford on account : 12 doz. Door Knobs at 750 5 doz. Lanterns at |6 • 20 doz. Planes at |24 10. Paid A. W^JBates cash, for rent of the store for 1 mo., $60. 12. Paid Wetm^e & SoiT5hish, for office books, per bill, |22.50. 15. Paid A. H. Robbins cash, for office safe, |65. 18. Received of A. L. Sanford cash, to apply on account, $125. 19. Sold W.. L. Hunter on account : 5 doz. Coal Hods at $8 6 doz. Door Knobs at |1 15 doz. Hammers at |6 10 Ice-cream Freezers at |2.50 5 doz. Lanterns at $6 20. Paid E. M. Chase & Son cash, to apply on account, $1000. 23. Received of W. L. Hunter cash, to apply on account, |150. 25. The Proprietor withdrew cash, for personal use, $50. 27. Gave E. M. Chase & Son a note at 10 da., to apply on account, $1000. '"- 29. Received of A. L. Sanford his note at 10 da., to apply on account, $300. 30. Paid E. M. Chase & Son cash, to apply on account, $250. 30. Paid E. L. Harris, a clerk, cash for his salary, $25. 38 BOOKKEEPING Inventories, April 30, 19 — Merchandise Expense : Office Books and Stationery Office Safe ' 12035 ♦15 65 t80 Allow ten lines for each account in the ledger. In the resource and liability statement, bills receivable are always a resource^ and bills payable, always a liability. >■ EXERCISE 34 CORRECTION OF ERRORS The correction of errors in books of record is a matter of special importance. Even careful workers make occasional errors, but correc- tions can be made so that the neatness of the books and their legal value are not affected. When an error is made, consult the instructor before attempting to correct it. Do not erase. If a journal entry is wrong, correct it as follows: Draw a red line through the wrong name, and then write the correct name either above or at the right of the correction, as follows : ^^ 52^y ^^T'T'-O-Li^ aCu^€^jt0-aii;^^ / oz J-0 / C? 2- J"y 2 _ /^^ 'Th^'y^:^^^^.:^ rcT JO^^^y^^^; ^^^^J.A^^ V / c>/j^y?^ .^y^-^(2r.-^y / // ^-.f C^':^^^yy:.-^yi'-^Z>^ ' Debit Expense for the above bill. A detailed statement of goods bought or sold is called either a hill or an invoice, A detailed statement of goods bought to be used or consumed, or a statement of services rendered, is usually called a hill. Thus, a physician's statement of services rendered, and the charges for the same, is called a hill; a statement of a quantity of silk bought or sold by a merchant is called either a hill or an invoice. Jan. 4. Bought of Allen & Parker for cash : 50 T. Grate Coal 40 T. Stove Coal 5. Sold John S. Adams for cash : 10 T. Grate Coal 6. Sold A. M. Paterson on account : 15 T. Stove Coal 8. Sold John S. King for cash : 5 T. Grate Coal 9. Sold Charles M. Gray on account 10 T. Stove Coal 35 T. Nut Coal 20 T. Hay 5 T. Hay 10 T. Nut Coal 5 T. Hay 10 T. Hay SET I. RETAIL FUEL AND FEED 43 Jan, 11, Bought of Henry A. Stevens on account : 15 T. Stove Coal 15 T. Hay 12, Received cash as shown by the following check : traders Rational ^ank "Pay to the order of r>f. //f .. A X ^^ .^t( ^r77^ , f / 1,^-^ A Check is an order on a bank by a depositor for the payment of money. 13, Received the following note to apply on account : ^' . "^ -<:Z^.,.--7^^.^-s^-^^!L^^t^^ ■ nfier date^ZiLpromise to pay to the order of ' ' /^^ yy^. '^^X^^t ^ J^^?^^ ^ Ualue receioed Ko.-lj2— "Due '/zj -dJ^^J^^^ 1^.jJ^^^._ Y- ^ 15, Gave Henry A. Stevens a note at 10 da. to apply on account, $150 16, Bought of Johnson & Main for cash : 5 T. Nut Coal 17, The Proprietor withdrew cash for personal use, |50. 18, Gave the Monroe Typewriter Exchange cash for the following : 1 Typewriter, $50 1 Office Desk, f 25 Debit Expense for this bill. 19, Received of A. M. Paterson his check for the balance of the in- voice sold him on Jan. 6, |62.50. W, Received of Charles M. Gray cash, to apply on account, $75. W, Sold James W. Traver on account ; 20 T. Grate Coal 12 T. Nut Coal 44 BOOKKEEPING Jan. 22. Bought of Lane & Son merchandise, as shown by the fol- lowing invoice: Vo zd /^^^^^^^^'-(^^It^. .^^^^ y^i'^^^^f^^^ ."Dt 2=IL 1^2^ >/< ? La. '^^'^^ jLl 23. Received of Charles M. Gray cash for his note which is due to-day, JllO. 24. Received of James W. Traver his check, to apply on account, *100. 25. Gave Henry A. Stevens cash for a note which fell due to-day, $150. 26. Sold A. M. Paterson on account : 5 T. Hay 5 T. Grate Coal 27. Gave Henry A. Stevens cash, to apply on account, $50. 29. Gave Lane & Son a note at 10 da., to apply on account, $135. 31. Paid Student cash, for services to date, $20. Pass the journal sheet to the instructor for correction and .criticism ; then copy carefully into the bound journal. Below the last journal entry copy the following, using the form given on page 6. Inventories, January 31, 19 — Merchandise : 20 T. Grate Coal $6.10 $122. 30 T. Stove Coal 6.25 187.50 18 T. Nut Coal 6.20 111.60 30 T. Hay 10.50 315. $736.10 SET I. RETAIL FUEL AND FEED 45 The student should verify the merchandise inventory. Expense : Typewriter $50 Office Desk 25 Office Supplies _5 |80 Posting. Open accounts in the ledger, three on each page, in the following order : Proprietor, Cash, Expense, Merchandise. After posting, foot the accounts having more than one item, in pencil, making very small figures. Recheck the posting. Take a trial balance of the ledger, omitting all accounts that balance ; record it in Blank No. 1, on the page indicated by the index. Make a Loss and Gain Statement. Make a Resource and Liability Statement. Make a proof or verification of statement. Record the statements and proof in Blank No. 1, on the page indicated by the index. Closing the Ledger. Open a Loss and Gain account ; close the Mer- chandise and Expense accounts into the Loss and Gain account ; close the Loss and Gain account into the Proprietor s account. Balance the Cash account ; take a trial balance. Present all books to the instructor for approval. EXERCISE 35 A Written Review The following review exercises are suggested. a. Journalizing. Journalize orally or in writing each of the following transactions, and state the reason for each debit and each credit named. 1. You began business with the following investment: cash, $1500; merchandise, |1200. When several resource items represent the proprietor's investment, each item is debited, under its appropriate name, and the proprietor is credited for the total of the resources. The following is the correct entry for No. 1 : Cash *1600 Mdse. 1200 Student 12700 Note the explanation of this entry on page 46. 46 BOOKKEEPIlSrG This is a compound entry ; it may consist of any one of the following : Several debits and one credit. One debit and several credits. Several debits and several credits. 2. Chas. E. Snyder began business with the following investment : cash, $1000 ; John A. Wilder's note, $950 ; merchandise, |1325. 3. Wm. A. Russell began business with the following resources: cash, $560 ; merchandise, $1975 ; H. H. Redding's note, $450 ; coal for use in store, on hand, $35. The following is the correct entry for No. 3 : Cash $560 Mdse. 1975 Bills Rec. 450 Expense 35 Wm. A. Russell $3020 4. W. A. Lincoln began business with the following resources : cash, $1750 ; account against Freeman & Co., $350 ; merchandise, $1275 ; John G. Reed's note, $500. 5. You began business with the following resources : cash, $1000 ; Geo. O. Overman's note, $400; merchandise, $1500; account against Prince & Lane, $250. 6. Gave Geo. S. Ware your note at 60 da., to apply on account, $325. 7. Gave H. M. Marshall your note at 30 da., with interest, to apply on account, $450. No entry is made for the interest until the note is paid. 8. Received of R. D. Record his note at 10 da., to apply on account, $176. 9. Received of Lyman & Son their note at 30 da., with mterest, to apply on account, $275. 10. Received of Thomas & Co. cash for their note and interest ; face of the note, $320 ; interest, $16. The above is journalized as follows : Cash $336 Bills Rec. $320 Interest 16 Interest is debited when it costs something; it is credited when it produces something. When the statement is made that we pay interest, we really mean that we pay cash for the interest. EEVIEW EXERCISES 47 11. Paid your note and interest in cash, in favor of W. D. Longman ; face of the note, |275 ; interest, |12. The above is journalized as follows : Bills Pay. $275 Interest 12 Cash $287 12. Received of W. L. Clark cash, for his note due to-day, |187.50. 13. Received of Frank Likly cash for his note and interest; face of the note, |245 ; interest, $11. 14. Paid your note and interest in favor of James A. Boyce, in cash ; face of the note, $160 ; interest, $7.50. 15. Paid your note in favor of Geo. K. Johnson, in cash, $300. 16. Received a check of H. A. Preston for his note, $452.50. 17. Paid your note in favor of H. D. Bryan, in cash, $275. 18. Received a check from A. S. Kemp for his note and interest; face of the note, $150 ; interest, $6.25. 19. Paid your note and interest in favor of A. R. Sharp, in cash; face of the note, $200 ; interest, $9.50. 20. Gave Robbins & Co. your note at 60 da., with interest, to apply on account, $500. b. Statements. Make the two statements and the verification from the following trial balances. Observe these directions : The bills receivable are a resource. The bills payable are a liability. Interest, as an open ledger account, is always a loss or a gain item; if the balance is a debit, the account shows a loss ; if the balance is a credit, the account shows a gain. Date each statement Feb. 28, 19 — . No. 1 Student, Prop. $5096. Cash $2443. Merchandise 952.50 200.50 Expense 100. Interest 12.25 8.50 James & Co. 397.50 Bills Receivable 600.20 Henry S. Willis 1011. John K. Searle 61.40 A. L. Gracey 101.35 Bills Payable 172. W.W.Hays 100.50 $5578.35 $5578.35 Inventories : Merchandise $794.50 Expense 76.50 k 48 BOOKKEEPING No. 2 Geo. M. Lee, Prop. H. K. Paine, Prop. Cash Merchandise 11061.30 2096.75 11200. 1200. 1723.50 Expense Wm. H. Lowney J. I. Percy Arden & Co. 110.50 125.30 206.30 215.15 Jas. P. Hunter 116.25 Bills Payable Interest 15.85 125. 16.40 Bills Keceivable 550. $4381.15 14381.15 Inventories : Merchandise $578.45 Expense 67.20 c. Closing the Ledger. On a loose sheet of ledger paper copy the following accounts; allow ten lines for each account. Student, Proprietor 19— Jan. 10 2 125 19— Jan. 2550 Merchandise 19— 19- ■ Jan. 5 1 516 20 Jan. 10 2 412 75 12 2 78 40 17 3 310 25 24 3 285 70 Expense 19— Jan. 35 25 50 REVIEW EXERCISES 49 Inventories : Merchandise Expense Open a Loss and Gain account ; close the ledger. $275.20 22.50 II James R. Turner, Proprietor 19— Feb. 75 19— Feb. 2650 Merchandise 19- — 19— Feb. 11 2 289 50 Feb. 13 2 609 20 18 3 546 70 19 3 335 23 4 715 45 25 4 255 60 27 5 100 Expense 19- Feb. 1 10 26 1 2 4 50 35 21 50 Interest 19— Feb. 12 12 10 19— Feb. 19 Inventories : Merchandise Expense $725.25 72.50 The model for closing the Interest account is on page 54. Open a Loss and Gain account ; close the ledger. 50 BOOKKEEPING REVIEW QUESTIONS 1. What is a business transaction ? 2. In how many ways does a business transac- tion affect the business ? 3. Define merchandise. 4. B, a dry-goods merchant, bought 3 T. coal for heating his store. Should this purchase be recorded under merchandise ? Why ? What is the name of the purchase to the merchant who sold it ? 5. Define cash. 6. Define expense. 7. Who is a debtor? a creditor? 8. Define debit; credit. 9. What is an account? 10. Name the two sides of an account. 11. What are personal ac- counts ? 12. Define a negotiable promissory note. 13. What is meant by journaliz- ing? 14. Define bookkeeping. 15. What is the object of bookkeeping? 16. Name the two methods of bookkeeping. 17. What is the purpose of the journal ? 18. What is posting ? 19. What is the purpose of the ledger ? 20. What is a trial balance ? From what is it taken ? 21. What facts are set forth in the trial balance ? 22. What is an inventory, and how is it found ? 23. When is merchandise debited ? when cred- ited ? 24. When is expense debited ? 25. When are personal accounts debited ? when credited? 26. When are bills receivable debited? when credited? 27. When are bills payable debited? when credited? 28. What is a gain? a loss? 29. What are resources or assets? liabilities? 30. Define net gain; net loss. 31. Define capital; insolvency. 32. Name the two general classes of accounts. 33. Name the class to which each of the following accounts belong: cash; merchandise; personal accounts; expense; interest; discount; bills receivable ; bills payable. 34. On which side of the ledger are losses found? gains? resources? liabilities? 35. What is the object of making business and financial statements ? 36. What is meant by closing an account ? 37. When are resource and liability accounts closed in business ? loss and gain accounts ? 38. Explain the process of closing a loss and gain account. 39. The accounts showing loss and gain are closed into what account ? 40. The loss and gain account is closed into what account? 41. How is the proprietor's account closed when there is a net gain ? when there is a net loss ? 42. Which side of the cash account must always be the larger when there is any difference ? of the bills receivable account? of the bills payable account? 43. What is an entry? 44. What is the difference between interest and discount ? 45. When is interest or discount debited? when credited? 46. When does a personal account show a resource? a liability ? SET II. WHOLESALE CARPET BUSINESS This set is separate from Set I, but the character of the work is similar. The books used are the same as in Set I. Directions and Suggestions. Observe the following directions : 1. First journalize on a loose sheet of journal paper. 2. James R. Denison is represented as the proprietor. Selling Price List for February Axminster $2.50 Brussels $1.35 Ingrain 75^ Linoleum 60^ Oilcloth 30^ Wilton $2.65 Memoranda of Transactions for February Feb. 1. James R. Denison, Boston, Mass., began the Wholesale Carpet business with the following resources: cash, $500; merchandise, $2595.50; fixtures, $200 ; coal, for heating the store, $15 ; the note on page 62. The following is the opening journal entry for this set : ^^^ -t^^U-^iA^^^z^ /, /f- - (^z^^^-z-^K^ 7P^o^U<-i^^^^z<.'^^l^ ^^e^^^^-c^^*?^*^ ~^fZ^ L.^<^ /C2^^fd<^ltA?^..2Jr^cr ^0 0yi^::^h.■^■-y^^z^c<^'ir>ty '^^/t^^^iPU^.A.^.J-iP-Uyt^C.e^ j6/o <^

^^^.d^/\^^ /^ ■ ■— *Oalue received Feb, 6. Sold W. F. Pratt, Springfield, on account : 200 yd. Brussels 150 yd. Ingrain 100 yd. Axminster 6. Sold Jas. R. Holcomb, City, for cash : 100 yd. Oilcloth 40 yd. Axminster 9, Sold John W. King, City, on account : 40 yd. Oilcloth 16 yd. Linoleum 60 yd. Brussels 9, Sold M. F. Newbury, Providence, on account : 100 yd. Wilton 120 yd. Axminster 10. Remitted A. R. Prescott & Co. a note at 10 da., with interest at 6%, in full for the mvoice of Feb. 5. 11. Received of Ernest B. Jackson cash for his note and interest due to-day ; face of note, $300 ; interest, 50<^ ; total, |300.50. 12. Received of W. F. Pratt his note at 10 da., with interest at 6%, $250, and the balance of the invoice of Feb. 6 in cash. 13. Sold Geo. S. Rollins, City, for cash : 100 yd. Brussels 100 yd. Linoleum 15. Bought of A. R. Prescott & Co., New York, on account, invoice of carpets amounting to $172.50. 16. Sold W. F. Pratt, Springfield, on account : 40 yd. Ingrain ^5 yd. Brussels 100 yd. Axminster 16. The Proprietor appropriated for his own use : 1 Rug 14' X 18', $40 1 Rug 16' x 20', $85 20. The First National Bank presented for payment the note in favor of A. R. Prescott & Co., due to-day. Paid the note and interest in cash; face of the note, $612.95; interest, $1.02; total, $613.97. SET 11. WHOLESALE CARPET 53 Feb, W. Sold John A. Newton, City, for cash : 70 yd. Wilton 22. Received of W. F. Pratt cash for his note and interest due to-day ; face of the note, $250 ; interest, 42(^ ; total, 1250.42. 22. Bought of C. W. Allen & Co., City, for cash, an invoice of carpets amounting to $410.50. 23. Received the following check, to apply on account : traders 3^ational ^ank ^ay to the order of i^^7^i-7^^^.. t^'^ ■ ■ t^- ^y!^1^^ r^y Ahf^.-?^^y?^^ ''//O^ • "Polk Under what name is this check entered ? As checks are used so commonly in business, a careful study of this form is commended. 25. Sold John W. King, City, the following (received cash, $65 ; balance on account) : 50 yd. Ingrain 40 yd. Axminster Make the following entry for this sale : Debit King and credit Mdse. for the whole bill; then debit Cash and credit King for the money received. Date each entry Feb. 25. 26. Received of John W. King his note at 30 da., with interest at 6%, for the amount of the invoice of Feb. 9. 26. Remitted W. B. Mason & Co. a note at 30 da., with interest at 6%, in full for the invoice of Feb. 4. 27, Sold Lewis & Parsons, City, for cash : 200 yd. Ingrain 50 yd. Linoleum 100 yd. Oilcloth 27. V2i\di Student for services to date, $40; paid A. M. Olcott for services to date, $30. Pass the journal sheet to the instructor for approval ; then copy into the regular journal, beginning on the page indicated by the index for Set II, in Blank No. 1. 64 BOOKKEEPING Below the last journal entry copy the following : IXVENTORIES, FEBRUARY 28, 19 Merchandise : Per schedule prepared by Denison $2214.92 Expense : Fixtures on hand |195. Posting. Open accounts in your ledger, three on each page, in the same order as in Set I, beginning on the first full blank page. Foot the accounts in pencil ; recheck the posting. Take a trial balance, omitting all accounts that balance ; after approval, record it in Blank No. 1, on the page indicated by the index. Make the usual statements, and the verification ; after approval, record them in Blank No. 1, on the page indicated by the index. Closing the Ledger. Open a Loss and Gain account ; close the follow- ing accounts into it : Merchandise, Expense, Interest. The model for closing the Interest account is given on this page. Close the Loss and Gain account into the Proprietor's account. Close the Cash account by balance. Take a trial balance. Present all books to the instructor for approval. Model for closing Interest ''d^CAy^, /f- Jlt^i^^U^ 3oa. /a '^7 4^— ^^^i-^dyz. ^ /¥Zf rf7 y ^^^./^x - / / "^y j r sV^ 7^ IJL INTRODUCTION TO BUSINESS PRACTICE 71 I N :s m ^ ^ ^ ^ ^ 2/^^ ___ Balance / /Z- yj -_ >^.. '4/ 2^^/^ _ /7 / / / 7 ■r^ /C Z^O ^ / ^/ .^^/^ X.f * / r 7^ Z3 y 1 3-0 ZA / ^ xr. ///^ 2-0 2-^ ^a ^0 / / 1 r<7 3/ 3 / ?-^i - TOTALS: DEPOSITS Zy.ft? ;,f CHECKS ^r.^ 4o TOTAL C^3 iU BALANCE ^^^/ /v At the end of a month a statement of the student's bank account should be made on the outside of this envelope, recording simply all deposits and all checks, as shown in the above illustration, and the balance. 74 BOOKKEEPIKO The deposits in the pass book may be totaled and the checks, in total, subtracted therefrom, thus showing the balance in the pass book. Place all the checks in the envelope. This constitutes a complete monthly statement of the student's bank account. EXERCISE 39 TRANSACTIONS WITH A BANK Make the following blank forms : rule lengthwise two sheets of paper about 6x8 inches ; rule two checks, two stubs, and the reverse stub on each sheet. This represents a page of a check book and the reverse stub. Follow the models given on page 71. Under date of March 1, enter on the reverse stub of the sheet just ruled a deposit of $1500. Under date of March 9, write a check for |250, in favor of Henry S. Lee, No. 1. Fill out the stub first and then write the check. Under date of March 13, enter a deposit of $150. Under date of March 16, write a check for $137.50, in favor of Wm. G. Howe, No. 2. Remember to fill out the stub first. Forward the total deposits to the reverse stub, and the total checks to the regular stub, on sheet number two. Under date of March 19, write a check for $100, in favor of E. T. Perry. Under date of March 23, enter a deposit of $75. Under date of March 30, write a check for $28.40, in favor of Amos H. Wells. What balance now remains in the bank ? This exercise may be continued at the discretion of the instructor. EXERCISE 40 BUSINESS FORMS Soston, Mass., je?^.^?^^. f, 19. T^eceived o f -^^^^^^^-^.^^1^. AJ X ^ ^ 7-- ^^ A- 77-''~A^^.-r^^^^^ /"" dollars 7^ $ ZC^(P' — :^- '~ i/7-r^^ Jr^p'^^^.^^^^..<^^^ INTRODUCTION TO BUSINESS PRACTICE 75 The Receipt. Study the model receipt, page 74, in every detail. Write the following receipts on slips of paper properly ruled : S. T. Wade owes you ^56.75, and pays the whole amount. The receipt bears these words: in full of account. R. O. Warner owes you 1120.50, and pays you t75. The receipt bears these words : to apply on account. You owe John Wheeler $102.50, and pay it all. You owe J. H. Leaman $62.50, and pay him |35. Near the bottom of page 19 is an open ledger account with J. A. Lyons. Write the receipt that he should give you, assuming that you pay the account in full. The Invoice. This model shows how an invoice should be made out when goods are bought or sold. The terms are on account^ 60 da., there- fore it is not receipted. -^-s^^^^^ j.,-^^ ^^^_^ ©r. T^e.rmR ^^ ,c7^^ ? .^r>^^.d^.^. y^ -^^^^^^^^/'^.r<£^ vr: ^^ / .rv .ra / £> — ^^z2-.52^i=^ ~X^^y^,.€7^ /T^-?^ r / ? 'T ,r ■-^^-^^<^^i^-/i^^^ /^ ,r ^l/^ ^^%'^^^^^^,,d-^^ 7 r.9 >?.? 4^/7 1 (?r In this invoice who is the buyer? the seller? What is meant by terms 60 da.f Note that the dollar sign is not used in writing either the prices or the exten- sions on an invoice. 76 BOOKKEEPING This model invoice is receipted because the terms are cash. .r v-^^. _^£_ /r r.r ^M 2/,tA<^s^- 3^y-L 2lL JT^ y^/^ rj^^AA .f^ ^ ^^=3:^,2^:^::^^^ /^f/-^^' .±jL 6\ /.?*/ ^^^^^ / /^!/ ^z: jLZ^ 7^ V^j^c- -^^2^r^^.^!>i^<^^..^'^^^ ^'^cZ^l^^^^. ./^tP^^J^/-7^<^^..g^ ^^^;^;>^,yl.^^ - after date^^ promise to pay to the order nf y/^tp-r-z^^.^y^^ ^^^^^>f^^^ /'^-^^ Qualified or Special A special indorsement names the indorsee ; the instrument could not again be negotiated without the indorsee's indorse- ment. A blank indorsement names no indorsee. Any holder may, how- ever, convert this into a special indorsement by writing " Pay to Qih name) or order" above the blank indorsement. A qualified indorsement simply passes the title without rendering the indorser liable. In form, this nidorsement may be either in blank or special. A restrictive indorsement con- stitutes the indorsee an agent of the indorser, usually for the col- lection of the paper. This form of indorsement is not com- mended by banks and clearing houses. Note the indorsement on page 87. All commercial paper offered for deposit at a bank must be in- dorsed, and the special indorse- ment is most commonly used. This form is a protection to the lawful holder because the payee is named, and payment will be made only on his order, by in- dorsement. If a check or a note bearing a special indorsement is lost or stolen, it is valueless to such a holder. When one has a check cashed at the bank, the blank indorsement may be used, as the check will be canceled as sooii as cashed. As the qualified indorsement relieves the indorser of responsibility for payment, commercial paper bearing this indorsement should be accepted with great caution. Restrictive SET III. GRAIN AND SEED BUSINESS WORK FOR APRIL The memoranda following are a continuation of the memoranda for March. No new principles are introduced, and the familiar business forms are used. As such full and explicit instructions were given in March, much explanatory matter will be omitted in April. If anything is not understood, refer to a similar transaction in the preceding month. Directions and Suggestions. The following general directions should be observed: 1. Use the same price list, the same books, etc., as in March. 2. Begin a new page in the journal. In the sales book leave a space of three lines, then write the first sale in April under the last sale in March. 3. The balance brought down from the March cashbook, under April 1, is to be reckoned with the cash receipts in April. Use a new envelope for the bank account. Record the balance at the head of the deposit column. Incoming Business Forms for April Form 15. Invoice of Henry Bruce, City, April 6. Terms : on account. 50 bu. Clover Seed 300 bu. Oats 50 bu. Garden Corn 100 bu. Millet Form 16. Invoice of S. D. Welch, City, April 9. Terms : on account 200 bu. Field Corn 100 bu. Spring Rye 200 bu. Wheat Form 17. Invoice of C. V. Cronin, City, April 11. Terms: cash. 50 bu. Timothy Seed Form 18. Note of Boyd &; Co., City, for |100, in your favor, at 10 da., April 14. Form 19. Check of Howard Young, City, for |145, in your favor, April 15. Form 20. Check of Boyd & Co., City, for |165, in your favor, April 23. Form 21. Check of Boyd & Co., City, for |100, in your favor, April 24. Form 22. Invoice of Smith & Bowers, City, April 25. Terms : cash. 20 bu. Dwarf Beans 200 bu. Field Corn 50 bu. Garden Corn 91 92 BOOKKEEPING Form 23. Check of Jesse Watson, City, for $175, in your favor, April 27. Fonn 24. Check of Jesse Watson, City, for $180.90, in your favor, April 28. Form 25. Check of Howard Young, City, for |90, in your favor, April 29. Memoranda of Transactions for April April 1. Give Amos Graves your check for the rent of the store for April, 135. 1. Give Henry Bruce your check in full of account. Turn to Henry Bruce's account in the ledger and find the balance of his account; write the check for this amount. 3. Receive of Howard Young cash, in full of account, |98. Turn to Howard Young's account in the ledger and verify the balance. Write the receipt and get the money. Enter it in the cashbook. 4. The note in favor of S. D. Welch falls due to-day; pay it by check. Write the check. Pass it in and receive the canceled note. The note will be can- celed by writing across the face, Paid April 4, 19 — . Make the entry in the cashbook. What account is debited in the cashbook? Place the canceled note in the Paid Bills envelope. 6. Buy of Henry Bruce, City, on account, merchandise as per invoice, Form 15. Remove the invoice from the tablet and proceed as usual. 7. Sell Howard Young, City, on account, at the prices given herewith: 100 bu. Field Corn at 48(^ 50 bu. Millet at 98^ 20 bu. Timothy Seed at $2.40 9. Give S. D. Welch your check, to apply on account, $200. 9. Buy of S. D. Welch, City, on account, merchandise as per invoice, Form 16. 10. Sell Boyd & Co., City, on account : 30 bu. Garden Corn 20 bu. Clover Seed 100 bu. Oats 11. Buy of C. V. Cronin, City, for cash, merchandise as per invoice, Form 17. Check the invoice ; if it is correct, write a check in payment. W. Sell P. H. Morse, City : 20 bu. Timothy Seed 100 bu. Field Corn 100 bu. Wheat SET III. GRAIN AND SEED 93 Receive cash, ♦125; balance on account. Write the bill. Terms : cash, $125 ; balance on account. Enter the entire bill in the sales book, and the cash received in the cashbook as a receipt on account. Neither entry should be checked. Why? Record the amount of the cash on the bill and receive the money. April 13. Receive of Boyd & Co. their note at 10 da., to apply on account, |100, Form 18. Place the note in the Unpaid Bills envelope. 13, Give Henry Bruce your note at 30 da., to apply on account, $200, payable at his office. 15. Sell Jesse Watson, City, on account : 20 bu. Dvrarf Beans 50 bu. Spring Rye 50 bu. Millet 10 bu. Timothy Seed 15. Receive of Howard Young his check for invoice of April 7, $145, Form 19. 17. Deposit the check and all currency on hand except |25. 18. Give S. D. Welch your check in full for the invoice of April 9, |348. Verify the amount by referring to the purchase book. 19. Sell Howard Young, City, on account, at the price given herewith : 100 bu. Wheat at 90^ 20. Sell F. G. Morgan, City, for cash, at the prices named herewith : 10 bu. Clover Seed at |3.70 10 bu. Timothy Seed at |2.40 Write a receipted bill and enter it in the sales book and the cashbook; check the item in each. Pass in the bill and receive the currency. M. Sell Boyd & Co., City, on account : 30 bu. Timothy Seed 20 bu. Garden Corn 50 bu. Millet 40 bu. Spring Rye ' 22. Sell John Wells, City, on account : 200 bu. Oats 50 bu. Millet 100 bu. Field Corn 23. Receive of Boyd & Co., their check, to apply on account, $165, Form 20. 24. Receive of Boyd & Co. their check in pa3rment of their note due to-day, tlOO, Form 21. Enter the amount of the check in the cashbook. Under what name ? Cancel the note and pass it in. 94 BOOKKEEPING April M, Deposit the two checks and all currency on hand. Indorse the checks. 25. Buy of Smith & Bowers, City, for cash, merchandise as per in- voice. Form 22. Examine and check the invoice ; if correct, pay it by check. Enter in the purchase book and the cashbook, checking the item in each. 26. Sell Johnson & Pease, City, for cash, at the prices named herewith: 10 bu. Dwarf Beans at $4.20 100 bu. Field Corn at ^^ 25 bu. Garden Corn at |1.90 After entering the invoice in the required books, receipt it, pass it in, and receive the currency. 27. Receive of Jesse Watson his check, to apply on account, |175, Form 23. 28. Prepay your note in favor of Henry Bruce by check. Face of the note, |200 ; discount, 50(^ ; amount of the check, $199.50. This note has 15 da. to run, and the interest on $200 for 15 da. is 50^. Write the check. Enter it in the cashbook as follows : on the right side debit Bills Payable for $200 ; on the left side credit Interest for 50^. Hand in the check and receive the note. Across the face of the note write. Paid April 28, 19 — . Place the canceled note in the Paid Bills envelope. Interest and discount are practically synonymous terms, interest is paid, usually, at the maturity of a loan, and discount is allowed before such maturity. For this reason all discount items will be entered as Interest. Study this transaction until it is understood. The discount and the prepayment of notes are common business transactions. 28. Receive of Jesse Watson his check for note and interest due to-day, Form 24. Face of the note, $180 ; interest, 90(/;. What two entries are made in the cashbook ? Cancel the note and pass it in. 29. Receive of Howard Young his check for the invoice of April 19, Form 25. 30. Give Henry T. Dale, your clerk, a check for his salary, $30. SO. Deposit the checks and all currency on hand. Indorse the checks. 30. Withdraw by check the balance on deposit in The Union Bank. This withdrawal is made as a matter of convenience in closing the set. The amount of the check is for the balance in the bank. Make the check payable to Self and pass it in. No entry is required. Proceed with your bank account as you did at the close of March. Before closing the books hand them to the instructor for inspection and approval. SET III. GRAIN AKD SEED 96 Record the following in the journal, in the usual form, at the cost price : Inventories, April 30, 19 — Merchandise: 30 bu. Dwarf Beans 50 bu. Millet 20 bu. Clover Seed 60 bu. Oats 200 bu. Field Corn 60 bu. Spring Rye 45 bu. Garden Corn 50 bu. Wheat Expense : Office Safe $75. Office Books 7.50 $82.50 Closing the Work for April After looking over the closing of each book in March, close the cash- book, the sales book, and the purchase book. The careful bookkeeper checks his work at every step. Check all additions before writing the results in ink. A simple way to check addition is to add the columns in reverse order. If the results agree, the work may be assumed to be correct. Post the books to the ledger. Post to the same accounts as in March. If any new accounts are to be added, allow one third of a page for each. Foot the ledger accounts. Take a trial balance ; after approval, record it in Blank No. 1, on the page indicated by the index. Make the two statements and the verification ; after approval, record them in Blank No. 1, on the page indicated by the index. Close the ledger. Take a second trial balance. Submit all work to the instructor for approval. When your monthly bank statement has been completed, compare each check with the stub in the check book. If they agree, check the stub. Place all canceled checks in the Paid Bills envelope. EXERCISE 43 ^ ^J^v-w^ A Written Review The following review exercises are suggested: 1. Journalize orally or in writing each transaction in April. 2. Use trial balances 3 and 4, page 28. Make the two statements, and the verification for each ; use $30 for the expense inventory in each statement. 96 BOOKKEEPING 3. Write from memory on blank paper, cut to the proper size, the following business forms : a. A Receipted Bill. Jan. 17, C. H. Palmer, Trenton, N.J., bought of Student for cash, less 3%: 25 doz. table knives at $7.50, 15 doz. nail hammers at |9,' 25 doz. safety locks at |4.50. h. A Promissory Note. Jan. 20, Student gave James B. Stevens a 60-da. interest-bearing promissory note payable at First National Bank. Face of the note, $125. c. A Receipt. Jan. 22, Frank H. Jackson paid Student $127.85 in full for invoice of Jan. 12. d. A Check. Jan. 25, Student gave William E. Hitchcock a check on Commonwealth Trust Company for $200. EXERCISE 44 INTEREST AND DISCOUNT The rate of interest allowed by law is called the Legal Rate. Persons may agree to pay less than this rate, but not more, unless a higher rate by special agreement is permitted by statute. If an agreement for the payment of interest specifies no rate, the highest legal rate in the state where the contract is signed will be understood. In the Commercial World 12 mo. of 30 da. each — 360 da. — are reckoned as 1 yr. In bank discount the exact number of days is used. Throughout the business practice employed in this text the rate will be 6%, based on the commercial year of 360 da. This method is not exact, but it is the most common because the most con- venient. It has been legalized by statute in some states and is generally used in all the states. A great variety of methods is employed to compute interest and dis- count, but it is suggested that the student use the day method, as follows : Point off to the left three decimal places in. the principal, multiply by the number of days, and then divide by 6. Cancel when possible. Example. What is the interest on $146.50 for 50 da. at 6% ? Solution. .1465 x 50 = 7.325. 7.325 H- 6 = 1.22, or $1.22, the required interest. When a man borrows money at a bank, he not infrequently pays the interest in advance ; when he sells a note to a bank, he allows discount to the bank, and such allowance is called Bank Discount. INTEREST AND DISCOUNT 97 The maturity of negotiable paper is determined as follows : When the time is expressed in months, calendar months are used to fix the date of maturity ; but when the time is expressed in days, the exact number of days is used. To illustrate : A note dated Jan. 28, 29, 30, or 31, at 1 mo., will mature on Feb. 28 (leap years excepted); but a note with any of the dates just noted at 30 da. will mature on Feb. 27, 28, March 1, or 2, respectively. The Tenn of Discount is the time from the date of discount to the maturity of the note. Banks differ as to method in finding the term, but in this text the exact number of days will he used uniformly. EXERCISE 45 INTEREST AND DISCOUNT ENTRIES This exercise is not a set, but a series of illustrations. It may be used first as an oral exercise. Use a sheet of journal paper for the cashbook, and enter the following transac- tions ; balance and rule the cashbook. May 1. Student begins business and invests cash, |1600. 2, Give Henry A. Dunton a check for your note, which falls due to-day, $172.50. 4, Receive a check from Henry A. Gray for his note, which is due to-day, 1235.20. 6. Pay your note and interest, due to-day, in favor of H. H. James, in cash. Face of the note, $325 ; interest, $11.50. 8. Receive of Hale & Son their check for their note and interest, due to-day. Face of the note, $220.35; interest, $7.75. 9. Discount at The Union Bank W. K. Marsh's note. Face of the note, $300 ; discount allowed for 45 da. What entry is made on the left side of the cashbook ? on the right side ? 12. Prepay your note in favor of Geo. R. Gushing. Face of the note, $400 ; discount allowed for 30 da. 20. Receive a check from Johnson & Co. for their note, due to-day* Face of the note, $256.25. 24. Prepay your note in favor of E. R. Sterling. Face of the note, $222.40 ; discount allowed for 60 da. 26. Discount at First National Bank T. T. Hunger's note. Face of the note, $257.80 ; discount allowed for 60 da. 30. Make an additional investment in the business in cash, $500. 98 BOOKKEEPING EXERCISE 46 COMPOUND ENTRIES The Compound Entry is explained on page 46. Refer to that explana- tion before proceeding with this exercise. A Simple Entry consists of one debit and one credit. Several of the preceding interest and discount entries are here used as illustrations of compound entries ; they will serve for reference in subsequent work. Journalize Exercise 45. The making of these entries in both the cashbook and the journal will make the debits and the credits clearer in each transaction. MaijG. Bills Pay. |325. Interest 11.50 Cash $336.50 MaijO. Cash $297.75 Interest 2.25 Bills Eec. $300. Maij 8. Cash $228.10 Bills Rec. $220.35 Interest 7.75 May 12. Bills Pay. $400. Cash $398. Interest 2. Selling Price Lists ARTICLE AND QUANTITY 1 2 3 4 5 6 7 8 9 10 11 Carpenter's Chis- els, ^-in., doz. . 4.75 5.00 5.00 5.00 5.10 4.96 5.01 5.06 5.11 5.16 4.76 Coal Hods, doz. . 9.00 10.00 9.00 9.00 9..30 9.21 9.26 9.31 9.36 9.41 9.01 Copying Presses, each .... 8.00 7.50 8.00 8.25 8.20 8.21 8.26 8.31 8.36 8.41 8.01 Door Knobs, doz. 1.00 1.20 1.10 1.10 1.05 1.21 1.26 1.31 1.36 1.41 1.01 Grindstones, each .5.00 6.00 5.00 5.25 5.20 5.21 5.26 5.31 5.36 5.41 5.01 Hammers, doz. . 8.00 9.00 8.00 8.20 8.60 8.21 8.26 8.31 8.36 8.41 8.01 Handsaws, doz. . 21.00 22.50 21.50 22.00 22.75 21.21 21.26 21.31 21.36 21.41 21.01 Ice-cream Freez- ers, each . . 3.25 3.20 3.30 3.10 3.30 3.46 3.51 3.56 3.61 3.66 3.26 Knives and Forks, set .... 1.60 1.50 1.75 1.70 1.65 1.81 1.86 1.91 1.96 2.01 1.61 Lanterns, doz. . 7.50 8.00 7.80 8.00 7.75 7.71 7.76 7.81 7.86 7.91 7.51 Mortise Locks, doz. .... 6.00 6.80 6.25 6.20 6.35 6.21 6.26 6.31 6.36 6.41 6.01 Nails, 8d, wire, keg 4.00 4.25 4.25 4.20 4.20 4.21 4.26 4.31 4.36 4.41 4.01 Planes, ^4, doz. . 30.00 32.00 30.00 29.00 31.00 30.21 30.26 30.31 30.36 30.41 .30.01 Railroad Picks, 9-lb., doz. . . 13.00 12.00 15.00 12.50 14.25 13.21 13.26 13.31 13.36 13.41 13.01 Steelyards, doz. . 16.00 17.50 18.00 16.25 15.80 16.21 16.26 16.31 16.36 16.41 16.01 Steel Axes, doz. . 12.00 12.50 13.00 12.25 12.50 12.21 12.26 12.31 12.36 12.41 12.01 Try-squares, 6- in., doz 6.00 7.00 6.30 6.50 6.20 6.21 6.26 6.31 6.36 6.41 6.01 SET IV. GENERAL HARDWARE BUSINESS WORK FOR MAY The Object of this set is to continue the work of Set III and to give more extended business practice. A partnership is introduced. Directions and Suggestions. Observe these general directions : 1. The same bound books are used as in Set III. 2. Student and James A. Hart are represented as proprietors. 3. The firm name is to be Student & Hart. 4. Student will keep the books and manage the business. 5. Begin a new page in the cashbook, the journal, the check book, and the sales book. 6. Unless otherwise stated, all payments are to be made hy check. Use a new envelope for the bank account. Different selling price lists may be used if the instructor so desires. The following table provides twenty-five such lists : for May and June 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4.80 4.84 4.88 4.92 4.97 5.02 5.07 5.12 5.17 4.77 4.81 4.85 4.89 4.93 9.05 9.09 9.13 9.17 9.22 9.27 9.32 9.37 9.42 9.02 9.06 9.10 9.14 9.18 8.05 8.09 8.13 8.17 8.22 8.27 8.32 8.37 8.42 8.02 8.06 8.10 8.14 8.18 1.05 1.09 1.13 1.17 1.22 1.27 1.32 1.37 1.42 1.02 1.06 1.10 1.14 1.18 5.05 5.09 5.13 5.17 5.22 5.27 5.32 5.37 5.42 5.02 5.06 5.10 5.14 5.18 8.05 8.09 8.13 8.17 8.22 8.27 8.32 8.37 8.42 8.02 8.06 8.10 8.14 8.18 21.05 21.09 21.13 21.17 21.22 21.27 21.32 21.37 21.42 21.02 21.06 21.10 21.14 21.18 3.30 3.34 3.38 3.42 3.47 3.52 3.57 3.62 3.67 3.27 3.31 3.35 3.39 3.43 1.65 1.69 1.73 1.77 1.82 1.87 1.92 1.97 2.02 1.62 1.66 1.70 1.74 1.78 7.55 7.59 7.63 7.67 7.72 7.77 7.82 7.87 7.92 7.52 7.56 7.60 7.64 7.68 6.05 6.09 6.13 6.17 6.22 6.27 6.32 6.37 6.42 6.02 6.06 6.10 6.14 6.18 4.05 4.09 4.13 4.17 4.22 4.27 4.32 4.37 4.42 4.02 4.06 4.10 4.14 4.18 30.06 30.09 30.13 30.17 30.22 30.27 30.32 30.37 30.42 30.02 30.06 30.10 30.14 30.18 13.05 13.09 13.13 13.17 13.22 13.27 13.32 13.37 13.42 13.02 13.06 13.10 13.14 13.18 16.05 16.09 16.13 16.17 16.22 16.27 16.32 16.37 16.42 16.02 16.06 16.10 16.14 16.18 12.05 12.09 12.13 12.17 12.22 12.27 12.32 12.37 12.42 12.02 12.06 12.10 12.14 12.18 6.05 6.09 6.13 6.17 6.22 6.27 6.32 6.37 6.42 6.02 6.06 6.10 6.14 6.18 99 100 BOOKKEEPING Incoming Business Forms for May Note. Please read the instructions given under the Incoming Business Forms for March and apply them to the work of Set IV. Form 1. Invoice of Turner & Moss, City, May 2. Terms: cash. 10 doz. Carpenter's Chisels 20 sets Knives and Forks 6 Copying Presses 4 doz. Mortise Locks 10 Grindstones 1 doz. Planes, #4 3 doz. Handsaws Form 2. Bill of H. L. Mills, City, May 4. Terms : cash. Set Office Books, |12 Stationery, $3 Form 3. Invoice of Wilder & Chase, City, May 7. Terms: 1/2 in 3 da., balance in 10 da. 8 doz. Coal Hods 5 doz. Lanterns 12 doz. Door Knobs 10 kegs Nails 15 doz. Hammers 2 doz. Planes, #4 10 Ice-cream Freezers 5 doz. Carpenter's Chisels Form 4. Invoice of Dunn & Sanford, City, May 9. Terms: 10 da. 10 doz. Railroad Picks 12 doz. Steel Axes 6 doz. Steelyards 20 doz. Try-squares Form 5. Check of Strong & Hunter, City, for $117.75, in your favor. May 11. Form 6. Invoice of Turner & Moss, City, May 14. Terms : on account. 12 doz. Carpenter's Chisels 6 doz. Hammers 10 doz. Coal Hods 6 Ice-cream Freezers 15 Copying Presses 6 doz. Handsaws 20 doz. Door Knobs 10 Grindstones 10 sets Knives and Forks Form 7. Invoice of Wilder & Chase, City, May 16. Terms : on account. 10 doz. Lanterns 10 kegs Nails 6 doz. Mortise Locks 6 doz. Planes, #4 Form 8. Invoice of Dunn & Sanford, City, May 20. Terms : 1/30. | 10 doz. Railroad Picks , 6 doz. Steel Axes ! 6 doz. Steelyards 10 doz. Try-squares The terms given mean that 1% will be taken off the face of the invoice if it is j paid within 30 da. SET IV. GENERAL HARDWARE mh Form 9. Check of Strong & Hunter, City, for $150, in your favor. May 23. Form 10. Check of John H. Sand, City, for |200, in your favor. May 30. In Set IV all merchandise is to be bought at the following prices : ARTICLE AND QUANTITY COST Carpenter's Chisels, ^-in Coal Hods, , doz u $3.75 7.50 Copying Presses, Door Knobs, Grindstones, Hammers, Handsaws, Ice-cream Freezers, Knives and Forks, each doz each doz 6.00 .75 3.75 6.00 18.00 each set 2.50 1.25 Lanterns, Mortise Locks, doz 6.00 4.50 Nails, 8d, wire, Planes, #4, Railroad Picks, 9-lb., keg doz « 3.00 24.00 10.00 Steelyards, Steel Axes, « 12.00 « 9.00 Try-squares, 6-in., <( 4.50 Memoranda of Transactions for May Mai/ 1. Student and James A. Hart begin a General Hardware busi- ness, investing cash, $3000. Each partner invests |1500. Place the above memorandum in the journal, hut make no journal entry. Receive the currency from the instructor. Make the following entry in the cashbook : (ou^li^ei^^^^ 1, Deposit all currency in The Union Bank, under the firm name. In the pass book, above the student's name, write the firm name. Student & Hart. .;lt)2 BOOKKEEPING May 1. You have entered into an agreement with Wm. H. Kellogg for the rental of his store, at 266 Broad Street, at $50 per month. No entry is required. A memorandum of this agreement may be made and filed with the incoming papers. Engage Henry Lakey as a clerk at |35 per month. 2. Buy of Turner & Moss, City, for cash, merchandise as per invoice, Form 1. Examine and check the invoice. Write a check in payment. Enter in the pur- chase book and the cashbook, and check in each. This check will be No. 1. Now that you are engaged in a partnership business, checks are to be signed with the Jirm name. 3. Give Wm. H. Kellogg a check for rent of the store for May. 4. Buy of H. L. Mills, City, for cash, books and stationery, as per bill, Form 2. Remember, all cash payments are made by check unless otherwise noted. 5. W. D. Mendon, City, places an order for the following goods. Fill the order at the prices given herewith. Terms : cash. 4 doz. Carpenter's Chisels at $4.75 1 doz. Handsaws at $21 3 Copying Presses at $8 5 sets Knives and Forks at $1.60 4 Grindstones at $5 2 doz. Mortise Locks at $6 Record the invoice in the sales book and the cashbook, and check in each. Begin a new page in the sales book. Receipt the invoice and receive the currency. 6. Hall & Son, City, place an order for the following goods. Fill the order. Terms: on account. 3 doz. Carpenter's Chisels 6 sets Knives and Forks 1 doz. Planes, #4 2 Copying Presses 7. Buy of Wilder & Chase, City, merchandise as per invoice. Form 3. Terms; 1/2 in 3 da. ; balance in 10 da. 7. Deposit currency, $100. 8. Strong & Hunter, City, place an order for the following goods. Fill the order at the prices given herewith. Terms : on account. 4 doz. Coal Hods at $9 6 doz. Hammers at $8 3 kegs Nails at $4 3 Ice-cream Freezers at $3.25 5 doz. Door Knobs at $1 2 doz. Lanterns at $7.50 9. Buy of Dunn & Sanford, City, at 10 da., merchandise as per invoice, Form 4. SET IV. GENERAL HARDWARE 103 May 9. Withdraw by check f 15, to be used for sundry office expenses. Write this check to the order of Cash. No entry is required because no cash has been paid out. Place the currency in the Business Cash envelope. This is called a cash check. 10. Remit Wilder & Chase a check for one half the invoice of May 7. If there is a half cent in the division, call it one cent ; always reckon the odd cent on the first transaction. 10. Pay S. H. Lyman, in currency, |5 for cleaning the store and basement. 11. Receive of Strong & Hunter their check for invoice of May 8, P^orm 5. Examine the check; if correct, enter the amount in the cashbook. Place the check in the Business Cash envelope. 12. Give each partner a check for $50, for his personal use. Write your check as follows : Pay to the order of Student. Make your partner's check payable to his own name. Sign each check with the firm name, as usual. Enter in the cashbook as payments, under each partner's name as a withdrawal. Place the currency in the Personal Cash envelope. 13. L. P. Austin, City, places an order for the following goods. Fill the order. Terms : on account. 5 doz. Railroad Picks 5 doz. Try-squares 2 doz. Steelyards 5 doz. Hammers 6 doz. Steel Axes 3 Ice-cream Freezers 14. Buy of Turner & Moss, City, on account, merchandise as per invoice. Form 6. Id. Deposit the check on hand. 15. Wilson & Barton, City, place an order for the following goods. Fill the order. Terms : 10 da. 10 doz. Door Knobs 3 Ice-cream Freezers 3 doz. Hammers 6 sets Knives and Forks 2 doz. Handsaws 4 doz. Carpenter's Chisels 16. Buy of Wilder & Chase, City, on account, merchandise as per invoice, Form 7. 17. Remit Wilder & Chase a check for the balance of the invoice of May 7. Note the amount paid on this invoice on May 10. 104 BOOKKEEPING May 18. John Howe, City, places an order for the following goods. Fill the order at the prices given herewith. Terms: cash. 4 doz. Lanterns at |7.50 5 kegs Nails at $4 3 doz. Mortise Locks at $6 3 doz. Planes, #4, at |30 Record in the sales book and the cashbook, and check in each. 19. Strong & Hunter, City, place an order for the following goods. Fill the order. Terms : on account. 6 doz. Carpenter's Chisels 8 doz. Door Knobs 4 doz. Coal Hods 4 Grindstones 5 Copying Presses 3 doz. Hammers 3 doz. Handsaws 5 sets Knives and Forks 20. Buy of Dunn & Sanford, City, merchandise as per invoice. Form 8. Terms: 1/30. 21. Receive of L. P. Austin cash, on the invoice sold to him on May 13, $100. AVrite the receipt and receive the currency. 22. John H. Sand, City, places an order for the following goods. Fill the order. Terms: on account. 6 doz. Railroad Picks 5 kegs Nails 5 doz. Steelyards 6 Ice-cream Freezers 10 doz. Try-squares 4 doz. Lanterns 3 Grindstones 6 doz. Carpenter's Chisels 23. Receive of Strong & Hunter their check for $150, to apply on the invoice of May 19, Form 9. 24. Deposit the check on hand, and currency, $200. Remember, you must indorse all checks that you deposit. 24. Remit Dunn & Sanford a check for the amount of the invoice bought of them on May 9. 25. Receive of Wilson & Barton cash, for the amount of the invoice sold them on May 15. Remember the receipt. 26. Give Wilder & Chase your note, at 15 da., with interest, for the invoice of May 16. Write the note and make the journal entry. The invoice should be receipted as follows : Paid hy note at 15 da., Wilder Sf Chase. SET IV. GENERAL HARDWAKE 105 May 27. P. D. Anson, City, places an order for the following goods. Fill the order. Terms : 10 da. 3 doz. Coal Hods 6 Grindstones 5 Copying Presses ^ 2 doz. Hammers 4 doz. Door Knobs 1 doz. Handsaws 27. Give Turner & Moss a check for one half of the invoice bought of them on May 14. 28. Receive of Hall & Son cash, to apply on the invoice sold them on May 6, $50. 29. L. P. Austin, City, places an order for the following goods. Fill the order at the prices given herewith. Terms ; 3/10, ^^/30. 4 sets Knives and Forks at $1.60 3 doz. Mortise Locks at $6 3 doz. Lanterns at $7.50 4 kegs Nails at |4 29. Wilson & Barton, City, place an order for the following goods. Fill the order. Terms : on account. 2 doz. Planes, #4 2 doz. Steelyards 4 doz. Railroad Picks 4 doz. Steel Axes 30. Receive of John H. Sand his check to apply on account, $200, Form 10. 31. Deposit the check and all currency on hand. 31. Give Henry Lakey, your clerk, a check for his salary, $35. Make the monthly bank statement. Before closing the different books, hand them to the instructor for inspection and approval. Record the following in the journal, in the usual form, at the cost price : Inventories, May 31, 19 — Merchandise : 4 doz. Carpenter's Chisels 2 doz. Lanterns 7 doz. Coal Hods 2 doz. Mortise Locks 6 Copying Presses 3 kegs Nails 6 doz. Door Knobs 3 doz. Planes, #4 4 Grindstones 5 doz. Railroad Picks 3 doz. Hammers 3 doz. Steelyards 2 doz. Handsaws 8 doz. Steel Axes 2 Ice-cream Freezers 15 doz. Try-squares 4 sets Knives and Forks Expense : Office Books and Stationery $12 106 BOOKKEEPIKG Closing the Work for May Look over the closing of each book in April, and then close the books. Post to the ledger, beginning on a new page ; allow one third of a page for each account. There are iiuo proprietors in this set ; their accounts should be on the first page of the ledger. Foot the ledger accounts. Take a trial balance ; after approval, record it in Blank No. 1, on the page indicated by the index. Make the usual statements, and the verification ; after approval, record them in Blank No. 1, on the page indicated by the index. Close- the ledger as follows: 1. Close the Merchandise and Expense accounts to the Loss and Grain account. 2. As there are two proprietors in this set, divide the gain equally between them, and close the Loss and Gain account as shown in the following model: ,^^^d^ ^^"^^U-ny 3/ 3/. i^ilg^e^t^Tle^'Sk^ ^ 3/ ^^0 zg2M ^ 3/ ^9^10^6^ /^yzi? /^7Z

>^ ^ A Written Review The following review exercises are suggested : ^ 1. Journalize orally or in writing each transaction in June. 2. On loose sheets of paper write Set II, page 51, as follows : Use the cashbook, the journal, the purchase book, the sales book, and the ledger. Complete the set in every detail and pass it to the instructor. 3. The following written test in business forms : Write from memory on blank paper, cut to the proper size, the following business forms; make the entry for each party. a, A Promissory Note. May 27, Student gives Henry S. Miller a 30-day promissory note, bearing interest at 6%, payable at Second National bank. Face of the note, $237.50. h. A Promissory Note. June 16, Student receives of Adam H. Free- man a 60-day promissory note, without interest, payable at Union National Bank. Face of the note, |348.20. c. A Check. On May 15, Student receives of Howard & Co. a check drawn on the City National Bank for |88.40. EXERCISE 49 k c^ SET G. GRAIN This set is given as an optional review set, or it may be used for additional work by those students who finish the regular sets in advance of the class. The books used are the journal, the cashbook, the sales book, the pur- chase book, and the ledger. Loose sheets of journal paper and ledger paper should be used for recording the transactions. Allow one third of a page for each account in the ledger. A REVIEW SET 113 Memoranda of Transactions June 1. Student and Wm. G. Allston begin the Grain and Seed busi- ness, investing cash, |2000. Each partner invests $1000. 2, Pay Edward S. Green by check, for rent of the store for 1 mo., $50. •5. Buy of Wm. S. Duncan by check : 500 bu. Wheat at 90^ 600 bu. Corn at 43^ 4. Sell Harvey & Co. for cash : 200 bu. Wheat at $1.10 150 bu. Corn at 50^ 6, Buy of E. S. Harlan on account : 1000 bu. Oats at 32(^ 6. Pay T. J. Coleman by check, for a set of office books, stationery, and supplies, $22.50. G. Sell Graves & Co. on account : 250 bu. Corn at 51(^ 400 bu. Oats at ^^ 8. Pay E. S. Harlan by check, on account, $200. 9, Buy of Richard F. Goodman on account : 500 bu. Corn at 44(^ 10. Sell Henry P. Button on account : 150 bu. Wheat at $1.12 100 bu. Corn at 50<^ 200 bu. Oats at ^^ 11. Buy of S. M. Collins by check : 400 bu. Wheat at 92(^ * 12. Pay Reading & Co. by check, for an office safe, $75. 13. Student withdraws cash, for personal use, $50. 13. Wm. G. Allston withdraws cash, for personal use, $50. 15. Give E. S. Harlan your note, with interest, at 10 da., $120. 16. Receive of Graves & Co. their check, on invoice of June 6, for $175. 17. Give Richard S. Goodman your check for the invoice of June 9. 18. Receive of Henry P. Button his check for the invoice of June 10. 19. Sell Kelsey & Co. on account: 200 bu. Wheat at $1.15 100 bu. Corn at 50^ 200 bu. Oats at 37^*^ 20. Receive of Graves & Co. their check for the balance of the invoice of June 6. 114 BOOKKEEPIKG June 22. Sell Graves & Co. on account, 2%, 10 da. : 200 bu. Wheat at $1.10 200 bu. Corn at 50^ 100 bu. Oats at 38(^ 23. Buy of Geo. M. Barber on account : 500 bu. Oats at 33^ 24. Sell Henry P. Dutton on account : 60 bu. Wheat at $1.12 200 bu. Oats at 39(^ 25. Pay E. S. Harlan by check for your note and interest due to-day. 26. Receive of Graves & Co. their check for the invoice of June 22, less 2%. 27. Pay Geo. M. Barber by check, on account, |100. 27' Buy of E. S. Harlan on account : 300 bu. Wheat at 91(^ 29. Receive of Henry P. Dutton his check, on account, $75. 30. Receive of Kelsey & Co. their note, with interest, at 30 da., $250. 30. Pay Fred A. Walker, your clerk, by check, one month's salary, $30. Inventories, June 30, 19 — Merchandise : 400 bu. Wheat at 90^ 300 bu. Corn at 43^ 400 bu. Oats at 320 Expense ^ Office Books and Stationery, $20 Office Safe at Cost EXERCISE 50 CONSIGNMENTS A fruit grower in Oregon may send a quantity of apples to a merchant in New York, who will act as agent in selling the apples. This agent is called a Commission Merchant. The quantity of apples received is called the Consignment ; the one who sent the apples, the Consignor; the commission merchant who received them, the Consignee ; the itemized statement sent by the consignee to the consignor, the Account of Sales. CONSIGNMENTS 115 After the apples are sold, the merchant deducts a certain per cent of the sales as his Commission, pays all the other charges, and remits the balance. The following transactions afford illustrations of the application of debit and credit to this kind of business. Journalize each transaction. Memoranda July 1, Henry Brown, a commission merchant of New York, received a consignment of pineapples from the Day Porto Rican Fruit Company, Manati, Porto Rico, by the steamer Coamo, to be sold, on their account and risk, as follows : 100 crates 36's 100 crates 30's 100 crates 24's 100 crates 18's No debit and no credit entry for this, simply a memorandum. 36's, 24's, etc., set forth the number of pineapples in each crate, and indicate the size of the fruit. 2. The freight charges, |0.482 per crate, wer'e paid by check to the New York & Porto Rican Steamship Company. Charge the Day Porto Rican Fruit Company for the amount of this check. S, Upon examination it was found that some of the fruit was damaged, and the entire shipment was repacked at a charge of 2^ per crate. The following were the losses : 3 crates 36's 2 crates 30's 2 crates 24's " 1 crate 18's Charge the Company and credit Labor. The charge is for the total number of crates. 4, Sold H. B. Smith on account : 50 crates 36's at $2.90 60 crates 24's at $3.25 5, Sold J. B. Conley for cash, less 2% : 47 crates 36's at $2.90 50 crates 30's at $3.10 Charge the net amount. 6, Sold C. H. White on account : 48 crates 30's at $3.15 50 crates 18's at $3.60 7, Sold P. C. Wilson for cash : 48 crates 24's at $3.20 49 crates 18's at $3.50 116 BOOKKEEPING July 8, The company is charged for the following items : Labor, |4 ; cartage, 2(f, per crate; commission, IO70 on the sales. Credit the accounts named. 9. A check is remitted for the net amount due the Day Porto Rican Fruit Company. Make the necessary entry for this remittance. COMMERCIAL DRAFTS Note. A brief study of the commercial sight draft and the bank draft is introduced at this stage of the student's work for the convenience and accommodation of those instructors who desire to take up the study of drafts, in a brief way, in connection with the introductory work of the text. Study the following illustration, giving particular attention to the relation that the different parties bear to each other. Chas. H. Hardy, Hartford, Conn., owes Geo. H. Allen, Chicago, 111., |500. Amos R. Graham, Chicago, 111., owes Chas. H. Hardy the same amount. What may Chas. H. Hardy do to serve his own convenience, and at the same time save Amos R. Graham the trouble of sending the money from Chicago to Hartford ? Chas. H. Hardy writes an order directing Amos B.. Graham to pay Geo. H. Allen $500. Allen presents the order to Graham, and he pays it in cash. Does this accomplish the same result as if Graham had sent the money to Hardy, and Hardy had sent it to Allen ? Whom should Chas. H. Hardy debit? Whom should he credit? Whom should Geo. H.Allen credit? What should he debit? Whom should Amos R. Graham debit ? What should he credit ? A Commercial Draft is a written order in which one person directs another to pay a specified sum of money to the order of himself, or to the order of a third person. The primary object of commercial drafts is to effect the settlement of debts without the risk or the inconvenience of transmitting money. There may be either three parties or two parties to a draft. The Original Parties to a three-party draft are : The Drawer, the one who draws the draft ; The Drawee, the one on whom the draft is drawn. The Payee, the one to whom the order is made payable. Many commercial drafts are drawn as a means of collecting debts, and a large number of them are dishonored. Unless there is a special reason, such as dealing with a delinquent debtor, a draft should not be drawn without a previous arrange- ment or an understanding between the persons. Without such notice, a draft ordi- narily has no more significance than the sending of a monthly statement of account. COMMERCIAL DRAFTS 117 Sight Paper is paper payable on presentation. The following is the usual form of a sight draft. Sight Draft d^^-d^^^^^^^^ — — — ^ay to the order of - ^^3.^ S=Z± r U.^i<<^ ^::n4^.^f^.''nrCt^.,^ \ /Dollars Value received and charge to account of 'tNlo..z^ T>ue -^A^. P> 4 ^^i ^^<^^^y^-^^ study this sight draft in connection with the following diagram : C. W. Gray, payee Springfield F. C. Gorham, drawee, Springfield Mason & Young, drawers Boston The persons to a three-party commercial draft usually bear the follow- ing relation to each other : The Drawee generally owes the drawer; The Drawer generally owes the payee ; The Payee and the drawee bear no relation to each other. The drawee and the payee usually live in the same place. While not bound to do so, the drawer usually notifies the drawee before or at the time of drawing the draft. It is customary to send it to the payee, and he presents it to the drawee. 118 BOOKKEEPING The Drawer's Entry. Mason & Young mail the following draft to C. W. Gray, and make this journal entry : Mason & Young's Journal Z^.'tZ^ i^-T-Z^ iZyOO^ S(?0 S^(? Mason & Young have given C. W. Gray an order equivalent to $500 cash, when presented to Gorham ; therefore they should debit Gray. When F. C. Gorham pays the sight draft, he gets out of Mason & Young's debt, $500. He gave the money to Gray, but /or tlie account of Mason 8^ Young ; therefore Mason & Young will credit F. C. Gorham. The Payee's Entry. Immediately upon the receipt of this draft Gray will take it to F. C. Gorham and receive the cash, or deposit it in his bank for collection and credit. Gray will get the cash, $500 ; he will make this cashbook entry on the left side: Gray's Cashbook .x'i^^.^i^-^^^zyK ^:W<>:?^^- <:z^l-a^A^a^Uz^/^tP'^ SOO The cash received by Gray came from Mason & Young through Gorham ; there- fore Gray should credit Mason Sj- Young. The Drawee's Entry. When the draft is presented to Gorham, he will pay it, and make this cashbook entry on the right side : Gorham' s Cashbook j-^^ Gorham paid Gray $500, but he paid one of his debts to Mason & Young, and thus got out of their debt ; therefore he should debit them. The three-party draft is not used so frequently as formerly. The Two-Party Draft; its General Uses. Business men frequently employ the sight draft as an aid in the collection of accounts that are past due. For example, suppose Edgar McMickle, Paterson, N.J., owes COMMERCIAL DRAFTS 119 Wilbert, Closs & Co., Springfield, Mass., |260.50. The account is past due, and Wilbert, Closs & Co. want the money. They will, after proper notice, draw the following draft : % 2.(^(7 :^ -.c^^^^ ^ J^^^^2^^^^ 'a.ue. ^ ^^yi'/i^^r^^.^^J^^ Wilbert, Closs & Co. will indorse the draft and leave it with the Springfield National Bank for collection. As they have no account with a Paterson bank, they will again indorse the draft and forward it to the Chemical National Bank of New York City, with whom they have a regular account. The following indorsements will appear on the back of the draft. The blank indorsement, simply the name, is but little used in business. Banks insist on the use of the full indorsement. A number of indorsements that are common in business are illustrated and explained on page 90. The Chemical National Bank will collect the money from McMickle through a bank in Paterson, and then notify the Springfield National Bank that the draft has been collected and the amount credited. The Springfield National Bank notifies Wilbert, Closs & Co. that the pro- ceeds have been credited. 120 BOOKKEEPING The following are the entries for this draft : The Drawer's Entry. Wilbert, Gloss & Co. make this entry on the left side of their cashbook : Wilbert, Closs & Co.'s Cashbook 1^0 sol Should the bank make a charge for collecting this draft, the amount of such a charge would appear on the right side of the above cashbook. The Drawee's Entry. When Edgar McMickle pays the draft, he will debit Wilbert, Closs & Co. on the right side of his cashbook, as follows : McMickle' s Cashbook iCo SO From the preceding discussion the following principles are deduced regarding the entries for commercial sight drafts : Drawer's Entry when a three-party sight draft is drawn : Payee Drawee Drawer's Entry when he draws a sight draft in his own favor, and it is collected: /-, i t-^ Cash Drawee Payee's Entry when he receives a sight draft and collects it, on account : Cash Drawer Drawee's Entry when he pays a sight draft : Drawer Cash EXERCISE 51 WRITING DRAFTS Write each of the following drafts, at sight, and make the entry for each party. Use the current date. The following script model shows an orderly arrangement of the work. It is suggested that the students rule ordinary sheets of writing paper to corre- spond to the model on page 121, and use them when writing the drafts outlined on page 122. COMMEECIAL DRAFTS. SCRIPT MODEL 121 Model Draft and Entries i^^^^i/'gi.'^-t^ v^:^5CZd.s^T^^yC-^2>^2^^.,5^ "^v^^ _w^- lyU'^TZyf'Zy 36? ^ 3CfO /a^u-d.^J^ 0.^-<>-t^^^^ (p-7-2^-^t^£-^^.-^-u^rz.>'9^ 30 (P 0^'' 12 BOOKKEEPING DRAWER '-^ DRAWEEN! ^^^ PAYEE AMOUNT 1. J. C. Green (Your Place) Amos Hamilton Albany, N.Y. L. B. Messer *350. 2. Student (Your place) John Garson Columbus, 0. Henry F. Cook 1402.10 3. A. B. Mentor Chicago, 111. Student (Your place) Carl V. Martin $378.50 4. David M. Gay Alton, 111. John A. Saxon (Your place) Student *1200. 5. You owe Ralph M. Wells, New York, $400, and Geo. M. Warren, New York, owes you $500. Draw a sight draft and make the required entries, assuming that the draft will be paid on presentation. 6. F. A. Wright, Atlanta, Ga., owes you $42.50 on account. Draw a-sight draft on him, in favor of yourself, indorse it, and leave it at The Union Bank for collection. In 5 da. the bank informs you that the draft has been collected. Make the entries. 7. The Union Bank presents a sight draft drawn by O. M. Howe, Denver, Colo., on you, in favor of himself, for $104.25. Pay it by check and make the entries. When you pay a sight draft drawn on you, the draft should be canceled and kept as a. receipt. 8. Frank Weeks, Austin, Texas, owes you $200 on account. Draw a sight draft on him, in favor of yourself, for that amount, indorse it, and leave it at the First National Bank for collection. In 6 da. the bank informs you that the draft has been collected. Make the entries. 9. The First National Bank presents a sight draft drawn by L. W. Stacey, Peoria, 111., on you, in favor of himseK, for $100. Pay it by check and make the entries. REVIEW QUESTIONS 1. Define commercial draft. 2. State the object of drafts. 3. What names are given to the parties to a draft? 4. What is the drawer's entry when he draws a sight draft on A in favor of B ? 5. What is the payee's entry for a sight draft received and collected ? 6. What is the drawee's entry for a sight draft paid ? 7. Do all drafts have three distinct parties? Explain. 8. How is a sight draft used to collect a debt ? 9. Is it wise to draw on a good customer without notifying him in advance ? Why ? 10. How would you indorse a sight draft left at The Union Bank for collection ? Commercial Time Drafts are used in business, but not so extensively as Sight Drafts ; these time drafts will be discussed in a more advanced portion of this text. DRAFTS 123 BANK DRAFTS Business men usually keep an account with a bank and make a large proportion of their payments by check. However, they find it necessary sometimes to make payment to persons or firms who do not care to give credit for private checks, and then some other form of transfer must be used. A very common and convenient form of remittance is by means of a check of one bank upon another. This is called a Bank Draft. Suppose that C. C. Canan, Boston, Mass., wishes to buy a bill of goods of Jordan, Marsh & Co., New York, amounting to |400.60. If his finan- cial standing is unknown to Jordan, Marsh & Co., he should not send his personal check. He therefore draws the following check and exchanges it at his bank for a New York draft. Check to pay for Bank Draft traders Rational ^ank "Pay to the order o f //. I^^^^ ^^^r^ ^^^ The check is drawn for 50(^ more than" the face of the draft, and this charge is called Exchange. Some banks do not make any charge to regular customers. For this check the Traders National Bank will issue the following draft: Bank Draft Boston, fJ ^^^^<^^ ■- $J,^/2A^ ^0 Chemical tNjational S^nk 1 ";^^^^>A^^>^^^^--^^ tKew York J '^ SsAfer 124 BOOKKEEPING A bank draft is usually drawn payable to the order of the purchaser, who indorses it to the person or the firm to whom it is to be sent, as shown herewith. ]9.=L-^o,f^Z£, T>ollars Cashier In this way the name of the sender appears on the draft and he is identified as such, and the draft, when canceled, is filed and serves as a receipt. The one who purchases a bank draft may require the name of the one to whom it is to be sent to appear as the payee. In opening letters that contain drafts, if the name of the sender does not appear on the draft, care must be taken to keep the draft and the letter together. If his name is on the draft, it may be identified without the letter. The Entries. The sending of this draft constitutes a cash payment by C. C. Canan to Jordan, Marsh & Co., and he makes the following entry on the right side of his cashbook : 0,.c>A^iZ.'-rt^^.i!>^ iP-9z^ £Z^^'-zn/~6y ^^^ BANK DRAFTS 125 Upon the receipt of the draft Jordan, Marsh & Co. will make this cashbook entry on the left side: 7 tZ^T^Z-iSZyT'Z^ --j2^>^;^,^W'»r'-^iiC^-/^&<^.^.^..,^^J^^^^?z-,d.^ -^^^^^.^^W^^z^.^;-^^^ >^7^^-<^<^ --c::^^^.^-^?-e'^^^:^ .y^^C^^:^;^-^^-^:::^^:^;^^-^;^^ Z^ -<::C-C<:Z^y^z^€?C€Zyt^ Zip ^^!^^6^ ^ ^-<^^^l-g^ly7''Z.^€^6^C^^ /o ,, :;^^%i^^^-'^^.^-2:-t^<^<^v_^^^^-^ ^ 0^'<;^^-t^€^'Tt^O^£:L^^^^^>'^^ :?^L^;;^.,^i^^4^:'li^^ -..^.f^^^ PART 11. INTEEMEDIATE WORK COMMERCIAL DRAFTS EXERCISE 53 A WRITTEN REVIEW OF SIGHT DRAFTS On pages 116 to 122 the discussion of the Sight Draft showed that it is an impoi'tant factor in business. A review of these pages is suggested, and then the following exercises may be worked out. 1. You owed Samuel T. Porter $325 on account, and on May 6 you drew a sight draft on Warren & Son, St. Louis, Mo., in favor of Porter, for the amount named. a. Make your entry, and the necessary explanations. A script model is given on page 121. 2. On May 10 you drew a sight draft on Patterson & Co., Atlanta, Ga., for an invoice dated May 1, for |165.20, in favor of yourself, and left it at your bank for collection. a. Write the draft. b. Show the necessary indorsement. c. Make the entry for each pei;son when the draft is collected. 3. On May 15 you sold an invoice of merchandise to Geo. H. Powell, Cleveland, Ohio, amountmg to $125.50, subject to a sight draft in 10 da. On May 24 you drew a sight draft on Geo. H. Powell in favor of W. R. Haynes, Cleveland, Ohio, for the amount of the invoice, and remitted the draft to Haynes. a. Trace the course for this draft until it is paid. b. Write the draft. c. Make your entry. d. Make the entry for each of the other persons. 4. On May 20 you bought an invoice of goods of Thos. H. Head, Omaha, Nebr., amounting to $450, subject to a sight draft in 10 da. On May 31, A. A. Lewis, of your city, presented a sight draft drawn 127 128 BOOKKEEPING on you, in his favor, by Thos. H. Head, for the amount of the invoice. The draft was paid by a check on The Union Bank. a. Write the check. h. Write the draft, and make the entry for each person. If a sight draft was presented to the drawee, and payment, by request, was de- ferred for a number of days, it would be proper for him to accept the draft. After acceptance, the sight draft may be treated as a time draft. Some states allow 3 da. of grace on sight drafts. Time Drafts. Time drafts are of two kinds : namely, those payable a certain time after date, and those payable a certain time after sight, that is, a certain time after presentation for acceptance. Draft Payable after Date $ .^Z^ '•;^64^r^,^^^:^^ y. /^^^^^ ^19^ JPay to the order of ^^^^^^i /^^y-^-^-T^st^;^ Value received d^'i:^afge to account of *Gb C^, Jx^^^-^'(^^^^'^, . V^o./2- "Due. TU /Delia An Acceptance is a time draft which has been accepted. The preceding form is an Acceptance, and it is treated in business as a promissory note. Without the writing across the face of this draft it was not binding upon the drawee. He had not agreed to pay the draft, and could not be held legally for payment. « Method of Procedure in handling Time Drafts. The drawer writes the draft and mails it to the payee, who presents it to the drawee for accept- ance. In the foregoing draft the date of maturity was not determined by the acceptance of E. W. Masten, and it was not absolutely neces- sary for William M. McKay to present the draft until it was due, and then only for payment; until the draft is accepted, there is no legal obligation on the part of Masten to pay it, so it would be unbusinesslike on the part of McKay not to present the draft for acceptance within a reasonable time after it was received. When the foregoing draft is presented, Masten is not bound to accept it. However, if he does accept it, he becomes the acceptor and is held for COMMERCIAL DRAFTS 129 its payment in the same way that he would be held if he had written his promissory note for the amount. Maimer of accepting. If the drawee is willing to meet a draft on him according to the conditions named therein, he writes the word Accepted and signs his name. This is generally done in red ink across the face of the draft, though the color of the ink has no particular significance. In those states that allow days of grace on sight drafts it is necessary to have them accepted in the same manner as time drafts payable after sight, unless they are paid upon presentation. To Aonor a sight draft is to pay it; to lionor a time draft is to accept it or to prepay it. Analysis of Entries of Parties to a Time Draft. - Compare the foregoing draft with the sight draft explained on page 117. The relation of the parties is identical. Osgood & Co. owe McKay, and Hasten owes Osgood & Co. It is expected that Masten will accept the draft when it is presented to him by McKay. Drawers' Entry: 1. F. V. Osgood & Co. have given William M. McKay value which, when accepted by E. W. Masten, is the same as bills receivable. There- fore they should debit McKay. . 2. When Masten accepts the draft he binds himself to pay one of Osgood & Co.'s debts. He is expected to honor the draft, and Osgood & Co. should therefore credit him, because by accepting the draft he cancels a debt to the amount of 1320.64. F. V. Osgood & Co.'s Journal Entry JZ0 6^ JZO Payee's entry : 1. The payee, William M. McKay, instead of receiving cash, as in the case of the sight draft, has received simply E. W. Masten's written promise to pay. We have already learned that other people's written promises are debited to Bills Receivable when received. 2. As in the case of the sight draft, F. Y. Osgood & Co. are respon- sible for McKay's getting the draft, and he should credit them. 130 BOOKKEEPING William M. McKay's Journal Entry ^ ^:7-?e^ JZ(P JZ^ Drawee's entry: 1. When E. W. Masten has accepted the foregoing draft, he has given the equivalent of his promissory note, and we have already learned that when one issues his promissory note he credits Bilh Payable. 2. It is for F. V. Osgood & Co. that Masten has promised to be bound by this draft ; therefore he should debit them. E. W. Masten' s Journal Entry i^^^ /?J//^^^. i::^.^ 1/fz,.^.'i.^r^^^.<±^.,J^, /Jy^^^Ly ^^^^^ a.J^^^ /^ /Pay to the order of Or^^^,/3:J^..^t€^-€>e^y^^cJ^i>i^ S(7lP 2^ ^Ul^^^teA-^^d^ Right Side or Note. Some business men prefer to make two distinct entries for the above, as follows : 1. BilU Receivable to L. B. Wade & Co. for the acceptance received. 2. Bills Receivable on the left side of the cashbook, |500, and Interest on the right side for $2.08, when the acceptance was offered for discount. PRINCIPLES FOR TIME DRAFTS 1. Drawer's Entry when a time draft with three distinct parties is accepted : Payee Drawee 2. Drawer's Entry when he receives his draft, drawn in his own favor, accepted : Bills Receivable Drawee 3. Payee's Entry when he receives a time draft properly accepted : Bills Receivable Drawer 4. Drawee's Entry when he accepts a time draft : Drawer Bills Payable 5. Drawer's Entry when he draws a time draft on a second party in favor of himself, and the drawee prepays it in cash : Cash Drawee Interest 6. Drawee's Entry when he prepays a time draft, in cash : Drawer Cash Interest COMMERCIAL DRAFTS 133 EXERCISE 54 For Written Work Note. These exercises may be used first orally. 1. On June 1, W. G. Gambee, Denver, Colo., drew on you at 45 days' sight, in favor of Fred G. Mercier, of your city. Upon presentation, June 5, you accepted the draft. Face of the draft, $500. a. Write the draft and the acceptance. b. Make the entry for each person. 2. You bought of R. H. Macey & Co., New York, 750 yd. Scotch ginghams at 15(f, and received their 30-da. draft dated June 4. This you accepted on June 6, for the amount of the invoice. a. Write the draft and your acceptance. b. Make your entry for the draft. c. Make R. H. Macey & Co.'s entry when they received the draft accepted. In the above it is assumed that R. H. Macey & Co. made one entry in their sales book at the time of shipping the goods, and another on the receipt of your accept- ance ; also that you e(iitered the invoice in your invoice book, and made a journal entry when the draft was accepted. 3. You owed D. E. Smith, Seattle, Wash., $275, due in 30 da., and F. C. Kirkman, of Seattle, owed you $426.50, on account. You wrote a draft payable 30 da. after date, and sent it to Smith ; he presented the draft to Kirkman, who accepted it. This canceled your debt to Smith. a. Show the proper acceptance on the draft. b. Make the entry for each person. 4. S. C. Davis, St. Louis, Mo., owed you $500, due in 30 da. You needed the money at once, and drew a 30-da. sight draft on him, in favor of yourself, and sent it to him. He accepted it and returned it to you. The draft was dated June 16, and the acceptance, June 18. a. Write the draft and show the acceptance. b. Make the entry for each person. 5. You drew a draft payable 30 da. after date on Frank H. Wilson, Trenton, N.J., in favor of yourself, for an invoice dated July 1, for $210.50, and left it at Traders National Bank for collection. The bank presented the draft, and it was duly accepted. At maturity Traders National Bank collected the draft, deducted 25^ for charges, and remitted the balance to you. a. Write the draft and the indorsement. Show Wilson's acceptance and entry. b. Make your entry when notified that the draft had been accepted. c. Make your entry when you received the remittance. 134 BOOKKEEPING 6. You drew a draft payable 10 da. after date on James B. Stillman, Louisville, Ky., in favor of yourself, for |500, and sent it to Stillman for acceptance. The draft is dated July 6, and the acceptance, July 9. He returned the draft, and you held it until it was paid at maturity. a. Write the draft. b. Show the acceptance. c. Make the entry for each person, after acceptance. d. Make the entry for each person at the time of payment. EXERCISE 55 For Oral Work 1. You drew a draft payable 30 da. after date on W. K. Darling, in favor of Isaac B. Langley. a. State your entry when you draw the draft. b. State the drawee's entry when he accepts the draft. c. Will the acceptance need to be dated ? Why ? 2. You accepted J. E. Keating's draft at 10 days' sight, in favor of Wells & Warriner. a. State your entry. b. When does a draft payable after sight begin to mature ? 3. Your draft at 10 days' sight for |200, drawn on The Geo. B. Fur- man Company, in favor of yourself, for the invoice of Jan. 15, has been received, accepted. a. State your entry. b. Will the acceptance of The Geo. B. Furman Company on the above draft need to be dated ? Why ? 4. The draft in Example 3 was taken to the bank and discounted 8 da. before maturity. a. The draft is payable to the order of myself Shall you need to indorse it? Why? b. State your entry when you discount the acceptance. c. State the entry of The Geo. B. Furman Company when they pay their acceptance at maturity. QUESTIONS ON TIME DRAFTS 1. Explain the difference between drafts payable after date and drafts payable after sight. 2. What is meant by the term acceptance ? 3. To what ledger account will the acceptances of other people be posted? 4. To what ledger account will our own acceptances be posted? 5. When does an acceptance need to be dated? Why? 6. Will banks take unaccepted drafts for collection ? 7. When a bill of goods is sold COMMERCIAL DRAFTS 135 and a time draft is drawn for all or a part of the sum, what is the proper method of treating the draft ? 8. Will banks discount unaccepted drafts ? 9. Give the drawee's entry when he accepts a time draft drawn upon him. 10. Give the drawer's entry when a time draft with three distinct parties is drawn. 11. How do the entries of the drawer of a time draft compare with the entries of the drawer ci a sight draft ? Why ? 12. Give the payee's entry when he receives an accepted time draft to apply on account. 13. Give the payee's entry when he receives payment for an acceptance at maturity. 14. Are sight drafts ever accepted? Why? 15. Are days of grace allowed on sight drafts in your state ? on time drafts ? 16. An acceptance matures on Sunday. In your state when should it be paid? 17. When, in your state, should notes and acceptances maturing on July 4 be paid? on February 22, if that date occurs on Saturday? EXERCISE 56 A Written Review 1. Paid by check Arthur S. Harrington's sight draft on you, dated Birmingham, Ala., Aug. 5, in favor of Horace C. Nelson, of your city, for $425. a. Write the draft and the check. h. Make the- entry for each party. 2. On Feb. 2, Roger P. Mills, Oakland, Cal., accepted your draft at 60 days' sight, dated Jan. 29, in favor of yourself, for |900. The draft is payable at Alliance National Bank. a. Write the draft and show the acceptance. b. Show the maturity of the draft. 0/^'^^ 3 • c. Make the entry for each person when the draft was accepted. d. Make the entry for each person when the draft was paid at maturity. Note. When the time of a note or a draft is expressed in months, calendar months (i.e. without regard to the exact number of days in each month) are used to determine the date of maturity ; but when the time is expressed in days, the exact number of days is used. A note or a draft due two months from date matures on the corresponding day of the second following month, provided there is a sufficient number of days in that month to make this possible. If there is not, it is due on the last day of that particular month. / Example. Notes and drafts dated Jan. 28, 29, 30, or 31, and payable one month after date, would each mature on Feb. 28, except in leap year ; but if payable 30 da. after date, they would be due Feb, 27, 28, and March 1 and 2, respectively. In most states the added day for leap years is not counted. For example, a note or a draft payable 30 da. after Feb. 25 in any leap year is due March 27, instead of March 26, as would be the case if the extra day were counted. 3. On Feb. 1 you sold F. B. Norton, Buffalo, N.Y., on his acceptance at 60 da., 150 doz. cotton hose at $2.50. The draft drawn on the date of the sale, payable' 60 da. after date, was received, accepted, on Feb. 5. a. Write the draft and show the acceptance. b. Make your entry for the draft. 136 BOOKKEEPING 4. On Feb. 6 you bought of Mechanics National Bank by check a draft, No. 7521, on the Puritan National Bank, New York City, for $96.24, and remitted it to S. G. Metzer & Co., Cincinnati, Ohio, in full of account. Exchange on draft, 10^. a. Write a check on Mechanics Bank to cover the draft and the exchange. b. Write the New York draft. A. Turner, Cashier. c. Make your entry. 5. On Feb. 20 you remitted your sight draft on Williams & King, Lansing, Mich., in favor of Goodwin Bros., in payment of an invoice of Feb. 18, less 5% discount. Face of the draft, $190. a. Find the face of the invoice. ^^xjt> b. Write the draft. c. Make your entry. 6. Write these drafts on paper cut to the proper size : a. Your sight draft on Chas. S. Snell, Dover, Del., for $122.50, in favor of J. B. Thompson. b. Your sight draft on Wm. S. Drake, Topeka, Kan., for $240, in favor of yourself. c. Your draft on C. H. Spring, Nashville, Tenn., for $300, in favor of S. M. Kline, payable 30 da. after date. Show C. H. Spring's acceptance. d. Your draft on Davis & Berry, Creston, Iowa, for $75, in favor of yourself, payable 30 da. after sight. Show Davis & Berry's acceptance. TEST QUESTIONS ON DRAFTS 1. Are drafts ever interest^bearing ? 2. Under what circumstances would you offer a bank sight paper (a) for collection? (b) for deposit? 3. Would the banks of your city readily accept for deposit or for collection any paper with your restrict- ive indorsement upon it ? Why ? 4. When will a draft drawn payable 10 da. after date mature in your state if the date of it is Feb. 19, 1904 ? 5. What is the drawee's entry when he prepays a time draft instead of accepting it? 6. As a rule, do banks make any charge for cashing bank drafts? 7. What negotiable paper considered thus far may, under any circumstances, be treated as cash ? EXERCISE 57 OPENING DOUBLE-ENTRY BOOKS The following exercises illustrate the opening of double-entry books when the proprietor begins business with both resources and liabilities. The student is requested to give special attention to these exercises, as they illus- trate the opening entries that will be used in subsequent sets. OPENING ENTRIES 137 a. W. D. Fain began the Jobbing Furniture business July 1, with the following resources and liabilities : Cash in drawer, |2500 Merchandise, per inventory, $1600 Jas. R. Milem's note, |500 Interest accrued on the above note, $12 Real estate, store and lot, $5000 Expense, per inventory, $125 Office furniture, safe, books, etc., $460 The following owed him on account : Wm. K. Duffey, $1240 R E. Bush, $400 C. 0. Bond, $300 He owed the following on account : Ralph Dewey, $400 Arthur Lehan, $1600 His note in favor of Chas. B. Hawley, $1387 Discount on the above note to maturity, $10.95 The following is the entry for these resources and liabilities : Madisox, Wis., July 1, 19 — C.B. I, W. D. Fain, have this day begun the Jobbing Furniture business with the fol- lowing resources and liabilities: Resources Cash Mdse. Bills Rec. Interest Real Estate Expense Office Fixtures Wm. K. DufEey F. E. Bush Interest C. O. Bond To W. D. Fain On hand f*er inventory Per bill book Accrued on above Store and lot Per inventory Safe, etc. Owes on account Owes on account On bills payable Owes on account Total resources Liabilities W. D. Fain To Ralph Dewey Arthur Lehan Bills Pay. Total liabilities Due him Due him Per bill book 2500 1600 500 12 5000 125 460 1240 400 10 300 3387 95 12147 400 1600 1387 95 138 BOOKKEEPING The cash item should also appear on the left side of the cashbook as follows: Julyl J. W. D. Fain Cash invested 2500 The cash item is checked Q, B. in the journal because it has been placed to the debit of the Cash account by the above record. W. D. Fain's account is checked J. in the cashbook because this item has been counted in determining the total resources and liabiUties in the journal. On a sheet of journal paper, or on paper ruled in journal form, make entries for the following: h. Chas. R. Osgood began the Furniture business July 1, with the following resources and liabilities: Cash in drawer, $1700 Chas. R. Dean's note, |500 Interest accrued on the above note, $10 Merchandise, per inventory, $2600 The following owed him on account : A. B. Knowlton, $1200 George K. Brown, $150 He owed the following on account : Foster, Hills & Co., $250 Traver, Bowe & Co., $300 His note in favor of M. B. Hanway, $600 Interest accrued on the above note, $10 G. C. B. Ellis began business July 1, with the following resources and liabilities : Cash in drawer, $2000 Merchandise, per inventory, $1300 F. M. Everett's note, $1200 Interest accrued on the above note, $19.50 City Water Works stock, $4200 Dividend on above, earned but unpaid, $168 House and lot, 1625 Main Street, $4500 Rent due from tenants, $95 Horse and wagon, $150 He owes Manning & Son on account, $1750 His note in favor of C. 0. Bond, $1200 He owes Ellis B. Hanway, on horse and wagon, $75 OPENING ENTRIES 139 d, Howard A. Johnson began business July 1, with the following resources and liabilities: Cash in drawer, |1750 Cash on deposit in The Union Bank, $1278.50 Merchandise, per inventory, |3875.40 He held notes against the following ; John S. Gray, $625 A. S. Coleman, $450 ; interest accrued, $8.75 Store and lot, $4000 His note in favor of W. A. Brown, $516.50 Interest accrued on the above note, $11.50 He owed the following on account : Samuel B. Lewis, $265 French & Co., $376.40 e. John D. Rowland began business July 1, with the following resources and liabilities: Cash in drawer, $975 Cash on deposit in First National Bank, $1845.50 Office fixtures valued at $180 A horse and wagon valued at $280 Merchandise, per inventory, $3246.50 Real estate valued at $1800 20 shares of A. & S. Ry. stock at 96J per share His note in favor of Frank Lee, $437.50 Interest accrued on the above note for 60 da. He owed Lake & Son on account, $275 Lacey & Co. owed him on account, $256.75 H. S. Chapin's note, $375 Discount on the above note to maturity, 30 da. /. Henry MacLane began business July 1, with the following resources and liabilities : Cash on deposit in The Union Bank, $2356.70 Merchandise, per inventory, $4623.55 Expense, per inventory, $78.50 Real estate valued at $3450 His note in favor of Henry R. Lete, $356.25 Ralston & Cooper's note, $350 Interest accrued on the above note for 48 da. A horse and wagon valued at $250 He owed Curtis & Co., on account, $267.40 Peterson & Co. owed him, on account, $237.50 SET V. JOBBING FURNITURE BUSINESS Object. This set is designed to illustrate the Jobbing Furniture business. A variety of advanced business forms is illustrated and explained, and two new books of record are used. The transactions deal largely with commercial paper, and the actual handling of money is avoided as far as possible. Notes, drafts, and acceptances, and the relations existing between the parties connected therewith, are made a prominent feature of the work. Books Used. In addition to the books with which the student is already familiar, the bill book and the invoice book are introduced. Model Bills NO. DRAWEE OR MAKER DRAWER OR INDORSER FOR WHAT RECEIVED WHERE PAYABLE DATE RECEIVED DRAWN 1 2 3 J. B. Maxwell W. D. Rimbach Walker, Brown & Co. J. B. Topham Student's name On account On account Inv. July 2 Union Bank Union Bank July 1 1 June July 15 3 2 Bills TO WHOM PAYABLE Allen & Bailey Fum. Co, C. O. Boswell Derby Mfg. Co. FOR WHOSE ACCOUNT C. 0. Boswell Derby Mfg.Co, FOR WHAT ISSUED Infullofacct InfuUofacct, Inv. July 2 WHERE PAYABLE Union Bank Union Bank Union Bank June July June July 140 SET V. JOBBING PUKNITURE 141 Bill Book. This book is used for recording all notes or acceptances which are received by the business, or which are issued by the business. It is generally divided into two parts, one for bills receivable and the other for bills payable. When notes or acceptances are received or issued, a full description of the paper should be recorded in the bill book. This book should exhibit the same balances as the Bills Receivable and the Bills Payable accounts in the ledger. The Model Bill Book given below is self-explanatory. Care should be taken to record in the proper columns the information called for. Com- plete records for the first three bills receivable and bills payable for the month of July are properly entered in this model. NoTB. The amounts in the model bill book are for price list No. 1. Bill Book Receivable TIME 30 da. 30 da. 30 da. DATE DUE July Aug, AMOUNT INT. 500 450 883 DATE DIS- COUNTED DATE SENT TO COLLECT July July Aug. Payable HOW PAID Paid at bank Paid at bank Paid at bank 1 mo. 30 da. sight 10 da. sight July AMOUNT INT. 2500 1000 1376 90 July HOW PAID Charged at bank Charged at bank Charged at bank 142 BOOKKEEPING Model Invoice Book ORIGINAL INVOICES (Boston, ^Miasi., ^JJC^^^^ P- fQ- 7^ Sought of "Derby ^Mfg. Co 1 T II .1 II ZI /XC^^^^^^ V^ew York. w^^^ C, . 79- ^ w/-^ ?^ ^o Qray, Salisbury & Co., ©r. -/if-^ ,^^>-?^^ ^^e,,d^ J ^ I II I II ^^ 64^2 J f ijs-- 'Trenton. !K.J., JU^^y / 2-, \9=^ fought ofC IV. Allen & Co. '^fj^ C^-yyyi^^^.^^s ^'^^f^^^e^x W^ .?f.^ f^/ ^ ^iT C-^g^^^ ^--V ?^-Yg<>r-r^?^7y^<^^ ,^^ A^^. 2^/Cf.f /C^^.^^^^>^^:gi,^i^et^..^t?-^^ 7-^-"^ //4^^Sa / /<^4^ Jjl /fU /^ SET V. JOBBING FUENITURE 143 ^ /f- ORIGINAL INVOICES '^ # M. •y/^^y fought of 'Vhe Skills Furniture Co. "^e, ,^77^K^J^':e^et^, r^ lA ^v^:prDvad by the letentate Commerce Commluioa by Order No. 787 of June 27, IMS THE COMMERCIAL TRANSPORTATION CO. STRAIGHT BILL OF LADINQ-ORIQINAL-NOT NEGOTIABLE Shipper's No- Agent's No. - BECEWED, subject to the claasificAtioiu and from- ^^?7. Z-L riSs in eflect on the date of issue of this Original >^?Z<^C^ >f.<>^>-^»?^^r^ Of Lading, y ^^ J.9- -the property described below, in apparent good order, except as noted (contents and condition of contente of packages unknown), marked, consigned and destined as Indicated below, which 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 mutually agreed, as to each carrier of all or any of said property over all or any portion of said route to destination, and as to each party at any time inter- ested in all or any of said property, 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 Bate of Freight from. -18 in Cents per 100 1 IF-Tinmlft IF l>t Cl>u IFRul*3S IF4thCI«u IFSth Consigned to U-^^d^. .^/V^^^f^^Zfe y^ ^^. ^.^r?y r-Qn (^. -i^ ~;>^. ^^'j!A/^^^.^r?^.'/P^ .r V^ ^^^ ^ gent (ThU BUI of LMUog U to be signed by the shipper wd ftoX of the earrler iHUlnc iaiDe) Model Memorandum {Heading) hr aM b conMCtlofl wWi tte Standard form •• Straight Bill of Uding approved by the hrtsrrtale Cemmaree Commteilon by Order No. 787 of lone 27, 1908 THE COMMERCIAL TRANSPORTATION CO. la an acknowledgment that a Bill of Lading haa been isaned and la not the Original Bin of Shipper S No.. THIS MEMORAN U M lading, ooi a copv «r duplicate, covering the property named herein, and ia intended solely for filing or record. Agent's No.- RECEIVED, subject to the classifications and tarifls in effect on the date of the receipt by the carrier of the property described in the Original BUI of fading, ^ ^ ^-. /I /? yZt^^y, Y^^^^^ rT 19—. at ^ ^ '^fr-^r-'T^y? ^y y^^u^^ -the property described below, in apparent good order, except as noted (contents and condition (rf contents of packages unknown), marked, consigned and destined as Indicated below, whieb 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 mutually agreed, as to each carrier of all or any of said property over all or any portion of said route to destination, and as to each party at any time inter- ested in all or any of said property, that every service to be performed hereunder shaU be subject to all the conditions, whether printed or written, herein contained Cmduding conditions on back hereof) and which are agreed to by the shipper and accepted for himself and his assigns. TliA PjktA nf Pmialit frntn is in Cents per 100 fb. \r. IF S»mW IF SpKi*l IF TiWM lltl IF lit CISM IF 2d Cl.t. IF Rul. 25 IF 3d Clu* IF Rul. 26 IF Rul. 28 IF 4th CISM IF StK CI.M IF 6»»t CI.M P« 1 ■ I SEr V. JOBBING FUIRNITURE 161 Model Shipping Order (Heading) hi connwtlsa wHIi th* Standird lorm ot Straight Bill of Lading approvtd by the Interstate Commerce CommlukNi by Order No. 787 of Juw Tt, 19 THE COMMERCIAL TRANSPORTATION CO. must be legibly filled In, In ink, la Indelible pencU, or In c*rbon, and Shipper's No_ THIS SHIPPING ORDER „^^^^ ,y ^he agent. AgeuX'i Ho. RECEIVE, subject to the claeaiflcatloiw and tarifis in effect, on the date of Issue of this Shipping Order, at. -^^^^^.^^^^rz^^^^A^ //7^..±^±^ ^ U -U ^ ^ , f , 19=., ^..^^ ^ / / from ~v^j .^^ ^tC-'C'-zi-fi^.^'^^^7''y^^t^-t^.^n.^ '7 '^'fietd . /'^^^s^y^n-tt^ny 6> S^ July 18 Receive the goods ordered of S. T. Udell & Co., Chicago, 111., on July 10, Form 19. July 19 P. R. Brown, Rochester, orders : 25 #635 Brass Bedsteads 25 #6387 Hall Settles Fill the order, subject to the order of The Union Bank. DRAFT WITH BILL OF LADING ATTACHED For the convenience of shippers when the responsibility or the credit of the buyer is limited or when his business standing is unknown, railway and steamship companies have provided a way whereby goods may be sent by freight so that the buyer cannot obtain possession of them without first paying for them. This method is commonly known among business men as Shipper's Order, and is anal- ogous to C.O.D. shipments in the express business, as explained in the transaction of July 17. Throughout the text, transactions of this kind will be entered as C.O.D. accounts. In this shipment it will be necessary to make out an order bill of lading. This form is described and illustrated on pages 159 to 162. Observe the following directions: After the words Consigned to order of, write The Union Bank, and on the line following write your address. After Notify, write P. R. Brown, and on the line following write Rochester, N. Y. Write a sight draft for the amount of the invoice, indorse it to The Union Bank, attach it to the bill of lading, and then leave it with the bank for collection. k Send the invoice to your customer in the usual way. Enter in the sales book as a C.O.D. item. See script illustration under July 17. 172 BOOKKEEPING HOW THE COLLECTION WILL BE MADE BY YOUR BANK Your bank will indorse both the draft and the bill of lading, and send them to its correspondent at Rochester. When the Rochester bank receives the draft it will notify Brown. If he pays it, the bank will give him the freight receipt, which receipt, when properly indorsed and given to the transportation company, will give him access to the goods. Transportation companies will not deliver goods without obtaining an order bill of lading, for they would thereby render themselves liable to the shippers should the consignee not pay for the goods. July 22 Pay William Leavens & Co.'s sight draft, in favor of themselves, for the amount of the invoice of July 11, Form 20. Verify the amount of the draft by comparing it with the amount of the invoice in the invoice book. If correct, write a check for it. Make the cashbook entry. Write Paid across the face of the draft and keep it as a receipt. Receive returns for the C.O.D. shipment of July 17, Form 21. Take the money out of the C.O.D. envelope and place it in the Business Cash envelope. (If the Incoming Business Forms are used, the envelope containing the currency will be found in the back of the tablet.) Enter in the cashbook as follows : Left Side Z2 SO July 23 Receive a check of David E. Teeter, in full for the invoice of July 2, less 1%, Form 22. Examine the check and verify the amount ; if correct, make the cashbook entry. Receive of M. N. Overman, Roger, Peet & Co.'s acceptance at 30 da. from July 16, to apply on account, $469.39, Form 23. The draft has 22 da. yet to run, so it is not worth its face value. The discount for 22 da. at 6% should be deducted. Make the journal, entry, and then record in the bill book. Do not mark it Discounted in the bill book, but enter the draft at its face value. July 24 Write a letter to J. K. Levy & Co., 27 East 126th St., New York, ordering : 15 #693 Antique Wardrobes SET V. JOBBING FURNITURE 173 Inclose a New York draft for the amount, less 2%. Buy the draft by- check. Exchange, 30^. Write a check to cover the draft and the exchange. The form of this check is given on page 123. Take the New York draft, Form 24, and indorse it. Debit J. K. Levy ^ Co. in the cashbook for the face of the draft, and debit Collection S^ Exchange for the amount of the exchange. Inclose the draft in a letter. When a remittance is sent with an order, the amount may have been determined by previous correspondence, or by reference to prices quoted in a catalogue issued by the firm. July 25 Your acceptance in favor of C. O. Boswell, and your note with interest for one month, in favor of Allen & Bailey Furniture Co., have been charged to your account at the bank. Make the entries in the cashbook and the check book. Refer to a similar transac- tion under July 13. Mark the notes Paid in the bill book. Chas. B. Sherman, 23 West Ave., Rochester, orders : 50 #15 Cane-seat Dining Chairs 3 #2229 Oak Dining Tables 25 #16 K Leather-seat Dining Chairs 16 #3016 Fancy Rockers References are satisfactory and you fill the order. Terms : sight draft in 30 da. for the amount of the bill, less 1%. Prepare the usual bill of lading. Place the invoice and the bill of lading in an addressed envelope and hand it in. Draw a sight draft, dating it ahead 30 da., in favor of yourself, for the amount of the bill, less 1%. Have the draft approved and place it in the Business Cash envelope. Do not count this draft in proving cash. The Metropolitan Carting Co. has delivered to you the goods ordered of C. W. Allen & Co. on July 13, Form 25. Draw cash for private use, $75. Take $75 from the Business Cash envelope and place it in the Personal Cash envelope. July 27 Pay by check Stoddard & Co.'s sight draft, in favor of themselves, for *150, Form 26. Place the draft in the Paid Bills envelope. Deposit the check and all the cash on hand. Make the proper indorsements before offering any paper for deposit. 174 BOOKKEEPING David E. Teeter, City, placed the following order with you over the telephone this morning. The order is filled at the prices given herewith : 15 #16 B Brass Easels at $15 19 #68 Oak Bookcases at $9.75 5 #20 D Parlor Cabinets at $37 Terms : 3/5, 1/30, net 60 da. Pay by check the bill of the Metropolitan Carting Co. for freight and drayage to date, $213.70. Examine the bill, Form 27. Debit Merchandise for the amount. Note. Merchandise is charged for the freight and cartage because such an expenditure is made for handling the goods bought and sold. July 29 • Pay by check gas bill for the month, $7.07, Form 28. Pay by checks salaries to date, as follows : Harry K. Sutton $60 Michael Donovan $30 Harvey L. Grant 50 Daniel L. Coon 48 Geo. W. Ainsley $40 Write the checks and have them approved. Charge Expense in the cashbook. Enter the five checks as one item. July 30 Your acceptance of July 15 in favor of Stoddard & Co., made payable at the bank, has been charged to your account. Make the entries in the cashbook and the check book. Mark the note Paid in the bill book. The reason for charging notes to a depositor's account is set forth on page 169. Closing the Work for July The student should now proceed to close the month's work as follows : 1. The monthly bank statement should be made. 2. Prove the cash, and balance and post the cashbook. (See model, pages 144 and 145.) In posting from the cashbook observe the following : a. In debiting or crediting a personal account when a discount has been allowed, be guided by the following form : Williams, Dowd & Co. 19— July Discount N.Y. draft 42 2058 19— 9 2100 June July 28 30 15 LB. LB. LB. 2100 592 1241 60 60 SET V. JOBBING FURNITURE 175 h. Post only the totals of the Merchandise Discount columns. The total of the column on the left side should be posted to the debit of Merchandise Discount in the ledger, because that column shows the aggregate discounts allowed to others for prepaying their bills during the month of July. The total of the column on the right side should be posted to the credit of Merchandise Discounts, because that column shows the aggregate discounts allowed to you for prepaying bills during the month of July. 3. In posting, allow one page for your account, one half page each for all property accounts, and one third of a page for all accounts receivable and all accounts payable. Accounts Receivable is a term applied to the total amount due the business on personal accounts ; Accounts Payable is a term applied to the total amount owed by the business on personal accounts. (The Proprietor's account is not included.) These terms, Accounts Receivable and Accounts Payable, are to be used in mak- ing trial balances and statements in subsequent work ; the result of using them is to shorten both the trial balance and the statement. Another advantage of using the terms suggested in the preceding paragraph is to give information in concrete form. The important fact shown by these accounts in the statements is the amount due the business on account, and the amount owed by the business on account, as single items, rather than as a list of the individual debtors and creditors. Information presented in concrete form is always a desirable feature in book- keeping. Note. Blank ruled pages are provided at the beginning of the ledger for an index. Observe the following directions In preparing the index. List all titles from the ledger alphabetically. In each Individual name write first the surname and then the Christian name ; for example, Burton, John L. Illustrations for writing firm names: Brlghtwood & Co., John H. ; Cobb, Bates & Co. ; Sherwood & Son, Henry L. Write on every other line, and place the page number of the account immediately after the name. When an account is transferred to a new page in the ledger, the number of this page should be written just after the number of the page on which the account was first written, as follows : Merchandise, 4, 76, etc. The last number Indicates the page on which the open account may be found, and the series of page numbers enables the bookkeeper to refer to any page on which the account stands. Any new accounts that may be opened in the ledger should be written in the index at once. 4. Rule, foot, and post the sales book and the invoice book. 5. Post the journal. 6. Prove the bill book. Note. To prove the bill book, find the total of the uncanceled Bills Receivable. This sum should agree with the balance of the Bills Receivahle account In the ledger. In like manner find the total of the unredeemed Bills Payable, and this sum should agree with the balance of the Bills Payable account in the ledger. 176 BOOKKEEPING 7. Prepare monthly statements of the customers' accounts. Place them in envelopes properly addressed and hand them in for approval. (See form for statement, page 178.) 8. Take a trial balance of the balances of the ledger accounts and hand it to the instructor for approval. 9. Inventory of stock was completed by Harvey L. Grant and Harry K. Sutton yesterday. The following are their figures. Copy in the journal in the usual form, using the buying price for the merchandise. Inventories, Merchandise : 5 #3116 A. Card Tables 17 #2546 A. Library Eockers 4 #693 Antique Wardrobes 25 #635 Brass Bedsteads 10 #16 B Brass Easels 150 #15 Cane-seat Dining Chairs 5 #59 A Cheval Glasses 10 #71 A Child's Cribs 10 #20 Corner Chairs 9 #16 A C. Dining-room Sets 15 #10 China Closets 17 #572 Drawing-room Suites 12 #3016 Fancy Kockers 12 #36 B Gentleman's Chiffonien 10 #6387 Hall Settles 250 #16 K L. Dining Chairs 5 #169 c Library Tables July 31, 19 — 10 pr. #91 Lace Curtains 5 #16 L. Dressing Cabinets 19 #50 M. Parlor Tables .20 #626 M. Office Chairs 10 #396 M. Hall Stands 2 #89 M. Chamber Sets 7 #2229 0. Dining Tables 12 #73 Oak Writing Desks 5 #68 Oak Bookcases 5 #20 D Parlor Cabinets 10 #57 Reclining Couches 12 #73 Sofa Beds 5 #5926 S. Book Cabinets J 20 #65 Turkish Rockers 24 #27 c W.-wire Mattresses 24 #16 Wool Mattresses 12 #495 W. I. Bedsteads Office Fixtures : Cost $450. Depreciation 4.50 1445.50 Horse and Wagon : Cost |450. Depreciation 45. $405. Real Estate 17000. Expense : Unexpired Insurance |145. 10. Make the usual statements of losses and gains, and of resources and liabilities. SET V. JOBBING FURNITURE 177 The form of the loss and gain statement is changed for this set. The following suggests the form to be used: Statement of Losses and Gains, July 31, Mdse. Mdse. Freight and Drayage Mdse. Mdse. Gain on Mdse. Gain on Mdse. Mdse. Disc. Mdse. Disc. Interest Interest Expense Expense Coll. and Exch. Office Fixtures Office Fixtures Horse and Wagon Horse and Wagon Net Gain On hand July 1 Bought during July Bill for July Sales for July On hand, July 31, per inv. Carried below From above On purchases On sales Allowed to us Allowed by us Cost, Dr. Unearned ins. Paid Cost, Dr. Inventory Cost Inventory For July 150.20 90.20 25.50 9.50 490. 100. 430. 425. 250. 224.50 7500 9200 400 1241 18341 390 2 25 894 1317 9650 8690 18341 60 16 1317 50 50 The statement of resources and liabilities is to be made in the same form as in the previous sets. 11. Make out a statement proof or verification. Statement Proof, July 31, 19 — Student's investment Student's withdrawals Student's net gain per statement Student's present worth per statement 250 6644 50 6000 894 50 6894 50 6894 50 12. Hand the statements and the proof of statement to the instructor for approval. 13. If the statements and the proof are correct, close the accounts showing loss and gain, and then show the proprietor's present worth. 14. Compare the check book with the monthly bank statement. 178 BOOKKEEPING HOW TO COMPARE THE CHECK BOOK WITH THE MONTHLY BANK STATEMENT 1. Arrange the canceled checks in the order of their numbers. 2. Compare each canceled check with the corresponding stub ; if they agree as to the number, the date, the amount, to whom given and for what purpose, place a large check mark on the stub. 3. If all the stubs are checked, the balance shown by the check book will agree with the balance shown by the monthly bank statement. 4. If the balances do not agree, find the total of the stubs not checked. This sum should equal the difference between the check book and the balance shown by the monthly bank statement. Note. If, at the time of making this comparison, any outstanding checks of a pre- vious month have been returned, they must be checked with the stubs from which they were detached. 15. Place the canceled checks in the Paid Bills envelope. 16. Pass all books to the instructor for approval. STATEMENT OF ACCOUNT -:^^r^.(? MjL Z^ REVIEW EXERCISES 179 EXERCISE 58 A Written Review The following review exercises are suggested : 1. Journalize orally or in writing each transaction in the month of July. All amounts may be omitted, as the value of the exercises is in determining debits and credits. 2. Make the following opening entries, referring to pages 137 and 138 to determine the correct form of entry: Student begins business this day with the following resources and liabilities : a. Cash in drawer, f 231.40 Deposit in First National Bank, |1674.50 Stock of merchandise valued at |9645.50 The following owe you on account : Henry A. Pell, |67.50 Morris & Co., |253.10 M. M. Bell, $167.25 Amos T. Young, |76.45 You owe the following on account : Barber & Co., $56.75 Young & Brown, |100.50 Thos. L. Parr, $25.25 h. Cash in drawer, $325 Deposit in The Union Bank, $2365.10 Store and lot valued at $4200 Stock of merchandise valued at $11,457.20 The following owe you on account : Warren & Son, $176.25 John K. Lamb, $200 C. H. Hartman, $423.50 D. B. Vance, $153.95 You owe the following on account : Marshall & Co., $235 Henry Marvel, $310 Chas. L. Burt, $65.70 You hold notes against the following : H. T. Inman, $125 ; interest accrued for 60 da. L, L. Pond, $250 ; interest accrued for 30 da. Mason & Son, $230 You have the following notes outstanding : R. N. Banks, $200 ; interest accrued for 45 da. T. S. Little, $100 ; interest accrued for 75 da. Alden & King, $75 180 BOOKKEEPING 3. Make the usual statements from the following trial balances a. John A. Smart, Prop. Cash Merchandise Expense Real Estate Bills Receivable Accounts Receivable Accounts Payable Bills Payable Interest Merchandise Discount Office Fixtures Horse and Wagon $125. 1165.50 7796.25 250.50 3005.20 270.45 1256.10 42.10 150. 200. $10500. 2645.50 964.25 61.95 89.40 $14261.10 $14261.10 Inventories : Merchandise $9857.50 Real Estate 3000. Expense 25.50 Office Fixtures 145. Horse and Wagon 190. h. L. S. Woods, Prop. $150. $12500. Cash 1346.20 Merchandise 9865.45 Expense 265. Real Estate 2500. Office Fixtures 210.50 Horse and Wagon 225. Bills Receivable 265.70 Bills Payable 826.55 Accounts Receivable 1950.75 Accounts Payable 3625.40 Interest 75.85 Merchandise Discount 97.50 $16951.95 $16951.95 Inventories (Resource) : Merchandise $12345.25 Expense 43.50 Real Estate 2500. Office Fixtures 197.50 Horse and Wagon 209.75 Inventory (Liability) : Merchandise, unpaid freight bill $110.40 Note. The liability inventory is treated in each statement in just the reverse way from the resource inventory, — as a liability, in the resource and the liability statement. In the loss and gain statement it is subtracted from the resource inventory before finding the gain on merchandise. SET V. JOBBING FURNITURE 181 PARTNERSHIP The work for August is a continuation of the work in July. You are desirous of extending your business, and not having suffi- cient capital to do so, you have decided to enter into a partnership agreement with Harvey L. Manning. For the resources enumerated below you admit Harvey L. Manning as an equal partner in your business. Draw up articles of copartnership between yourself and Manning, embodying the following conditions. (See Form V, Appendix F.) 1. The firm name shall be Student & Co. 2. Student shall contribute the net resources shown by his July state- ment of resources and liabilities. 3. Manning shall invest : Cash Merchandise Account with Foley Bros, due him $7000 1500 5725 4. Each partner shall devote his entire time to the business. 5. Neither partner shall engage in any other business. 6. The gains and the losses shall be divided equally. 7. The partnership shall continue for two years unless sooner dis- solved by mutual consent. Hand the articles of copartnership to the instructor for criticism. If they are correct, he will sign for Harvey L. Manning. Model for Briefing Articles of Copartnership between Student and Harvey L. Manning Aug. 1, 19 — Make a copy of the July statement of resources and liabilities, attach it to the articles of copartnership, fold the sheets together, and in the outer right-hand corner at the top brief as shown in the Model for Briefing on this page. 182 BOOKKEEPING Note. Some business men prefer to make the reference to investments in the articles of copartnership cover merely the net amounts invested in the business by each partner, and then transfer all rights and interests in goods and personal property by means of a bill of sale. However, if the articles of copartnership are drawn up in accordance with the above directions, the bill of sale is wholly unnecessary. Each partner should receive a copy of the articles of copartnership. Keal property cannot be transferred by the ordinary bill of sale nor by articles of copartnership ; a deed is necessary. In order not to multiply complicated forms at this point of the work, it is assumed that the student's real estate has been transferred by a warranty deed drawn this day by his attorney, Fred V. Smith, and placed on file in the oflfice of the new firm. Ordinarily, a business man does not draw up his own warranty deeds, articles of copartnership, etc., but employs an attorney. When any change in the personnel of a business occurs, all who have had dealings with the house should be notified promptly, by means of circular letters or otherwise. In this case it is assumed that these letters have been written and mailed. Incoming Business Forms for August In this connection the student is referred to the instructions given for the business forms in the month of July, page 151. Remember that the business is now conducted under the firm name of Student & Co. Form 29. Check of Harvey L. Manning, dated City, Aug. 1, drawn on Traders National Bank, in favor of your firm, for $7000. Form 30. Invoice of J. K. Levy & Co., New York City, dated July 31. Terms: cash, less 2%. 15 #693 Antique Wardrobes Deduct the discount from the amount of the invoice ; receipt it, per your initials. Form 31. New York draft, dated Olean, Aug. 1, drawn by The Union Bank of Olean, on Chemical National Bank of New York, in favor of M. L. Covey & Co., for |283.72, W. D. Byron, Cashier. Transferred to Student & Co. by full indorsement. Form 32. Draft on your firm by Stoddard & Co., in favor of Curry, Browning & Co., dated City, Aug. 3, payable at 10 days' sight for $1500. Form. 33. Invoice of Cobb, Bates & Co., City, dated Aug. 3. Terms: 3/10, net 30 da. Items as follows : 25 #5932 Empire Toilet Tables 18 #1008 Oak Sideboards 25 #76 A Oak Chamber Sets Remember that all goods bought are now billed to your firm. k SET V. JOBBING FURNITURE 183 Form 34. Invoice of Derby Mfg. Co., City, dated Aug. 3. Terms : draft at 10 da. for the amount, less 2%. Items as follows : 5 #16 A Comp. Dining-room Sets 5 #693 Antique Wardrobes 10 #89 Mahogany Chamber Sets Deduct the 2% discount, but do not receipt the bill. Form 35. Draft of Derby Mfg. Co., City, on your firm, in favor of them- selves, for the net amount of the above invoice, dated Aug. 3, payable at 10 days' sight. Form 36. Invoice of C. W. Allen & Co., Trenton, N.J., dated Aug. 3. Terms : 2/30, net 60 da. Items as follows : 30 pr. Blue Chenille Curtains 20 pr. #91 Lace Curtains Form 37. Check of David E. Teeter, City, dated Aug. 6, drawn on Traders National Bank, in favor of Student & Co., for $589.30. Form 38. Bill of Ward, Macey & Co., dated City, Aug. 6, for 1 letter file and cabinet, $65. Terms : cash. Receipt the bill. Form 39. Bill of Tracy Coal Co. to Harvey L. Manning, dated Aug. 6, for 3 T. coal at $5. Terms : cash. Receipt the bill. Form 40. C.O.I), envelope. Data as follows: Cash inclosed, |22. Goods were shipped by your firm to J. W. Clark, Waltham, Aug. 5. Note. Refer to the note under Form 21, page 153. Form 41. Check of David E. Teeter, City, dated Aug. 9, drawn on Traders National Bank, in favor of your firm, for $1248.87. Form 42. New York draft, dated City, Aug. 11, drawn by The Union Bank, in favor of your firm, on Chemical National Bank, New York, for $438.55, Chas. H. Palmer, Cashier. Form 43. Sight draft of S. T. Udell & Co. on your firm for $479.50, dated Chicago, 111., Aug. 10 ; drawn payable to W. D. Lapham. Form 44. Check of J. E. Bender, dated Troy, Aug. 11, drawn on Traders National Bank, in favor of your firm, for $920.95. ■ Form 45. Draft of J. O. Moran, drawn on your firm, in favor of Geo. L. Jones, dated City, Aug. 13, payable in 60 da. from date, for $1900. Form 46. Check of Walker, Brown & Co., dated Albany, Aug. 12, drawn on Traders National Bank, in favor of your firm, for $712.95. 184 BOOKKEEPING Form 47. Check of H. B. Claflin & Co., dated City, Aug. IB, drawn on Traders National Bank, in favor of your firm, for $400. Form 48. Invoice of C. W. Allen & Co., Trenton, N.J., dated Aug. 14. Terms: 2/30, net 60 da. Items as follows: 50 #176 c Piano Chairs 20 #6387 Hall Settles 25 #835 Music Cabinets 50 #170 English Clothes Poles Form 49. Invoice of Cobb, Bates & Co., City, dated Aug. 22. Terms : 3/10, net 30 da. Items as follows : 25 #16 L. Dressing Cabinets 25 #36 b Gentleman's Chiffoniers 25 #5932 Empire Toilet Tables Form 50. Invoice of Fowler Furniture Co., Rochester, dated Aug. 22. Terms: cash, less 2%. Items as follows: 10 #245 Cedar Chests 10 #2229 Oak Dining Tables 10 #687 Ornamental Tables 15 #17 a Roman Chairs Deduct the discount arid receipt the bill. Form 51. New York draft, dated Springfield, Aug. 24, drawn by The Union Bank of Springfield, on Chemical National Bank, New York, in favor of G. H. Ingalls & Co., for |732.35, A. R. Shef- field, Cashier. Transferred to your firm by full mdorsement. lorm 52. Check of Samuel W. Bradley, Bedford, dated Aug. 26, drawn on Traders National Bank, in favor of your firm, for |1587.60. Form 53. Note of Chas. B. Sherman, Rochester, dated Aug. 25, at 30 da., with interest at 6%, in favor of your firm, for $352.69. Form 54. Draft of Traders National Bank, Bangor, dated Aug. 26, drawn on Chemical National Bank, New York, in favor of your firm, for |454.06, W. H. Gould, Cashier. Form 55. Invoice of William Leavens & Co., New York, dated Aug. 27. Terms: sight draft in 10 da., for the amount of the bill, less 2%. Items as follows: 25 #5926 Secretary Book Cabinets 40 #68 Oak Bookcases 50 #396 Mahogany Hall Stands Form 56. Bill of the Metropolitan Carting Co., City, dated Aug. 31 Items as follows: Aug. 1, Freight and Cartage, $24.25 16, Freight and Cartage, 57.50 22, Cartage, 8.50 23, Freight and Cartage, 43.50 30, Freight and Cartage, 139.50 Receipt the bill. - SET V. JOBBING FURNITURE 185 Memoranda of Transactions for August August 1 Draw a check in favor of Student & Co., on The Union Bank, for the amount of the balance on deposit. Have the check approved, and place it in the Business Cash envelope. This check is drawn in order that the bank account with the student may be closed. Presently this check will be deposited to the credit of the new firm. Receive Harvey L. Manning's check on Traders National Bank, for the amount of his cash investment. Form 29. Carry the July balance to a new page in the cashbook. On the first line below the balance, credit Manning for his cash investment, $7000. Indorse the two checks on hand and deposit them in The Union Bank in the name of the new firm. Above the student's name on the pass book write the firm name. Make a memorandum in the journal, setting forth the change in the personnel of the business. Make a journal entry for the merchandise and the personal account invested by Manning. Remember to check every cash item that is entered in both the journal and the cashbook. Your bank reports that the draft on P. R. Brown, attached to a bill of lading, has been collected. Collection, |1. Have the amount entered in the pass book, and record it in the check book. The entry in the cashbook is the same as the entry of the C.O.D. shipment to Lyman, July 22. Debit Collection and Exchange for the $1 collection. The Metropolitan Carting Co. has delivered to you the goods ordered of J. K. Levy & Co. on July 24, Form 30. Draw a cash check for office expenses, |25. Ask for $5 in change. Enter in the check book only. Telegraph C. W. Allen & Co., Trenton, N. J., ordering : 20 pr. Blue Chenille Curtains 20 pr. #91 Lace Curtains Limit the message to fifteen words. Pay the charges in cash, 60^. The draft drawn on Walker, Brown & Co., July 2, and left with the bank for collection, has been paid. Collection, 75^. The bank teller will make the proper record in your pass book. Enter the amount in the check book and the cashbook. Make the proper record in the bill book. 186 BOOKKEEPING August 2 J. E. Bender, Troy, sends the following order. Fill the order at the prices given herewith : 50 #15 C. Dining Chairs at |2.25 5 #495 W. Iron Bedsteads at |5 10 #16 Wool Mattresses at $4 5 #m Turkish Rockers at $24.75 50 #16 K L. Dining Chairs at |9.50 3 #73 Sofa Beds at |38 3 #626 Mahogany Office Chairs at $16.50 Terms : 3/5, 2/10, net 30 da. M. L. Covey & Go., Olean, order : 3 #396 Mahogany Hall Stands 2 #68 Oak Bookcases 3 #20 Corner Chairs Fill the order. Terms: cash, less 3%. Deduct the discount on the invoice and in the sales book. Prepare the bill of lading as usual. A New York draft was inclosed in payment of the order. Form 31. Make a cashbook entry for the draft. Note. But few special instructions will be given to the student for entering the trans- actions of this month. He is supposed to be sufficiently familiar with the different books and the various transactions recorded therein to proceed without a guide. If in doubt at any time, he should consult the instructor. Place the following orders over the telephone : Cobb, Bates & Co., City: 25 #5932 Empire Toilet Tables 25 #76 a Oak Chamber Sets 18 #1008 Oak Sideboards Derby Manufacturing Co., City : 10 #89 Mahogany Chamber Sets 5 #693 Antique Wardrobes 5 #16 A Complete Dining-room Sets Note. Some memorandum should be made of each order placed as above. When these orders are frequent, a special order book is used. In this set the memoranda for all orders placed over the telephone may be written on a sheet of paper and filed with the incoming papers. August 3 Draw a draft, payable at 30 days' sight, on J. E. Bender, for the amount you owe W. H. Stearns & Co. Make the required journal entry. Write a letter to W. H. Stearns & Co. and inclose the draft. Also, write a letter to J. E. Bender, informing him of the draft drawn. Refer to similar letters under Julyl. ., SET V. JOBBING FUENITUEE 187 Accept, payable at The Union Bank, Stoddard & Co.'s draft, on your firm, in favor of Curry, Browning & Co., drawn at 10 days' sight, for $1500, Form 32. Make the journal entry. Record the draft in the bill book, and then hand it in. You have received the goods, ordered of Cobb, Bates & Co. on Aug. 2, Form 33. Goods ordered of Derby Manufacturing Co. have been delivered. Form 34. Accept the draft which they inclosed, payable at The Union Bank, Form 35. The goods ordered of C. W. Allen & Co., on Aug. 1, have been received. Form 36. August 5 A telegraphic order has been received from Henry L. Miller, Provi- dence, for : 15 #5932 Empire Toilet Tables 15 #1008 Oak Sideboards Fill the order, subject to the order of The Union Bank, less 2%. Deduct the discount on the invoice, and treat in the same manner as the ship- ment to P. R. Brown, July 19. A telegraphic order has been received from J. W. Clark, Waltham, for : 2 pr. #91 Lace Curtains 2 pr. Blue Chenille Curtains The goods are to be shipped by express C.O.D. Treat the same as the order of Chas. B. Lyman, July 17. David E. Teeter, City, has given you the following order over the telephone : Fill the order at the prices given herewith : 5 #5932 E. Toilet Tables at $50 10 #693 Antique Wardrobes at |25.75 3 #396 M. Hall Stands at |65 3 #1008 Oak Sideboards at $195 Terms : 3/5, 1/30, net 60 da. August 6 Receive of David E. Teeter his check, for the invoice of July 27, less 1%, Form 37. Pay by check Ward, Macey & Co.'s bill for a letter file and cabinet for use in the office, |65, Form 38. Charge Office Fixtures. Pay by check Charles B. Hanley for sundry repairs, $10.50. 188 BOOKKEEPING Pay by check Tracy Coal Co.'s bill for coal for private use of Harvey L. Manning, $15, Form 39. Leave J. E. Farley's acceptance, received July 10, with the bank for collection. Deposit the check and the New York draft on hand. August 8 Acceptance in favor of W. H. Stearns & Co. is due to-day, payable at the bank. In the month of July our notes and acceptances payable at the bank were charged to the depositor's account. This matter was explained under July 13. Hereafter such notes and acceptances will be paid by check, the check being made payable to the payee of the note or the acceptance. Issue a check in payment. Enter in the cashbook, and make the usual record in the bill book. Write a letter to C. W. Allen & Co., Trenton, N.J., ordering the following : 60 #176 c Piano Chairs 25 #835 Music Cabinets 50 #170 English Clothes Poles 20 #6387 Hall Settles August 9 Benj. P. Freeman & Co., City, order: 5 #10 China Closets 10 #16 Wool Mattresses 5 #495 White Iron Bedsteads 5 #65 Turkish Kockers 2 #5926 Secretary Book Cabinets Fill the order. Terms: sight draft in 10 da. for the amount, less 3%. Treat in the same way as their order of July 2. Walker, Brown & Co., Albany, send in the following order. Fill the order at the prices given herewith : 5 #89 M. Chamber Sets at |80 5 pr. B. Chenille Curtains at $5 15 pr. #91 Lace Curtains at $6 2 #16 a C. Dining-room Sets at $110 Terms : 3/5, net 30 da. J. B. Cox & Co., Somerville, order: 7 #572 Drawing-room Suites 3 #59 a Cheval Glasses 5 #3016 Fancy Rockers 12 #2546 Ant. Library Eockers Fill the order. Terms : 20-da. draft for the amount of the bilL Treat in the same way as the order of Walker, Brown & Co., July 2. Receive returns, for C.O.D. shipment of Aug. 5, Form 40. SET V. JOBBING FURNITURE 189 August 10 Receive of David E. Teeter his check for the amount of the bill of Aug. 5, less 3%, Form 41. August 11 Your bank has collected J. E. Farley's acceptance due to-day. Take your pass book to the bank and receive credit for the amount. Leave the acceptance of Rogers, Peet & Co. with the bank for collec- tion ; also deposit |20 currency and the check on hand. You receive frequent calls for a line of furniture manufactured by the Fowler Furniture Co., Rochester. From their catalogue you have made the following selections : 10 #687 Ornamental Tables 10 #245 Cedar Chests 10 #2229 Oak Dining Tables 15 #17 a Roman Chairs Write a letter, ordering the above goods and inclosing a New York draft to cover the amount, less 2%. Give references and some informa- tion about the volume of your business. The volume of business is shown by the total sales. Write the check and receive the draft, Form 42. The bank makes no charge for the draft. August 12 Pay by check S. T. Udell & Co.'s sight draft on you, in favor of W. D. Lapham, |479.50, Form 43. Receive of J. E. Bender, Troy, his check for the invoice of Aug. 2, less 2%, Form 44. August 13 Accept J. O. Moran's draft, payable 60 da. from date, in favor of Geo. L. Jones, for |1900, Form 45. Receive of Walker, Brown & Co. their check for the invoice of Aug. 9, less 3%, Form 46. Receive from H. B. Claflin & Co. their check, for their acceptance due to-day. Form 47. Make the following record in red ink across the face of the drq/?, and thenliand it in: Paid in full 8/13 Student & Co., per (^Student's initials). Note. A canceled draft, note, or check should always be kept and filed as a receipt. 190 BOOKKEEPING Your acceptances, in favor of Curry, Browning & Co. and Derby Manufacturing Co., are due to-day. Write checks for the payment of these notes, hand them in, and receive the canceled acceptances. August 15 Deposit the checks on hand and the currency received from the C.O.D. shipment Aug. 9. Collection on the checks, $1.50. Your bank informs you that the acceptance of Rogers, Peet & Co., due yesterday, has been collected. Your bank informs you that the draft on Plenry L. Miller has been paid. Collection, $2. August 16 The Metropolitan Carting Co. has this day delivered to you the goods ordered of C. W. Allen & Co., on Aug. 8, Form 48. E. F. Green & Co., Bangor, order the following. Fill the order at the prices given herewith : 15 #176 c Piano Chairs at $17 5 #835 Music Cabinets at |5 15 #170 E. Clothes Poles at $5.50 5 #6.387 Hall Settles at $23.25 Rumors are current to the effect that the resources of E. F. Green & Co. are in an unsatisfactory condition, and you think it advisable not to sell them anything on account. Prepare the usual bill of lading. Make a sight draft on E. F. Green & Co., in favor of your firm, for the amount of the invoice, less 5%, and attach it to the bill of lading. Deduct the discount on the invoice and in the sales book. (Refer to the comment on the shipment to P. R. Brown, July 19.) Indorse the draft to the bank to which it is to be sent. Write a letter, inclose the draft and the bill of lading, and send it direct to Traders National Bank, Bangor, for collection. E. F. Green & Co. have consented to the terms of this shipment. August 17 Your offer to prepay your acceptance in favor of Geo. L. Jones is accepted. Refer to the bill book for all details regarding this acceptance. Deduct the discount for the time the acceptance has yet to run, and write a check for the proceeds. Have the acceptance canceled, and keep it as a receipt. August 18 Give C. W. Allen & Co. a check for the invoice of Aug. 14, less 2%. August 19 Take the draft on Benj. P. Freeman & Co., drawn Aug. 9, from the Business Cash envelope, indorse it properly, and deposit it in the bank. SET V. JOBBING FURNITURE 191 August 20 Samuel W. Bradley, Bedford, sends in the following order. Fill the order at the prices given herewith : 5 #36 B G. Chiffoniers at $10 10 #27 c W.-wire Mattresses at |3.25 150 #16 K L. Dining Chairs at $9.50 50 #15 C. Dining Chairs at $2.25 Terms : 3/5, 2/10, net 30 da. G. H. Ingalls & Co., Springfield, send in the following order. Fill the order at the prices given herewith : 5 #2546 A. Library Rockers at $12 5 #635 Brass Bedsteads at $22.50 5 #626 M. Office Chairs at $16.50 5 #572 D. Suites at $100 Terms : 3/5, 2/10, net 30 da. Give Cobb, Bates & Co. the following order over the telephone : 25 #36 B Gentleman's Chiffoniers 25 #5932 Empire Toilet Tables 25 #16 Lady's Dressing Cabinets August 22 Write a letter to William Leavens & Co., New York City, ordering ; 50 #396 Mahogany Hall Stands 40 #68 Oak Bookcases 25 #5926 Secretary Book Cabinets The Metropolitan Carting Co. has delivered the goods ordered of Cobb, Bates & Co., on Aug. 20, Form 49. M. N. Overman, Albany, orders : 10 #50 Mahogany Parlor Tables 10 #10 China Closets Fill the order. Terms: 3/10, 1/30, net 60 da. August 23 Give Cobb, Bates & Co. a check for the invoice of Aug. 22, less 3%. • You and your partner each withdraw from the business, by check, $150. Hand in Manning's check. Have yours cashed at the bank and put the currency into the Personal Cash envelope. Pay Chas. O. Rigdon, by check, $52.50 for stabling and feeding your horses. Also pay James Lundergan, by check, $9.20 for horseshoeing, etc. These are Expense items. The Metropolitan Carting Co. has delivered to you the goods ordered of the Fowler Furniture Co. on Aug. 11, Form 50. 192 BOOKKEEPING August 24 Chas. B. Sherman, Rochester, sends in the following order. Fill the order at the prices given herewith : 5 #5932 E. Toilet Tables at $50 5 #50 M. Parlor Tables at $21.25 Terms: 30-da. note with interest, less 1%. Deduct the discount on the invoice and in the sales book. The note will be received later ; make no entry until it is received. Take the sight draft on Chas. B. Sherman, dated to-day, from your Business Cash envelope, and deposit it in the bank, together with all the cash on hand. Collection on the draft, 50^. This draft is for the invoice of July 25. Enter in the cashbook. August 25 Receive of G. H. Ingalls & Co. a New York draft, in payment of the invoice of Aug. 20, less 3%, Form 51. August 26 Receive of Samuel W. Bradley his check, on Traders National Bank, in payment of the invoice of Aug. 20, less 2%, Form 52. August 27 Receive of Chas. B. Sherman his note, dated Aug. 25, in favor of your firm, for the net amount of the invoice of Aug. 24, Form 53. Receive a New York draft, from Traders National Bank, Bangor, for the amount of the sight draft on E. F. Green & Co., Aug. 16, less 75(^ collection. Form 54. The account should be credited in the cashbook for the amount of the invoice in the sales book. Note. The amount of the draft is the face of the invoice less 75(^. E. F. Green & Co. deducted the collection, and this necessitates a charge on your books for the 75^, as it was paid by you. August 30 Deposit the check which you received of Samuel W. Bradley on Aug. 26, and the two New York drafts on hand. The collection on Bradley's check is $1.50. Your bank informs you that the draft drawn on J. B. Cox & Co., Aug. 9, has been paid. Collection, $1. SET V. JOBBIKa FURKITUKE 193 The Metropolitan Carting Co. has delivered to you the goods ordered of William Leavens & Co., on Aug. 22, Form 55. Discount at The Union Bank the note received of Chas. B. Sherman on Aug. 27. The bank gives you credit for the face of the note. Note. It is customary for many banks to give depositors credit for the face of interest- bearing notes discounted within a few days after they are made. The interest is the com- pensation received by the bank. August 31 Give J. L. Bidwell & Son a check for |125 for one carriage horse. Charge this to the account of Harvey L. Manning. Pay by check the bill of the Metropolitan Carting Co., for freight and drayage to date, $273.25, Form 56. Charge Merchandise in the cashbook. Pay salaries to date by checks as follows : Harry K. Sutton $60 Michael Donovan $30 Harvey L. Grant 50 Daniel L. Coon 48 Geo. W. Ainsley $40 Enter these salaries in the cashbook as one item. Closing the Work for August The student should now proceed to close the work for this month as follows : 1. Have the monthly bank statement made, and compare it with the check book. 2. In posting, allow one third of a page for all new accounts. As Harvey L. Manning is now one of the proprietors, write his name on the lower half of page 1. 3. Rule, foot, and post the sales book and the* invoice book. 4. Prove the cash, and balance and post the cashbook. 5. Prove the bill book. 6. Make out monthly statements for the customers. 7. Make a trial balance of the balances of your ledger accounts, and hand it to the instructor for approval. 8. An inventory of everything on hand has been completed by Mr. Sutton. A statement of it follows. Copy it in the journal in the usual way, computing the value at cost prices. 194 BOOKKEEPING Inventories, August 31, 19 — Merchandise : 5 #3116 Antique Card Tables 12 #626 M. Office Chairs 14 #693 Antique Wardrobes 4 #50 M. Parlor Tables 10 #16 B Brass Easels 54 #396 M. Hall Stands 20 #635 Brass Bedsteads 17 #89 M. Chamber Sets 13 pr. Blue Chenille Curtains 20 #835 Music Cabinets 10 #245 Cedar Chests 25 #76 a Oak Chamber Sets 50 #15 Cane-seat Dining Chairs 10 #687 Ornamental Tables 2 #59 A Cheval Glasses 17 #2229 Oak Dining Tables 10 #71 A Child's Cribs 12 #73 Oak Writing Desks 7 #20 Corner Chairs 43 #68 Oak Bookcases 25 #16 A C. Dining-room Sets 5 #20 d Parlor Cabinets 5 #572 Drawing-room Suites 35 #176 o Piano Chairs 25 #5932 Empire Toilet Tables 10 #57 Reclining Couches 35 #170 English Clothes Poles 15 #17 a Roman Chairs 7 #3016 Fancy Rockers 9 #73 Sofa Beds 32 #36 B G. Chiffoniers 28 #5926 Sec. Book Cabinets 25 #6387 Hall Settles 10 #65 Turkish Rockers 50 #16 K L. Dining Chairs 14 #27 c W.-wire Mattresses 5 #169 c Library Tables 4 #16 Wool Mattresses 13 pr. #91 Lace Curtains 2 #495 White Iron Bedsteads 30 #16 Lady's Dressing Cabinets Office Fixtures : Cost $515. Depreciation Horse and Wagon : Cost Depreciation Real Estate : Cost Depreciation Expense : Unexpired Insurance $130. 9. Make the statements and the verification, and have them approved. Show the net gain as a total on the loss and gain statement, and the present worth as a total on the resource^ and liability statement. 10. If the statements are correct, close the ledger as follows : a. Close the loss and gam accounts. h. Close the Loss and Grain account into the Proprietors' account. In closing the Loss and Gain account, remember that the net gain is to be divided equally between the partners. 5.15 1509.85 $450. 60. $390. 17000. 350. 16650. DISSOLUTIOISr OF PARTNERSHIP 195 iT account in the ledger and close the account. Harvey L. Manning is to conduct the furniture business at the old stand under the name of Harvey L. Mannmg. He is to have the net resources and assume all the liabilities of the old firm. Draw a check in favor of Harvey L. Manning for the balance of the cash in the bank in the name of the old firm, and hand it in. It is assumed that your attorney, Fred V. Smith, has drawn up the contract of sale and the warranty deed necessary to transfer the title to all the chattels and the real estate to Manning. These documents, it is assumed, are on file with other important papers. Consequences of Dissolution of Partnership. The direct consequence of a dissolution of partnership is the necessity of taking effectual steps to close the partnership affairs. Some disposition must always be made of the partnership effects. Sometimes articles of copartner- ship provide that property on hand shall be taken at dissolution by one of the partners according to a prescribed mode, and in that case the business may be continued without interruption. In this case there was no such agreement, but the partners between themselves entered into an arrangement whereby Manning continues the business and Student^ for a sufficient consideration, consents to withdraw. 196 BOOKKEEPING Notice of Dissolution. A dissolution of partnership, so far as it con- cerns its own members, may be immediate, but with reference to the public the element of notice requires consideration. When Notice is Unnecessary. A notice of dissolution is unnecessary : 1. When a partnership expires by its own limitation. 2. When a partnership is dissolved by the operation of law. 3. When dissolution occurs by the death of one of- the partners. 4. When a dormant, or silent, partner retires. Manner of giving Notice. A notice of dissolution should be published in one of the usual advertising newspapers of the city in which the busi- ness has been conducted. This notice is deemed sufficient for all those who have not had previous dealings with the firm. A special notice of the dissolution should be sent to those who have had previous dealings with the firm. (See Form II, Appendix F.) Prepare a notice of your withdrawal from the firm. (See Form III, Appendix F.) Hand in the notice. It is assumed that a notice of dissolution has been inserted in one of your usual advertising newspapers, and that circulars embodying the facts stated in the notice have been mailed to each of the firms with whom you have had dealings. After writing the circular, the work of sending it to the various firms is purely mechanical, and it is thought best not to require the student to do all this work. After notices have been circulated as outlined above, your liability, so far as new debts are concerned, ceases. GENERAL REVIEW QUESTIONS 1. Under what circumstances would a gain or loss on real estate be likely to occur ? 2. What are the principal advantages of the invoice book ? 3. Explain the posting of (a) the separate bills in the invoice book ; (b) the weekly, the monthly, or the quarterly totals of the invoice book, 4. Explain the advantages of the bill book. How is it proved ? 5. What provision was made in the cashbook of Set V for mer- chandise discounts ? What are the principal advantages of these special columns ? Explain how they are posted. 6. Explain the meaning of 3/5, 1/30, net 60 da. 7. What is a discount memorandum ? 8. In which column of the sales book should discounts be deducted ? Why ? 9. Define and differentiate merchandise discounts and interest and discount. 10. What is a bill of lading? How is it usually drawn? What is done with each copy? 11. Are bills of lading assignable by indorsement? 12. Should transportation companies ever deliver goods without receiving the bill of lading? Why? 13. Explain the meaning of the following terms : (a) C.O.D. ; (b) f.o.b. ; (c) shipper's order. 14. Describe the usual method of making a shipment by express C.O.D. 15. Outline briefly the usual process for entering C.O.D. shipments (a) in the sales book ; (b) in the ledger. 16. What REVIEW EXERCISES 197 means have railway and steamship companies provided for shipping goods by freight C.O.D. ? Explain this method fully. 17. Would you deposit a draft at- tached to a bill of lading for shipper's order in your local bank, or would it be more desirable to forward the same to a bank located in the place to which goods have been consigned ? 18. Are the net resources of a firm any less after it has paid one of its own non-interest-bearing notes? Why? 19. Are the net resources of a firm any less after it has paid one of its own interest-bearing notes ? Why ? EXERCISE 59 A Written Review The following review exercises are suggested : 1. Journalize orally or in writing each transaction in August. All amounts may be omitted, as the value of the exercise is in determining the debits and the credits. 2. Make the following opening entries: a. James S. Brien and Howard A. Ferris began business with the fol- lowing resources and liabilities ; credit each proprietor with one half the net resources : Deposit in Traders National Bank, |4235.70 Store and lot valued at |6750 Stock of merchandise valued at 1 12,534. 20 Office furniture valued at $425 Horse and wagon valued at |275 They have the following notes outstanding : George D. Raney, $1500 ; interest accrued for 2 mo. Henry D. Fowler, $725 ; interest accrued for 1 mo. Accounts receivable, $2256.45 Accounts payable, $1725.50 For estimated early payments make the following allowances: on accounts receivable, 2% ; on accounts payable, 2%. Note. Debit accounts receivable for the face value, and credit Mdse. Disc, for the 2% allowance. Credit accounts payable for the face value, and debit Mdse. Disc, for the 2% allowance. 5. John S. Brady & Son began business with the following resources and liabilities ; credit the firm with the net resources : Stocks and bonds on hand, $4200 Interest accrued on above, $156.20 Stock of merchandise valued at $11,645.50 Unpaid freight bill on merchandise, $76.25 (Liability) Real estate valued at $5500 198 BOOKKEEPING They hold notes against the following : Murray & Co., |450 ; interest accrued for 3 mo. James E. Marston, |320 ; discount allowed for 2 mo. J. H. Belden, $250 They have the following notes outstanding : Thomas D. Fales, $350 ; interest accrued for 2 mo. Derby & Son, |300 ; discount allowed for 1 mo. Office fixtures valued at $325 Horses and wagons valued at $500 Accounts receivable, $2450 ; estimated discount, 1 % Accounts payable, $1800; estimated discount, 2% 3. The formation of partnerships. The following illustrations apply to the formation of partnerships : Firsts the formation of a partnership on the basis of equal investment by each partner at the beginning of the business. The necessary entry is of the simplest character, as follows : Cash $4000 A $2000 B 2000. When posted, each partner's account will appear as follows : A 19— Jan. 2000 19— Jan. 2000 Second^ the formation of a partnership by the individual proprietor when he sells a half interest in an established business. Illustration : A has an established business worth $15,000 ; he sells B a half interest for $7500 ; thus B becomes an equal partner. The money received by A is not a part of the capital of the new firm ; it is his individual possession, and the capital of the firm is $15,000. On A's books, as proprietor, the capital account appeared as follows : 19— Jan. 15000 REVIEW EXERCISES 199 Under the partnership agreement one haK of this sum must be credited to each partner, and this is accomplished bj the following journal entry : A $7500 B 17500 When this entry is posted, the accounts of the proprietors, on the books formerly used by A, will appear as follows : A ' 19— Jan. 1 7500 19— Jan. 15000 19— Jan. 7500 Thirds the formation of a partnership when the incoming partner makes an investment equal to the value of the established business. Illustration: A has a business worth |18,000 ; B invests a like sum and becomes an equal partner. The money invested by B is a part of the capital of the firm, which is now |36,000. On A's books, as proprietor, the capital account appeared as follows : A 19— Jan. 18000 The following entry should be made when B makes his investment : Cash 118,000 B 118,000 After posting this entry in the books formerly used by A, B's account will appear as follows : B 19— Jan. 18000 A's account will remain unchanged, and each partner is now credited for one half of the capital of the firm. Note. The cash items in the illustrations may be entered in the cashbook ; the journal entry has been used simply to set forth the debit and the credit items more clearly. Only two partners have been considered, but the principles are the same whether there are two partners or more than two, and whether the investments are equal or unequal. 200 BOOKKEEPING Make entries for the following partnership arrangements : a. Henry T. Jackson and James Young form a partnership, as follows : Henry T. Jackson invests cash, $1500, and a stock of merchandise valued at |2750. James Young invests cash, $1250, and a store and lot worth $3000. h. Student and Fred S. Carmen form a partnership, as follows : Student invests cash, $2000, and R. S. Good's note which he holds ; face of the note, $500, with accrued interest for 4 mo. Fred S. Carmen invests cash equal to the total investment of Student. c. Harold D. Powers owns a dry-goods business the present value of which is $16,450. He sells a half interest to Bernard F. Shaw for $8225. d. George D. Fuller owns a drug store, and he values the store, fixtures, and stock at $12,600. Ealph F. Varley becomes an equal partner with Fuller by investing cash, $7600, and a stock of drugs worth $5000. e. Henry S. Carey, George R. Downey, and Harry S. Mason form a part- nership on the following conditions : the capital is to be $25,000, of which Carey invests $12,500, Downey $7500, and Mason borrows $5000 of Carey and invests it in the business. Note. How much of the Mason investment and loan should be entered on the books of the business ? SET VI. WHOLESALE GROCERY BUSINESS The Object of this set is to illustrate in a brief way a system of bookkeepmg adapted to a general wholesale business. Special Features. Among the special features of the set are : 1. Introduction and use of : a. Auxiliary ledgers. h. Special-column cashbook. c. Special-column journal. d. Proprietors' private accounts. 2. Adjustment of interest in the Proprietors' accounts. 3. Suggestions bearing upon business correspondence. The Books used are the cashbook, the sales book, the invoice book, the journal, the general ledger, the purchase ledger, the sales ledger, the bill book, and the check book. The bill book and the check book are the same as in the preceding sets. Form for making Closing Entry in Sales Book 20 pkg. S. Yeast Cakes 1.05 21 500 lb. P. Tapioca . ^ 20 25 bbl. R. P. Flour 4.75 118 75 40 doz. bottles M. Pickles 16 2.25 90 672 98 24 J. M. Martin & Co. , Albany 2/10, net 30 da. 25 bx. W. L. Soap 2.00 60 5 bbl. C. R. Oatmeal 6.60 27 50 5 bbl. S. P. Flour 4.26 21 25 150 gal. P. R. Molasses 300 45 14 150 gal. N. 0. Molasses Total sales for month Accounts Receivable 40^ 60 203 76 6762 95 6762 "95 16 Mdse. 6762 95 Sales Book. This book is treated in the same way as the one illustrated on page 64, except the posting. The amounts of the various sales are posted separately to the debit of the personal accounts in the sales ledger. 201 202 BOOKKEEPING Price List for September and October ARTICLE DESCRIPTION HOW PUT UP FOR SALE COST SELLING PRICE Baking Powder Royal Cases of 1 doz. 1-lb. cans $3.60 case $4.80 4.50 (< n Cleveland's <( (( << 3.50 case Beans Lima Bulk 3.25 bu. 3.50 '< New York Medium " 2.50 bu. 2.75 Butter Color Boxes 1.50 box 2.00 Cocoa Baker's 1-lb. cans .48 lb. .60 " Huyler's i-lb. and 1-lb. cans .43 lb. .58 Coffee Plain Rio 125 lb. to bag .24 lb. .28 " Genuine Mocha 150 lb. to bale .20 lb. .24 " Fancy Java 75 lb. to mat .23 lb. .30 Chocolate Hasty Lunch 24 1-lb. tins in box .29 lb. .35 (< Baker's 12 1-lb. tins in box .27 lb. .34 Crackers Oyster 60 lb. to bbl. .08 lb. .10 <( Cream Soda <( (( .06 lb. .08 Candy Stick Pails .12 lb. .14 « Standard Mixed Empire Chocolate .10 lb. .12 Drops 5-lb. boxes .07 lb. .10 (( Peppermint Creams 30-lb. pails .04 lb. .06 (< Mixed Creams Pails 1.40 pail 2.10 Diamond Salad Dressing Evaporated Fruits Cases of doz. bottles .90 case 1.20 Apricots 25-lb. boxes .08 lb. .10 <( (( Apples 50-lb. boxes .m lb. .06 << (( Raspberries Bulk .17 lb. .22 Fish Cream Codfish 40-lb. boxes .07i lb. .09 <( No. 1 Mackerel 20-lb. pails 1.80 pail 2.40 Flour Roller Process Barrels 3.50 bbl. 4.75 " Searchlight Pastry " 3.35 bbl. 4.50 << Puritan Pancake Cases of 20 5-lb. sacks .12 sack .15 <( Chef Pastry << << (( .15 sack .18 Horse-radish Cases of 1 doz. bottles .65 case .90 Insect Powder Boxes .16 box .24 Mucilage Boxes of 3 doz. bottles .90 box 1.20 Matches Gates 3-gro. pkg. .90 pkg. 1.20 (< Parlor 1-gro. boxes 1.15 box 1.53 Molasses Porto Rico Bbls. of 50 gal. .25 gal. .30 (( New Orleans << a .30 gal. .36 Mixed Pickles Doz. bottles 1.70 doz. 2.20 Oatmeal Cedar Rapids Barrels 4.50 bbl. 6.00 " H. O. 24 2-lb. pkg. in box 2.35 box 3.10 Olives Pint cans 2.20 doz. 2.75 Raisins London Layer 20-lb. boxes .07 lb. .10 <( California 50-lb. boxes .07 lb. .09^ Sugar Standard A 325-lb. bbl. .04 lb. .05 / V 42 40 16 5 10 10 V V 1 1 42 V 16 11 8 Expense Expense Expense Jordan, Marsh & Co. Coll. and Exch. N. P. Pond & Co. Bills Pay. Interest Coll. and Exch. A. B. Curtice & Co. C. 0. Bond & Co. Expense Expense Mdse. Coll. and Exch. Expense Expense R. H. White & Co. Sibley, Lindsay & Curr Bills Pay. Interest Coll. and Exch. Office Fixtures Office Fixtures Expense Expense R. R. Traver Jas. R. Bender R. H. White & Co. Coll. and Exch. Coll. and Exch. Bills Pay. Accts. Pay. To Mdse. Disc. Rent for Sept. Insurance premium Bill for stationery, etc. Inv. 8/16, less 2% On foreign checks Inv. 8/31, less 3% Note favor E. S. Lee Int. on above note On foreign checks Inv. 7/10 Inv. 7/16 Stamps Office stationery Freight Aug. 1 to Sept. 1 On foreign checks Telegram Traveling salesman Inv. 8/12, less 2% Inv. 8/18, less 2% Note favor A. Swan Int. on above note On foreign checks Safe for office Letter press Coal bill to date Salaries to date Private account Private account Inv. 8/31, less 2% On above N.Y. draft On Brown's check Note favor J. Green Total discounts on pur- chases for month 42 30 34 18 8 i,72 970 395 1193 1G66 882 392 62 G4 150 120 27 5 16 125 13 220 50 42 98 75 50 2 3 1 15 65 75 25 40 1000 10 169 1500 7 250 9 100 100 400 50 50 50 30 30 11 14 Accts. Pay. Expense Pay'ts on acct. for month Total for month 7557 2G 679 15 7557 679 26 15 30 18 Coll. and Exch. Total for month T '20 8 20 30 Balance In bank 17480 09 = 29271 "20 206 BOOKKEEPIKG The first two columns on the right are reserved for payments to the creditors on account. These columns are for personal items only, and are similar in use to the columns for accounts receivable on the left side, except that they are posted to the debit of the separate accounts with the creditors in the purchase ledger. At the end of the month, or at other regular intervals, the total of the first column is posted to the debit of Accounts Payable and to the credit of Merchandise Discounts in the general ledger. (See page 205.) The total of the net proceeds column is posted to the debit of Accounts Payable in the general ledger. All items of expense are entered in the Expense column, and only the total of this column is posted. All items of collection and exchange are entered in the Collection and Exchange column, and only the total of this column is posted. All the other cash payments are entered in the General column, and these items are posted separately. Form for making Closing Entry in Invoice Book ll 3^ rM. ^^^^^^y?^. 'Vrenton, ^J, jZ^^^,^/. 19- ^frr.-'?^^^. -^> ^^ .,^. '^^^^ Sought ofC. W. Allen & Co. 'Germs • ^/^.. ^-9^^-^, 9/7.r, 'Germs : /-f^ .■■■7^^,^-J t!>..^ti^^ _. MJ. r.r^^J -^-^9^..^^^^^^ ^^^ .^^ /C^^y'-d^-:^^^ ^ 97 A^ '/J-^ Z /^fZO I^ZJ 4^j-6z ^s6i S4^ ^r SET VI. WHOLESALE GROCERY 207 Invoice Book. This book is illustrated and explained on pages 142 and 143. The separate bills are credited to the various accounts in the pur- chase ledger, and the total is posted to the debit of Merchandise and to the credit of Accounts Payable in the general ledger. Purchase Ledger. The purchase ledger contains a record of trans- actions with the creditors. The principal items of credit in this ledger are posted from the invoice book, and the main items of charge, from the cashbook; but both debits and credits for the creditors' accounts may come from the journal. Sales Ledger. The sales ledger contains a record of transactions with customers. The mam items of charge come from the sales book, and the main items of credit from the cashbook ; but both debits and credits for the customers' accounts may come from the journal. General Ledger. The general ledger contains a record of all accounts of the business not entered in the purchase ledger or the sales ledger. The Accounts Payable account, or Purchase Ledger Account, in this ledger represents the purchase ledger, and the balance of the account should agree with the sum of the balances in the purchase ledger. The Accounts Receivable account, ^r the Sales Ledger Account, in the general ledger represents the sales ledger, and the balance of the account should equal the sum of the balances in the sales ledger. Advantages of Auxiliary Ledgers. The chief advantages resulting from the use of auxiliary ledgers may be stated as follows : 1. By glancing at the balance of the Accounts Receivable in the general ledger a merchant may know at once the aggregate of the amounts due him. This would not be possible if a sales ledger were not used. 2. By glancing at the balance of the Accounts Payable a merchant may know the aggregate of the amounts he owes. This account would not be in the books, except in scattered details, if a purchase ledger were not used. 3. The Accounts Receivable and the Accounts Payable accounts aid in proving the correctness of the personal accounts of a business. 4. Auxiliary ledgers show a classification of accounts which is necessary in the bookkeeping of large concerns ; they also give a business man classified information concerning many important details of his business. The Journal used in this set is provided with special columns. (See model journal, page 208.) This book is sometimes provided with a large number of columns to meet the requirements of some lines of business. The columns used here, however, are sufficient to give the student an idea of how special columns may be used to advantage in the journal. The Purchase Ledger Debits column may be used to advantage in houses where a separate ledger is kept for accounts with those from 208 BOOKKEEPING whom goods are bought. Any charges to these accounts in the journal should be extended into this column. The several amounts are posted separately to the debit side of the accounts in the purchase ledger, and the total is carried regularly to the debit of Accounts Payable in the general ledger. BosTox, Mass., September 25, 19 — ACCOUNT AND EXPLANATION M. O. Barry, R. O. Cook, and D. W. Baker have entered into a copartnership agreement as per con- ditions in the articles executed Sept, 15. The above parties have this day bought the entire resources and are to assume the entire liabilities of the late firm of A. J. Weaver & Co. as per contract on file. These resources and liabilities are as shown in the following entry made to open a new set of books. Mdse. Per inventory Bills Rec. Per bill book OflBce Fixtures Per inventory Good Will Established trade Accts. Rec. Per the following list Morgan & Co., Troy 1250 Osborn, Frey & Co., Westfield 750 L. O. Sweetland, Lynn 1900 Insurance Unexpired premium Bills Pay. Per bill book Accts. Pay. Per the following list Smith, Perkins & Co. , N. Y. 1700.50 Sprague& Co., Boston 1900.50 Harmon & Brown, Chicago 3200. Bills Pay. Two notes given A. J. Weaver & Co. Cash Check given A. J. Weaver & Co. C. O. Bond & Co. Bills Pay. Accepted their 10-day draft 27 Williams & Co. S. W. Brown Forward Drew a sight draft on S. W. B. and remitted it to W. & Co. on acct. PURCHASE LEDGER DEBITS 300 1801 GENERAL LEDGER DEBITS 12000 13000 1200 3000 3900 125 94 75 SALES LEDGER CREDITS 300 GENERAL LEDGER CREDITS 1900 6801 15000 9525 1500 34727 66 75 50 BosTOx, Mass., September 30, 19 — 8 18 5 6 Forward Bills Rec. Reed, their note as per Eaton & Co. bill book Accts. Pay. (Purchase Ledger Debits) General Ledger Debits Accts. Rec. (Sales Ledger Credits) General Ledger Credits 1801 35 33226 500 75 300 500 60 34727 50 1801 35 33726 75 800 60 34727 50 1801 33726 35 75 800 34727 60 50 35528 10 = 35528 10 SET VL WHOLESALE GROCERY 209 The General Ledger Debits column contains all the items of charge in the journal except the purchase ledger debits. The total is not posted. The Sales Ledger Credits column may be used to advantage in most houses where a separate ledger is kept for accounts with those to whom goods are sold. Any credits to these accounts in the journal should be extended into this column. The several amounts are posted separately to the credit side of the accounts in the sales ledger, and the total is carried regularly to the credit of Accounts Receivable in the general ledger. The General Ledger Credits column contains all the items of credit in the journal except the sales ledger credits. The total is not posted. Incoming Business Forms for September A tablet, separate from the text, containing all the incoming business forms, is available for use in writing this set when business practice is used. A list of the forms is given herewith so that the text affords all material requu-ed for writing the set if business practice is omitted. Also, these forms afford an opportunity for the study of the set as a whole before writing the same, thus meeting a requisite for adequate drill work, whether the business forms are used or not. If the set is written without using business practice, blank invoice forms may be used for the invoice book, in recording the merchandise bought ; these blanks may be secured of the publishers. If business practice is used either with or without the tablet, the student should be given the necessary blank forms for making out the following : Form 1. Check drawn by Student on Traders National Bank, City, Sept. 15, in favor of your firm, for |7000. Form 2. Note of Frey & Brown, City, dated Sept. 1, at 3 mo., for $8000. Note is drawn in Studenfs favor and is transferred by him to his firm by full indorsement. Form 3. Check of Geo. H. Dobbin, dated Sept. 15, drawn on Traders National Bank, City, in favor of your firm, for |1 0,000. Form 4. Check of Arthur M. Black, dated Sept. 15, drawn on Traders National Bank, City, in favor of your firm, for |14,000. Form 5. Note of F. Moore, dated Rome, Sept. 1, payable at The Union Bank, 2 mo. after date. Note is drawn for |1750, in favor of A. J. Weaver & Co., and is transferred to your firm by full indorsement. Form 6. Note of Walter L. Parker, dated City, Sept. 1, payable at The Union Bank, 30 da. after date. Note is drawn for |700, in favor of A. J. Weaver & Co., and is transferred to your firm by full indorsement. 210 BOOKKEEPIKG Form 7. Note of Benton Bros. & Co., dated City, Aug. 26, payable at The Union Bank, 60 da. after date. Note is drawn for |300, in favor of A. J. Weaver & Co., and is transferred to your firm by full indorsement. Form 8. Bill of Eureka Coal Co. to your firm for 5 T. coal at |4.50. Terms : cash. Bill is "dated City, Sept. 18, and is receipted. Form 9. Bill of Geo. E. Roe & Co., for 1 one-horse delivery wagon, $65 ; 1 heavy truck wagon, $90 ; 1 set single harness, $35 ; 1 set double harness, $85. Terms: cash. The bill is dated City, Sept. 19, and receipted. Form 10. Bill of the Daily Transcript Co. for advertising to date, $49.23. Terms: cash. The bill is dated City, Sept. 19, and receipted. Form 11. Bill of R. H. Myers & Co., for 1 sales ledger, $1.50; 1 pur- chase ledger, $1.50 ; 1 general ledger, $3 ; 1 journal,] 75(f ; 1 cashbook, $2.75; 1 bill book, 75(f; 5 M No. 6 envelopes and printing, $6.50 ; 5 M sheets letter paper and printing, $9.60. Terms : cash, less 1 % . The bill is dated City, Sept. 20, and receipted. Form 12. Bill of Eureka Coal Co. to Geo. H. Dobbin for 3 T. coal at $4.50. Terms: cash. The bill is dated Sept. 20, and receipted. Form 13. Letter of application to your firm from Albert B. Curtis, dated City, Sept. 19. Applicant saw your advertisement in the Evening Transcript for a shipping clerk and wishes to be considered an applicant for the position. He is a high-school graduate and has had experience as a salesman with the firm of W. H. Glenny & Co., City. He refers to John W. Nellis, principal of the high school, and to G. B. Watkins, manager for W. H. Glenny & Co. Inclose the letter in an envelope, properly addressed. THINGS TO BE OBSERVED IN LETTERS OF APPLICATION 1. The use of proper materials : a. Good ink. b. Paper of the proper size and quality. c. Envelopes of the proper size and quality. 2. Good mechanical and grammatical construction. 3. Brief and concise expressions. 4. Good tone : a. Frank, sincere expressions. b. Sufficient self-confidence and self-respect. (State your qualifications modestly, but frankly.) c. Truthfulness. SET VI. WHOLESALE GROCERY 211 5. Necessary information with regard to yourself : a. Qualifications, general and special. b. References. c. Salary expected (sometimes ; instructor should explain). d. Age (sometimes ; instructor should explain). 6. Courteous introduction and closing. ' Form 14. Draft of The Union Bank, City, dated Sept. 21, drawn on Chemical National Bank, New York, in favor of your firm, for 1841.47, W. B. Frey, Cashier. Form 15. Sight draft, dated City, Sept. 21, drawn by David R. Warriner, in favor of himself, on Arthur M. Black, for $50. Form 16. Draft drawn by The Union Bank, City, Sept. 24, on Chemical National Bank, New York, in favor of your firm, for $1297.18, W. B. Frey, Cashier. Form 17. Draft drawn by Traders National Bank, Weedsport, Sept. 23, on Chemical National Bank, New York, in favor of F. W. Earl & Co., for $950, C. W. Amsden, Cashier. The draft is transferred to your firm by full indorsement. Form 18. Check of D. L. Hinman & Co., City, on Traders National Bank, dated Sept. 24, in favor of your firm, for $411.99. Form 19. Invoice of Walter Baker & Co., New York, dated Sept. 22. Terms : 3/5, net 30 da. Items as follows : 500 1-lb. cans B. Cocoa 500 bx., 6000 lb., B. Chocolate 5000 lb. P. Tapioca Form 20. Draft drawn by Traders National Bank, Allston, Sept. 24, on Chemical National Bank, New York, in favor of Clinton, Jones & Co., for $292.04, W. F. Pratt, Cashier. The draft is transferred to your firm by full indorsement. Form 21. Invoice of Smith, Perkins & Co., New York, dated Sept. 24. Terms : 5/10, net 30 da. Items as follows : 50 bags, 6250 lb., P. R. Coffee 100 half chests, 7500 lb., C. J. Tea 50 bales, 7500 lb., G. M. Coffee 100 half chests, 6000 lb., F. 0. Tea 100 mats, 7500 lb., F. J. Coffee Form 22. Note of Frank Moore & Son, City, dated Sept. 25, drawn in favor of your firm, for $745.69, payable 10 da. from date, at The Union Bank. Form 23. Check of Salisbury, Gray & Co., Rochester, dated Sept. 24, on Traders National Bank, in favor of your firm, for $260.51. Form 24. Check of J. D. Manning, Albany, dated Sept. 24, on Traders National Bank, in favor of your firm, for $600. 212 BOOKKEEPING Form 25. Bill of R. O. Merrill & Co., City, dated Sept. 25. Terms: cash. Items as follows : 30 #16 Packing Boxes at 20^ 35 #3 Packing Boxes at 10^ The bill is receipted by O. W. Form 26. Invoice of Geo. H. Buell & Co., City, dated Sept. 26. Terms : 30-da. note in 10 da., with interest at 6%, less 1%. Items as follows : 240 bu. N.Y. Medium Beans 200 lb. E. Raspberries 25 bx., 1250 lb., E. Apples Form 27. Invoice of J. E. Seel & Co., City, dated Sept. 26. Terms : 2/10, net 30 da. Items as follows : 25 pails M. C. Candy 500 lb. S. M. Candy 50 bbl. L. L. Salt Form 28. Check of T. B. Welch & Co., Medford, dated Sept. 25, on Traders National Bank, in favor of your firm, for 1 296.94. Form 29. Draft drawn by The Union Bank, City, dated Sept. 25, on Chemical National Bank, New York, in favor of your firm, for $1949.70, W. B. Frey, Cashier. Form 30. C.O.I), envelope. Data as follows: Cash inclosed, $18.60. Goods were shipped by your firm to W. D. Greene, Dans- ville, Sept. 25. Note. An envelope containing the required amount of cash will be found in the back part of the tablet of Incoming Business Forms. If business practice is used and the In- coming Business Forms are not used, get the cash of the instructor. Form 31. Draft drawn by Traders National Bank, Troy, on Chemical National Bank, New York, in favor of Williams, Harmon & Co. for $399.35, R. C. Cook, Cashier. Draft is dated Sept. 25 and is transferred to your firm by full indorsement. Form 32. Sight draft of Salisbury, Gray & Co., Rochester, dated Sept. 25, in favor of your firm, on J. E. Seel & Co., City, for $50. Form 33. Invoice of Stickney, Poor & Co., New York, dated Sept. 26. Terms : 3/10, net 60 da. Items as follows : 100 bx., 2500 lb., E. Apricots 250 bx. Insect Powder 50 bx. Butter Color 50 bx., 2500 lb., E. Apples 100 bx. Mucilage 100 bbl. R. P. Flour The discount is deducted and the bill receipted. Form 34. Check of W. L. Anderson, Perth Amboy, dated Sept. 26, on Traders National Bank, in favor of your firm, for |400. SET VI. WHOLESALE GROCERY 213 Form 35. Invoice of Gray, Dunkle & Co., Chicago, dated Sept. 26. Terms; 3/10, net 30 da. Items as follows: 26 bbl., 7500 lb., Br. C Sugar 10 bbl., 3300 lb., Wh. C Sugar 200 half chests, 14,000 lb., M. Y. H. Tea Form 36. Check of James K. Lusk, City, dated Sept. 28, on Traders National Bank, in favor of your firm, for |369.07. Form 37. Invoice of Bates, Aldrich & Co., Boston, dated Sept. 27. Terms : 3/5, net 30 da. Items as follows : 100 1-lb. cans Huyler's Cocoa 100 pails M. C. Candy 60 bbl. S. P. Flour 20 bbl., 6500 lb., St. A Sugar 20 bbl., 6500 lb., F. G. Sugar Form 38. Invoice of D. W. Simpson & Co., Chicago, dated Sept. 27. Terms : 3/10, net 30 da. Items as follows : 60 bx. S. Soap 125 bx. W. Soap 60 cases, 1000 sacks, C. P. Flour 50 bx. W. L. Soap 20 bbl., 1200 lb., 0. Crackers 5 cases, 100 sacks, P. P. Flour 20 bbl., 1200 lb., C. S. Crackers Form 39. Draft drawn by The Union Bank, City, dated Sept. 28, on Chemical National Bank, New York, in favor of your firm, for 1907.43, W. B. Frey, Cashier. Form 40. Check of W. D. Packard & Co., City, dated Sept. 28, on Traders National Bank, in favor of your firm, for |605.38. Form 41. Note of D. L. Hinman & Co., City, dated Sept. 29, payable at The Union Bank, 10 da. from date, to your firm, |500. Form 42. Bill of Enterprise Carting Co., City, dated Sept. 29. Terms: cash. Items as follows : Sept. 24, Freight, $15.75 ; Cartage, $1.60 27, Freight, 49.25 ; Cartage, 6.50 28, Cartage, 4.75 The bill is receipted by W. M. O. Memoranda of Transactions for September Saturday, Sept. 15 Since selling your interest in the furniture business of the late firm of Student & Co. you have had several conferences with Geo. H. Dobbin and Arthur M. Black, relative to making an investment in a wholesale grocery business. 214 BOOKKEEPING To-day it has been decided to enter into a partnership for the purpose of conducting a wholesale grocery business under the following conditions : 1. The name of the copartnership will be Student,, Black & Co. 2. Investments will be as follows : a. Arthur M. Black makes a cash investment of $14,000. h. Geo. H. Dobbin makes a cash investment of |1 0,000. c. Student makes a cash m vestment of f 7000, and a note of Frey & Brown in his favor, dated Sept. 1, at 3 mo., for |8000. 3. The partnership shall continue for two years, unless the parties mutually consent to a dissolution at an earlier date. 4. Gams shall be shared equally and losses borne equally. 6. Student and Black shall each receive $200 per month for their services, and Dobbin, $150. 6. Whenever the books of the firm are closed, each partner shall be charged with interest at 6% on all sums withdrawn for private use, and shall receive interest at the same rate on all sums invested. Draw up articles of copartnership, fully covering the above points. (See Form V, Appendix F.) Fold and brief the articles (see page 181) and then hand them in. Each partner pays his investment as per agreement. Receive the three checks. Dobbin's and Black's checks are Forms 3 and 4. Your check and note are Forms 1 and 2. Enter the note in the bill book and place it in the proper envelope. Credit Student, Black & Co. for the total investment on the left side of the cashbook, extend- ing the amount into the general column. Debit Bills Receivable on the right side of the cashbook for the amount of the note, $8000, extending the amount into the general column. The difference between the two amounts recorded in the cashbook will show the amount of cash received by the business, $31,000. Open an account with The Union Bank and deposit the three checks on hand. When signing the name of the firm to indorsements, notes, checks, etc., sign Student, Black & Co. Monday, Sept. 17 A. J. Weaver & Co., of your place, have offered to sell you the entire resources and liabilities of their business located at 420 State St., on the following conditions t 1. That you pay them $6000 for the good will of their business. 2. That you buy all their resources at face value, the personal ac- counts and the quality and the quantity of the merchandise on hand to be covered by their written guarantee. SET VI. WHOLESALE GROCERY 215 3. That you assume their lease of the building at 420 State St. and pay all their liabilities. 4. That you pay them for the net assets of the business, cash, $14,000, and the balance in two notes payable in 3 mo. and 6 mo. respectively, without interest. GOOD WILL EXPLAINED The term good loill can hardly be said to have any precise signification. It is gen- erally understood to stand for certain advantages obtained by the purchaser of any business in consequence of his position before the public as succeeding to an enter- prise which has been identified in the past with the good name and the repute of his predecessor. Its value is dependent upon the ability of the purchaser to main- tain and improve past celebrity, reputation for skill, punctuality, etc. The Good Will account may appear as a resource on the books of the purchaser of any business, but its value is never definite. The value of the account is necessarily indefinite because of its dependence on the maintenance of the reputation and the success of the business, and as these are changing factors, the value of it is subject to change. When a business changes ownership, the good will is then subject to a definite valuation, as agreed upon by the buyer and the seller. The account is seldom opened except in connection with the purchase and the sale of an established business. When a business of recognized reputation is offered for sale, the good will is frequently as much a matter for consideration as any commodity. The account, however, is of more or less fictitious value, and many business men prefer to drop it gradually from their records in the ledger. This may be done by carrying regularly a definite portion of the account to the Loss and Gain account, when the books are closed. In the course of time, this plan of carrying a certain portion of the Good Will account to the Loss and Gain account will eliminate it from the open ledger accounts of the business. You accept the proposition of A. J. Weaver & Co. and ask them to make out a contract of sale at once. Tuesday, Sept. 18 A contract of sale covering the following resources and liabilities was received by Mr. Black from A. J. Weaver & Co. this morning. It was duly examined by Joseph M. Gordon, Esq., the attorney for your firm, and when found strong and binding in every way was filed among other important papers in the firm's safe. Note. Form IV, Appendix F, is a contract of sale similar to the one which would be given by A. J. Weaver & Co. in the preceding transaction. If thought best, the instructor may require the student to prepare the contract for the preceding transaction. 216 BOOKKEEPING Resources Mdse., per schedule on file $14609.50 Bills Eeceivable, per the following list 2750. 1. Note of F. Moore, at 2 mo. from Sept. 1 $1750. 2. Note of Walter L. Parker, at 30 da. from Sept. 1 700. 3. Note of Benton Bros. & Co., at 60 da. from Aug. 26 300. Office Fixtures, per schedule on file 1920. Rent, due from tenants for subrentals 50. Insurance, unused premium 240. Good Will, estimated value 6000. Accounts Receivable, per the following list 16814.10 Williams, Harmon & Co., Troy 6252.60 Fred W. Hill & Co., Rome 1642.40 W. L. Anderson, Perth Amboy 1400. Frank Moore & Son, City 2145.69 James K. Lusk, City 592.50 J. D. Manning, Albany 1600. D. L. Hinman & Co., City 420.40 F. W. Earl «& Co., Weedsport 1500. Salisbury, Gray & Co., Rochester 1260.51 Liabilities Bills Payable, per the following list $2300. 1. Note at 30 da. from Aug. 26, in favor of King & Co., payable at The Union Bank $1500. 2. Note at 30 da. from Sept. 3, in favor of Boyd, Evans & Co., payable at The Union Bank 800. Accounts Payable, per the following list 18166. Walter L. Mann & Co., Boston 2150. D. W. Smith & Co., New York 2100. Smith, Perkins & Co., New York 1450. Bates, Aldrich & Co., Boston 1365.45 D. W. Simpson & Co., Chicago 7100.55 Gray, Dunkle & Co., Chicago 4000. Note. In actual business the two bills payable would be in the possession of the payees or the bank at which they are made payable. In this case it is assumed that they are in the possession of the bank for collection. The student will therefore need to draw up both notes and hand them to the bank or to the instructor. Indorse them as they should be indorsed by the payees when left at the bank for collection. Write the check and the notes in payment of the purchase from A. J. Weaver & Co., as per agreement. Make the journal and the cashbook entries for the purchase. Study the model journal, page 208. Check the cash item in both the journal and the cashbook. SET VI. WHOLESALE GROCERY 217 Take the notes of A. J. Weaver & Co., Forms 5, 6, and 7, and enter them in the bill book. Also enter the bills payable in the bill book. Post the journal and the cashbook entries just made to the proper ledgers. If necessary, consult the instructor. After posting the journal entries to the general ledger, debit the several personal accounts receivable in the sales ledger and credit the several personal accounts payable in the purchase ledger. In posting, allow one third of a page for each account in the general ledger, and one fourth of a page for each account in the sales ledger and the purchase ledger. Prepare an index for each ledger ; the general ledger on the first page, and the others on the second page. In the sales ledger and the purchase ledger write the address after each ledger title. This should be written in a smaller hand just to the right of the title. Wednesday, Sept. 19 You desire to engage the services of a competent shipping clerk and decide to insert an advertisement in the Evening Transcript of your place. Prepare an advertisement stating the qualifications you consider desirable in a candidate for such a position as you have to fill. Write checks in payment of the following : Two work horses purchased of Walter H. Wood for |125 each; bill of Eureka Coal Co., Form 8, for coal, |22.50 ; bill of Geo. E. Roe & Co., Form 9, for wagons, harnesses, etc., $275 ; bill of the Daily Transcript Co., Form 10, for advertising to date, |49.23. Charge the advertising and the coal to Expense, and the other items to Horse and Wagon account. Note. Unless otherwise instructed, hand in all outgoing papers. When in doubt as to what should be done with any incoming forms, consult the instructor. Write letters, ordering the following : 1. Of Walter Baker & Co., New York, the goods outlined in Form 19, page 211. Give references and shipping directions and ask for the best cash discounts. 2. Of Smith, Perkins & Co., New York, the goods outlined in Form 21, page 211. These people have had extensive dealings with the old firm of A. J. Weaver & Co., but you are entire strangers to them. Give such information concerning your firm as will secure prompt shipment of the goods you order. If necessary, consult the instructor. 218 BOOKKEEPING Thursday, Sept. 20 Pay the following bills by checks: bill of R. H. Myers & Co., Form 11, for office books, stationery, etc., |26.09 ; bill of Eureka Coal Co., Form 12, for the private account of Geo. H. Dobbin, $13.50. Open an account with Geo. H. Dobbin, Private, WHY PRIVATE ACCOUNTS WITH THE INDIVIDUAL MEMBERS OF A FIRM SHOULD BE OPENED Strictly speaking, these accounts do not represent a part of the investment of any business, but rather the items show the dealings of the business with the individual members of the firm ; it is, therefore, desirable that they be kept separate from the account or accounts representing the capital of the concern. The failure to keep such accounts confuses business and private affairs, fosters carelessness and extravagance, and sometimes results in financial disaster. The capital account or investment is a fund to be used in carrying on the business, and is not to be disturbed except by agreement of the partners and the amendment of the articles of partnership. ITEMS THAT ARE ENTERED IN PROPRIETORS' PRIVATE ACCOUNTS Debits 1. Cash, or any other property belonging to the firm, withdrawn by a partner for private use. 2. Private debts of a partner paid by the firm. 3. Proper share of any net losses to be borne by a partner when the books are closed. Credits 1. Cash advanced to the business by a partner and not counted as a part of the capital of the firm. 2. Unpaid salary due a partner. 3. Firm debts assumed by a partner. 4. Proper share of any net gains of the business. Friday, Sept. 21 In response to your advertisement of Sept. 19, for a competent ship- ping clerk, twenty-three letters were received ; one from Albert B. Curtis, 270 Tremont St., impressed you favorably. Form 13, and you have had an interview with the young man, which has resulted in his engagement with your firm at |25 per week. His appointment dates from Monday, Sept. 24. File the letter, as it may be needed for reference. SET VL WHOLESALE GROCERY 219 Engage Edward McDorman as driver at |10 per week. Make a memorandum and place it on file. Write letters, ordering the following goods : 1. Of Stickney, Poor & Co., New York : 250 bx. Insect Powder 2500 lb. E. Apples 50 bx. Butter Color 2500 lb. E. Apricots 100 bx. Mucilage 100 bbl. R. P. Flour Inclose a New York draft in payment of the bill, less 3%. Buy the draft by check. Form 14 ; exchange, 25(f. 2. Of Gray, Dunkle & Co., Chicago, the goods outlined in Form 35, page 213. Remember that this firm was one of the creditors of the late house of A. J. Weaver & Co., and word the letter accordingly. 3. Of Bates, Aldrich & Co., Boston, the goods outlined in Form 37, page 213. The members of this firm were creditors of A. J. Weaver & Co. If you pay the balance in favor of D. W. Simpson & Co. this week, you will get a discount of 5%. Write your check for the amount shown in the purchase ledger, less 5%. Take the check to your bank or instructor and have it certified. CIRCUMSTANCES UNDER WHICH CHECKS ARE CERTIFIED IN BUSINESS Checks pass as money very freely from one person to another. They cannot always be accepted as money, however, for there is nothing to prevent any person from drawing a check upon a bank in which he has no money on deposit. Before a business man accepts a check from a stranger he may require that it be certified ; that is, that it be stamped by the bank upon which it is drawn, in a manner that will indicate its validity. When a check is certified, the bank immediately charges the amount to the drawer and sets aside the funds from which to pay the check when it is presented. A certified check is secured by the bank on which it is drawn, and it is good as long as the bank is solvent. SIGNIFICANCE OF CERTIFICATION i 1. By certifying a check a bank declares in effect the following : a. That the signature is genuine. b. That the drawer's balance is good for the amount named. c. That it holds itself responsible for the payment of the check. 2. Certification does not guarantee the following : a. That the indorsements, if any, are genuine. b. That the check was drawn in good form. If a check is so carelessly drawn that it can be raised easily, and is certified afterwards, a bank can be held for only the amount for which the check was first drawn. 220 BOOKKEEPING Write a letter to D. W. Simpson & Co., inclosing the above check and ordering: 50 bx. Sunlight Soap 6 cases, 100 sacks, P. P. Flour 125 bx. Wool Soap 50 cases, 1000 sacks, C. P. Flour 60 bx. Water LHy Soap 20 bbl., 1200 lb., 0. Crackers 20 bbl, 1200 lb., C. S. Crackers Saturday, Sept. 22 Pay by check David R. Warriner's sight draft on Arthur M. Black, *50, Form 15. Charge Black's private account. Monday, Sept. 24 A telegraphic dispatch has been received from W. D. Greene, Dans- ville, ordering the following to be sent by express, C.O.D. : 2 cases R. Baking Powder 3 bx., 150 lb., E. Apples Prepare the necessary papers and enter under C.O.D. Accounts in the sales book. The following orders were received in this morning's mail. 1. From Williams, Harmon & Co., Troy : 10 bbl. L. L. Salt 10 bbl. S. P. Flour 10 half chests, 750 lb., C. J. Tea 5 bbl., 800 lb, L. Starch 5 bbl., 1500 lb., Br. C Sugar Fill the order. Terms : 2/5, net 30 da. Prepare the bill of lading. Place the bill and the receipt in an envelope and hand it in. Do this with all similar orders. 2. From T. B. Welch & Co., Medford: 6 bbl., 300 gal., K O. Molasses 5 bbl., 1625 lb., F. G. Sugar 6 bbl., 300 gal., P. E. Molasses 10 bags Ice-cream Salt Fill the order. Terms : 2/5, net 30 da. •The account of Fred W. ,Hill & Co., Rome, is 23 da. past due. Draw a sight draft on them in favor of your firm for |1200 and leave it with the bank for collection. Indorse the draft. No entry is required. Write a letter to Fred W. Hill & Co., telling them of the draft you have drawn. Take the note of F. Moore from the Unpaid Bills envelope and offer it for discount at your bank, Form 5. Indorse the note, make out a discount memorandum and pin it to the note. Place the note in the pass book ; take it to the bank, and receive credit for the proceeds. SET VI. WHOLESALE GROCERY 221 Pay the balance due Bates, Aldrich & Co., less 5%, by a New York draft, Form 16. Buy the draft by check. Exchange, 50^. Indorse the draft and inclose it in a letter. POINTS TO BE OBSERVED IN WRITING A LETTER OF REMITTANCE 1. State what is inclosed, — note, draft, etc. 2. Give the amount of the inclosure. 3. Generally write the amount of the inclosure in words and figures, thus : Twenty- four and ^26^ Dollars ($24.25). 4. State how the amount inclosed is to be applied. 5. Fold the inclosure within the letter properly. (See Form I, Appendix F.) Receive of F. W. Earl & Co., Weedsport, a New York draft for |950, in full for invoice of Aug. 24, Form 17. Receive of D. L. Hinman & Co. their check, in full of account, less 2%, Form 18. The Enterprise Carting Co. has delivered to you the goods ordered of Walter Baker & Co. on Sept. 19, Form 19. A telegraphic order has just been received from W. L. Anderson, Perth Amboy, for : 10 bbl. R. P. Flour 1500 lb. P. Tapioca 25 cases C. Baking Powder 10 bbl., 1600 lb., G. G. Starch Fill the order. Terms : 2/5, net 30 da. Deposit the check and the New York draft on hand. Draw a cash check for office expenses, $25. Make no entry in the cashbook. Ask for $5 in change. Note. A daily statement shows the cash balance, a list of the journal entries, the sales, and the purchases. Prove the cash and make out a daily statement. Take all books to the instructor for criticism. Proceed to post as follows : 1. Post the items in the Accounts Receivable section of the cashbook to the credit of the proper accounts in the sales ledger. 2. Post the items in the General column on the left side of the cash- book to the credit of the various accounts in the general ledger. 3. Post the items in the Accounts Payable section of the cashbook to the debit of the various accounts in the purchase ledger. 4. Post the items in the General column on the right side of the cash- book to the debit of the various accounts in the general ledger. 222 BOOKKEEPING 5. Post the sales from the sales book to the debit of the different accounts in the sales ledger. 6. Post the purchases from the invoice book to the credit of the dif- ferent accounts in the purchase ledger. 7. Hand all books to the instructor for approval before proceeding with the next day's business. Tuesday, Sept. 25 The following orders were received in this morning's mail : 1. From L. P. Ross, Warsaw : 12 bbl., 3900 lb., St. A Sugar 25 half chests, 1750 lb., M. Y. H. Tea 15 bbl., 4875 lb., F. O. Sugar 10 pkg. S. Yeast Cakes You are not familiar with the financial standing of this firm, and so ship the goods to the order of The Union Bank, less 2%. \ ^v^-v ' The purchaser consents to this form of shipment. ■A^_,<^1_-.^- — '^^Enter the amount in the sales book under C.O.D. Accounts. Draw a sight draft ^ in favor of your firm, indorse it, and attach it to the bill of lading ; leave it with the bank for collection. 2. From Clinton, Jones & Co., Allston : 10 bbl., 3300 lb., Wh. C Sugar 15 pails No. 1 Mackerel 5 bbl., 800 lb., L. Starch 25 pkg. G. Matches 10 pkg. S. Yeast Cakes 5 bbl. C. R. Oatmeal 15 cases Horse-radish A New York draft is inclosed in settlement of the bill, less 2%, Form 20. Write the invoice, and prepare a bill of lading in the regular way. Deduct the discount and receipt the bill. Only the proceeds are entered in the cashbook. 3. From James K. Lusk, City : 25 cases D. Salad Dressing 50 cans B. Cocoa 6 cases, 120 sacks, C. P. Flour 250 lb. E. Chocolate Drops 15 bbl., 750 gal., N. 0. Molasses Fill the order. Terms : 2/5, net 30 da. 4. From F. E. Rogers, City : 15 bx., 300 lb., L. L. Raisins 10 bx. P. Matches 5 bbl., 250 gal., P. R. Molasses 10 bu. N. Y. Medium Beans SET VI. WHOLESALE GROCERY 223 Fill the order. Terms: sight draft in 5 da. for the amount of the bill, less 2%. Draw the draft, dating it Oct. 1 (Sept. 30 will be Sunday), and place it in the Business Cash envelope. What is the custom in your state regarding paper that falls due on Sunday ? The old account of Williams, Harmon & Co., Troy, is several days past due. Draw a sight draft on them for $3126.30, and leave it with The Union Bank for collection. Write a letter to Williams, Harmon & Co., telling them of the sight draft you have drawn. The goods ordered of Smith, Perkins & Co. on Sept. 19 have been received, Form 21. Place the following orders over the telephone: 1. With Geo. H. Buell & Co., City: 240 bu. N. Y. Medium Beans 25 bx., 1250 lb., E. Apples 200 lb. E. Raspberries 2. With J. E. Seel & Co., City : 50 bbl. L. L. Salt 25 pails M. C. Candy 500 lb. S. M. Candy The note of A. J. Weaver & Co., payable at The Union Bank, the payment of which was assumed by your firm, is due to-day. Issue a check in payment. Receive of Frank Moore & Son, City, their note at 10 da. for 1745.69, to apply on account. Form 22. Receive a check of Salisbury, Gray & Co. in full for the invoice of Sept. 2, $260.51, Form 23. Receive a check of J. D. Manning in full for the invoice of Aug. 25, $600, Form 24. Pay by check the bill of R. O. Merrill & Co. for packing boxes, etc., $9.50, Form 25. Pay James Burrill cash for shoeing horses, $2.50. Deposit the checks and the New York draft on hand. The bank charges y^^% collection on the checks. Make out a daily statement. If it is correct, post the different books as instructed on Sept. 24. Post the journal entry. After the posting is finished, hand all books to the instructor for examination and approval. 224 BOOKKEEPING Wednesday, Sept. 26 Goods ordered yesterday, over the telephone, of Geo. PI. Buell & Co. have been dehvered, Form 26. Goods ordered of J. E. Seel & Co. have also been delivered, Form 27. Receive of T. B. Welch & Co. their check, in full for the invoice of Sept. 24, less 2%, Form 28. In the letter inclosing the check they order the following : 25 bx. Wool Soap 5 bbl., 1650 lb., Wh. C Sugar 25 bx. Water Lily Soap 5 bbl., 1625 lb., F. G. Sugar 5 bbl., 1500 lb., Br. C Sugar 10 half chests, 600 lb., F. 0. Tea Fill the order. Terms : 2/5, net 30 da. Telegraph Walter L. Mann & Co., Boston, ordermg the following to be shipped by fast freight : 50 bx. Mucilage 50 cases C. Baking Powder Limit the message to eleven words. Pay 50^ charges in cash. Leave the note of Walter L. Parker with The Union Bank for collec- tion, Form 6. The note is in the Unpaid Bills envelope. Make the proper memorandum in the bill book. Pay Walter Baker & Co.'s invoice of Sept. 22, less 3%, by a New York draft, which you buy by check at The Union Bank, Form 29. Exchange, 75(^. Write a letter and inclose the draft. Receive returns for the C.O.D. shipment to W. D. Greene, Dansville, on Sept. 24, Form 30. Receive of Williams, Harmon & Co. a New York draft for invoice of Sept. 24, less 2%, Form 31. W. D. Packard & Co., City, order : 10 pails No. 1 Mackerel 20 1-lb. cans H. Cocoa 3 cases C. Baking Powder 10 bags, 1250 lb., P. R. Coffee 10 mats, 750 lb., F. J. Coffee Bill the above 3/5, net 60 da. This is a reliable firm, and you expect large orders from them frequently ; hence the above terms. The firm pays Geo. N. Cooper $125 by check for one carriage horse, to be charged to Student's private account. SET VI. WHOLESALE GROCERY 225 Receive of Salisbury, Gray & Co. a sight draft, on J. E. Seel & Co., City, for |50, Form 32. Remit the draft by letter to J. E. Seel & Co., and make an entry in the journal. J. D. Manning, Albany, orders : 10 bags, 1250 lb., P. R. Coffee 10 bales, 1500 lb., G. M. Cofeee 20 mats, 1500 lb., F. J. Coffee Fill the order. Terms : 2/5, net 30 da. Deposit the money received from the C.O.D. shipment, and the check and the New York draft on hand. The bank charges 35(^ collection on the check. Be sure to deduct the collection on the deposit ticket. Make out a daily statement and have it corrected. Post as previously explained. Present all books to the instructor for approval. Thursday, Sept. 27 The Enterprise Carting Co. has delivered to you the goods ordered of Stickney, Poor & Co. on Sept. 21, Form 33. Remit Gray, Dunkle & Co., Chicago, your note at 15 da., to apply on account, flOOO. Write a letter and inclose the note. Receive of W. L. Anderson his check for |400, to apply on account. Form 34. The following orders were received by mail to-day. 1. From Fred W. Hill & Co., Rome : 75 1-lb. cans H. Cocoa 50 lb. E. Raspberries 3 bx., 120 lb., C. Codfish 10 bx., 240 lb., H. L. Chocolate Fill the order. Terms : 2/5, net 30 da. 2. From D. L. Hinman & Co., City : 10 half chests, 750 lb., C. J. Tea 3 bags Ice-cream Salt 5 half chests, 300 lb., F. 0. Tea 3 bbl., 480 lb., H. W. Starch 10 half chests, 700 lb., M. Y. H. Tea Fill the order. Terms : 2/5, net 30 da. Discount at The Union Bank Frank Moore & Son's note received on Sept. 25. The proceeds are placed to your credit. Make out a discount memorandum and pin it to the note. Place it in the pass book and hand it to the bank. Make the proper records. 226 BOOKKEEPIXG Your bank informs you that the sight draft drawn on Ered W. Hill & Co., Rome, on Sept. 24 has been collected. Collection, y^%. Have the amount entered in the pass book, and make the proper records in the other books. Give A. W. Weet your check for $65 to be charged to the private account of Geo. H. Dobbin. Goods ordered of Gray, Dunkle & Co. on Sept. 21 have been de- livered. Form 35. Deposit the check on hand. No collection is charged. Make out a daily statement and have it examined, after which post the different books in the regular way. Hand all books to the instructor for approval. Friday, Sept. 28 Receive of James K. Lusk, City, a letter inclosing a check, in pay- ment of the invoice of Sept. 25, less 2%, Form 36. He also orders the following items : 10 bx. Sunlight Soap 50 lb. Pearl Tapioca 3 bbl., 480 lb., G. G. Starch Fill the order. Terms : 2/5, net 30 da. Salisbury, Gray & Co., Rochester, order: 15 bbl. R. P. Flour 4 bbl., 200 gal., K 0. Molasses 10 bbl. L. L. Salt 20 bx. Wool Soap 10 bbl., 3250 lb., St. A Sugar 5 bbl., 1500 lb, Br. C Sugar 25 bx. P. Matches 10 bx. Butter Color 5 pails No. 1 Mackerel 15 doz. pint cans Olives 5 bx., 250 lb., C. Raisins 5 bbl. C. R. Oatmeal Fill the order. Terms : 3/5, net 30 da. The Enterprise Carting Co. has just delivered to you the goods ordered of Bates, Aldrich & Co. on Sept. 21, Form 37. Give Geo. H. Buell & Co. your note at 30 da., with interest at 6%, for the net amount of the invoice of Sept. 26. A telegraphic order has just been received from W. M. Beach, Pitts- field, for: 3 half chests, 225 lb, C. J. Tea 50 lb. Flake Tapioca He requests that the goods be shipped by express, C.O.D. Fill the order. Terms: cash, less 1%. SET VL WHOLESALE GROCERY 227 Goods ordered of D. W. Simpson & Co., Chicago, on Sept. 21 have been delivered, Form 38. Remit Bates, Aldrich & Co. a New York draft, in full for the goods received to-day, less 3%, Form 39. Buy the New York draft by check. Exchange, 75^. Indorse the draft and inclose it in a letter. Deposit the check on hand. Your bank informs you that the draft drawn on Williams, Harmon & Co. on Sept. 25 has been collected. Collection, y^%. Have the amount entered in the pass book, and make the proper entries in the other books. Make out a daily statement. Post. Hand all books to the instructor for approval. Saturday, Sept. 29 Draw from the bank by a cash check for office expenses, $50. Ask for ten five-dollar bills. The following orders have been received by mail to-day. 1. From W. D. Packard & Co., City : 10 half chests, 750 lb., C. J. Tea 10 half chests, 600 lb., F. 0. Tea 5 bbl., 800 lb., L. Starch They inclose check in payment of the invoice of Sept. 26, less 3%, Form 40. Fill the order. Terms : 2/10, net 60 da. 2. From D. L. Hinman & Co., City : 20 bags Ice-cream Salt 50 bbl. L. L. Salt 10 bbl., 3250 lb., St. A Sugar 10 bbl., 3250 lb., F. G. Sugar 10 bbl., 600 lb., O. Crackers 10 bbl., 600 lb., C. S. Crackers They inclose their note at 10 da. for $500, to apply on account. Form 41. Fill the order. Terms : 2/5, net 30 da. 3. From Frank Moore & Son, City : 6 bx., 300 lb., E. Apples 5 bx., 125 lb., E. Apricots 15 bbl., 4875 lb., St. A Sugar 10 pails M. C. Candy 500 lb. S. M. Candy kFill the order. Terms : 2/5, net 30 da. Pay John Harvey cash for cleaning the store, |5. Also pay salaries 228 BOOKKEEPING Your bank informs you that the sight draft attached to the bill of lading and left with your bank for collection Sept. 25 has been paid. Collection, ^^^o- Have the amount entered in the pass book. Pay by check Enterprise Carting Co.'s bill for freight and drayage to date, 177.75, Form 42. Charge Merchandise. Pay William Jennings |15 by check for keeping and feeding horses to date. Make a journal entry crediting the Proprietors' private accounts with one-half month's salary for September. Charge Expense, and credit each proprietor for one half the monthly salary agreed upon in the articles of copartnership. Receive cash for subrental of a part of the store, |65. Get the cash at the office or of the instructor and credit Rent account. •Make out a daily statement and hand it in. Post as instructed for previous days. Closing the Work for September 1. Study the explanation of the model cashbook illustrated on pages 204 and 205. Close the cashbook, and follow all the details of the model very carefully. Note that the closing of the Discount column, on either side, is accomplished by a journal entry. The model does not show the total column under cash receipts, but this column will be found in your blank books. In closing the cash receipts carry all totals to this column. 2. Post the summary of the cashbook to the general ledger. 3. Study the illustration and the explanation of the sales book, page 201. Make the proper entry to close it. Post the entry to the general ledger. 4. Study the illustration and the explanation of the invoice book, page 206. Make the proper entry to close it. Post the entry to the general ledger. 5. Study the illustration and the explanation of the journal, page 208. Make the proper entry to close it. Post the entry to the general ledger. SET VI. WHOLESALE GROCERY 229 6. Prove the sales ledger by an abstract similar to the following : Abstract of Sales Ledger, September 30, 19 — 12 Wm. B. Tenny & Co. 920 14 D. M. McCarthy 1291 50 16 J. A. Merrill & Son 9120 16 R. W. White & Son 492 20 Baker, Hillis & Co. 162 50 21 J. E. Bender 1250 22 Wm. A. Conway 1120 24 Morgan, Wright & Co. 962 50 25 Kendall Mfg. Co. 162 90 26 F. E. Moore 865 29 C. W. Gray 120 31 G. H. Dunkle m 25 24 Balance per Accts. Rec. in G. L. 16532 65 16532 65 16532 65 7. Prove the purchase ledger by an abstract similar to the following Abstract of Purchase Ledger, September 30, 19 — 18 Jordan, Marsh & Co. 6142 50 19 Morgan, Traver & Co. 3150 21 Gray, Salisbury & Co. 1250 24 Williams & Rogers 925 26 C. H. Lyman & Son 2100 27 M. A. Weaver & Co. 1650 29 J. E. King, Son & Co. 1122 10 30 M. F. Raymond 4698 20 31 E. R. Barnard & Co. 162 90 46 Balance per Accts. Pay, in G. L. 21200 76 21200 76 21200 76 8. Have the abstracts approved by the instructor. If they are cor- rect, make a trial balance from the general ledger. 9. Have the trial balance approved. 10. Prove the bill book. 11. Hand all books to the instructor for examination. Remember the monthly statement of your bank account. 230 BOOKKEEPING EXERCISE 60 A Written Review The following review exercises are suggested. 1. Make the usual statements from the following trial balance A. L. Persons, Prop. 18000. Harry K. Leslie, Prop. 7000. Cash $448.45 Deposit in First National Bank 2036.85 Merchandise 8090.55 Real Estate 3300.55 Expense- 203.20 Taxes 60.40 Horse and Wagon 280. Office Fixtures 177.60 Interest 27.45 Salaries 324.90 Accounts Receivable 1258.25 Accounts Payable 2218.40 Bills Receivable 155.20 B. & 0. R.R. Stock 1800. Bills Payable 1100. A. L. Persons, Priv. Acct. 95. Harry K. Leslie, Priv. Acct. 60. $18318.40 $18318.40 Inventories Resource LiahUlty Merchandise 19150. $95.10 Real Estate 3250. 60. Expense 48.90 Interest 15.25 20 shares of B. & 0. R.R. Stock at par Horse and Wagon at cost, less 10% Office Fixtures : Typewriter at cost, |70, less 10% Office Chairs at cost, $40, less 10% Office Desk at cost, |67.60 2. Journalize the resources and the liabilities, and credit the proprietor for his net investment. Journalize the succeeding transactions, post all to the ledger, and take a trial balance. If the work is correct, all the personal accounts will balance. REVIEW EXERCISES 231 April 1. Harold F. Carson began business with the following re- sources and liabilities: Resources Merchandise on hand |6925. Bills Receivable on hand 460. Interest on above 10.50 Cash on hand 1940. W. F. Gordon on account 465.20 A. W. Dunham on account 1444.50 D. E. Sumner on account 750. Ware «&; Co. on account 341.75 Liabilities R. W. Owens on account 1260. J. A. Hazard on account 1020. Howe & Co. on account 165.20 Mercer & Co. on account . 250. Unpaid freight bill 104.25 Unpaid taxes 250. Bills Payable outstanding 420. Interest on above 3. 4. He drew a sight draft on A. W. Dunham for |1020, in favor of J. A. Hazard. 8. He drew a sight draft on W. F. Gordon for |250, in favor of H. J. King, City Treasurer, in payment of taxes now due. 10. He drew a 10-da. draft on W. F. Gordon for $165.20, in favor of Howe & Co. 12. He drew a sight draft on D. E. Sumner for $250, in favor of Mercer & Co. 15. He drew a sight draft on A. W. Dunham for $424.50, in favor of E. R. Maxon, in payment of his note and interest. Face of the note, $420 ; mterest, $4.50. 19. R. H. Weller remitted a sight draft on R. W. Owens for $472.50, in payment of his note and the interest. Face of the note, $460 ; interest, $12.50. 22. He drew a sight draft on D. E. Sumner for $500, in favor of R. W. Owens. 24. He drew a sight draft on Ware & Co. for $104.25, in favor of Fred H. Kerns, Agt., for a freight bill now due. 27. He drew a sight draft on W. F. Gordon for $50, in favor of R. W. Owens. 30. He drew a 30-da. draft on Ware & Co. for $237.50, in favor of R. W. Owens. 232 BOOKKEEPIKG Incoming Business Forms for October Before beginning the business practice for October, read the explanatory note preceding the Incoming Business Forms for September, page 209. Form 43. Note of Frank Moore & Son, City, dated Oct. 1, drawn in favor of your firm, with interest at 6%, payable in 60 da. at The Union Bank, $500. Form 44. Invoice of Walter L. Mann & Co., Boston, dated Sept. 29. Terms: 10 da. draft, less 1%. Items as follows: 50 bx. Mucilage 50 cases C. Baking Powder Deduct the 1% discount. Form 45. Draft of Walter L. Mann & Co., Boston, dated Sept. 29, drawn on your firm, in their own favor, at 10 days' sight, for the net amount of the above invoice. Form 46. Draft at 10 days' sight, drawn by Smith, Perkins & Co., New York, Sept. 29, on your firm, in favor of themselves, for |750. Form 47. Check of Salisbury, Gray & Co., Rochester, dated Oct. 1, drawn on Traders National Bank, in favor of your firm, for |602.37. Form 48. Check of D. L. Hinman & Co., City, dated Oct. 2, drawn on Traders National Bank, in favor of your firm, for $632.05. Form 49. Invoice of Geo. H. Buell & Co., City, dated Oct. 3. Terms : a 30-day note in 10 da., with interest at 6 %. Items as follows: 100 bu. N. Y. Medium Beans 150 bx. E. Apples 500 lb. E. Raspberries Form 50. Sight draft of D. W. Smith & Co., New York, dated Oct. 2, drawn on your firm, in favor of themselves, for |900, and indorsed by them to the First National Bank, New York. Transferred by the First National Bank to The Union Bank of your place, W. O. King, Cashier. Form 51. Draft of The Union Bank, City, on Chemical National Bank, New York, dated Oct. 3, drawn in favor of your firm, for $500, W. B. Frey, Cashier. Form 52. Check of Frank Moore & Son, City, dated Oct. 2, drawn on Traders National Bank, in favor of your firm, for $348.14. Form 53. Sight draft of T. B. Welch & Co., Medford, dated Oct. 2, on D. O. Mosher, City, drawn in favor of your firm, for $79.60. Form 54. Q. O.D. envelope. Data as follows : cash inclosed, $80.32. Goods were shipped by your firm to W. M. Beach, Pittsfield, Sept. 28. See note under Form 30, page 212. SET VI. WHOLESALE GROCERY 233 Form 55. Draft of Traders National Bank, Albany, on Chemical National Bank, New York, dated Oct. 3, drawn in favor of J. D. Manning and transferred to your firm by full indorsement, for 1919.24, D. O. Morehouse, Cashier. Form 56. Invoice of Bates, Aldrich & Co., Boston, dated Oct. 3. Terms : 3/5, net 30 da. Items as follows : 200 l-lb. cans Huyler's Cocoa 100 bbl. S. P. Flour Form 57. Draft of The Union Bank, City, dated Oct. 4, drawn on Chemi- cal National Bank, New York, in favor of your firm, for $500, W. B. Frey, Cashier. Form 58. Sight draft of D. W. Smith & Co., New York, dated Oct. 3, on your firm, in favor of C. W. Mobray, City, for |300. Form 59. Invoice of Smith, Perkins & Co., New York, dated Oct. 3. Terms : 5/10, net 30 da. Items as follows : 100 bags P. R. Coffee 100 half chests F. 0. Tea 50 half chests C. J. Tea Form 60. Olney P. Davis & Co.'s draft, dated City, Oct. 5, at 1 day's sight, on Arthur M. Black, in favor of themselves, for $75.96. Form 61. Check of F. W. Earl & Co., Weedsport, dated Oct. 4, drawn on Traders National Bank, in favor of your firm, for $1605.48. Form 62. Invoice of Walter Baker & Co., New York, dated Oct. 4. Terms : 3/5, net 30 da. Items as follows : 500 l-lb. cans Baker's Cocoa 100 bx. Baker's Chocolate Form 63. Invoice of Gray, Dunkle & Co., Chicago, dated Oct. 4. Terms : 3/10, net 30 da. Items as follows: 50 bbl. Br. C Sugar 100 bbl. Wh. C Sugar 25 half chests M. Y. H. Tea Form 64. Draft of Traders National Bank, Dansville, on Chemical National Bank, New York, dated Oct. 5, drawn in favor of W. D. Greene and transferred to your firm by full indorse- ment, for $262.15, W. E. Traver, Cashier. Form 65. Check of W. D. Packard & Co., City, dated Oct. 6, drawn on Traders National Bank, in favor of your firm, for $586.53. Form 66. Sight draft of Salisbury, Gray & Co., Rochester, dated Oct. 5, drawn on J. E. Seel & Co., in favor of your firm, for $76.42. 234 BOOKKEEPING Memoranda of Transactions for October • Monday, Oct. 1 The following orders were received in this morning's mail. 1. From F. W. Earl & Co., Weedsport : 25 half chests F. 0. Tea 10 bx. W. L. Soap 25 half chests C. J. Tea 10 bbl. F. G. Sugar Fill the order. Terms : 2/5, net 30 da. 2. From J. D. Manning, Albany : 10 bbl. St. A Sugar 10 bu. IST. Y. Medium Beans 5 bbl. F. G. Sugar 10 bx. H. 0. Oatmeal 25 doz. bottles M. Pickles 25 bx. H. L. Chocolate 50 bx. L. L. Raisins 25 bx. E. Chocolate Drops 5 bales G. M. Coffee 5 pails No. 1 Mackerel 10 bx. E. Apples 10 bx. Butter Color Fill the order. Terms : 2/5, net 30 da. 3. From R. D. Fowler & Co., City : 5 bbl. S. P. Flour 3 bx. Butter Color 5 bbl. R. P. Flour 3 bbl. C. R. Oatmeal 20 bx. C. Codfish Fill the order. Terms: sight draft in 5 da. for the amount of the bill, less 2%. Draw a sight draft, date it ahead 5 da., and place it in the Business Cash envelope. Deduct the discount on the invoice and in the sales book. Do not count this draft in proving cash. The Union Bank informs you that the note of Walter L. Parker, left for collection on Sept. 26, has been credited to your account at its face value. Discount at The Union Bank Benton Bros. & Co.'s note, bought by your firm of A. J. Weaver & Co., and receive credit for the proceeds. Form 7. Receive of Frank Moore & Son their note, at 60 da., with interest at 6%, for $500, Form 43. The Enterprise Carting Co. has just delivered to you the goods ordered of Walter L. Mann & Co. on Sept. 26. Look up the invoice. Form 44, and handle it in the regular way. Take the draft which they inclosed. Form 45, and accept it. Place the draft in an envelope, properly addressed, and hand it in. SET VI. WHOLESALE GROCERY 235 An order has just been received from Clinton, Jones & Co., Allston, for the following : 10 bx. Mucilage 10 half chests M. Y. H. Tea 10 cases C. Baking Powder 10 bales G. M. Coffee 10 bbl. St. A Sugar 10 bags P. R. Coffee Fill the order. Terms : 2/5, net 30 da. Write letters, ordermg the following goods : 1. Of Walter Baker & Co., New York : 500 1-lb. cans Baker's Cocoa 100 bx. Baker's Chocolate 2. Of Smith, Perkins & Co., New York : 100 bags P. R. Coffee 100 half chests F. 0. Tea 50 half chests C. J. Tea In a communication received from Smith, Perkins & Co. this morning there was a draft at 10 days' sight on your firm, in favor of themselves, for $750, Form 46. Accept the draft and inclose it in the above letter. 3. Of Gray, Dunkle &; Co., Chicago : 50 bbl. Br. C Sugar 100 bbl. Wh. C Sugar 25 half chests M. Y. H. Tea Inclose your check in payment of the invoice of Sept. 26, less 3%, and the proceeds of your note, in their favor, due Oct. 12. Deduct the discount from the face of the note, add the proceeds of the note to the net amount of the bill, and write a check to cover the total amount. Have the letter approved before inclosing the check. Write Bates, Aldrich & Co., Boston, ordering the following goods : 200 1-lb. cans Huyler's Cocoa 100 bbl. S. P. Flour Telephone Geo. H. Buell & Co., City, the following order : 100 bu. N. Y. Medium Beans 150 bx. E. Apples 500 lb. E. Raspberries An order has just been received from Williams, Harmon & Co., Troy, for: 200 1-lb. cans Baker's Cocoa 25 bx. Baker's Chocolate 25 half chests F. 0. Tea 25 half chests C. J. Tea 10 bbl. S. P. Flour Fill the order. Terms : 2/10, net 60 da. Give Smith, Perkins & Co. a check for the invoice of Sept. 10, less S%. The amount of the mvoice is 1947.60. 236 BOOKKEEPING Take the draft drawn on F. E. Rogers on Sept. 25 from your Business Cash envelope, indorse it properly, and deposit it in the bank. Deposit all currency and the check on hand. Make out a daily statement and hand it in. Post. Hand all books to the instructor for approval. Tuesday, Oct. 2 The following orders were received in this morning's mail. Fill each in the regular way. Terms : 2/5, net 30 da. 1. From W. L. Anderson, Perth Amboy : 25 half chests M. Y. H. Tea 10 bbl. Br. C Sugar 10 bbl. Wh. C Sugar 10 bales G. M. Coffee 10 bbl. S. P. Flour 2. From W. D. Greene, Dansville : 25 bx. E. Apples 50 bu. N. Y. Medium Beans 250 lb. E. Easpberries Draw by a cash check for office expenses, |125. Ask for $5 in change. Pay cash for repairing the wagons, ^9- Pay D. W. Simpson & Co. by check for the invoice of Sept. 27, less 3%. Write a letter and inclose the check. Receive a check of Salisbury, Gray & Co., Rochester, in payment of the invoice of Sept. 28, less 3%, Form 47. A telegraphic order has just been received from W. C. Holbrook & Co., Resort, for: 10 bags P. R. Coffee 10 bales G. M. Coffee 20 half chests C. J. Tea Ship the above to the order of The Union Bank, less 2%. Deduct the discount on the bill and in the sales book- Enter in the sales book as a C.O.D. item. Draw a sight draft in favor of yourself, indorse it, attach to the bill of lading, and leave it with your bank for collection. Receive of D. L. Hinman & Co. their check, in payment of the invoice of Sept. 27, less 2%, Form 48. Engage W. O. Warner as traveling salesman at a salary of |125 per month and expenses. Give him a check for |100 to cover expenses on a trip through adjacent territory. SET VI. WHOLESALE GROCEKY 237 Engage F. E. Ramsey, who has been assisting in the shipping room for several days, as general assistant, at a salary of |10.50 per week, beginning Oct. 1. Pay him cash for services to date, |4. Pay by check S. E. Waldorph for cooperage, $16.50. Deposit the checks on hand. Collection, J^% on the check of Salis- bury. Gray & Co. Make out a daily statement. Post. Hand all books to the instructor for approval. Wednesday, Oct. 3 Goods ordered of Geo. H. Buell & Co. on Oct. 1 have been de- livered, Form 49. Pay a sight draft of D. W. Smith & Co., in favor of themselves, by check, |900, Form 50. The draft is presented to you by The Union Bank, and you make your check payable to that institution. Remit Walter L. Mann & Co., Boston, a New York draft, to apply on account, |500, Form 51. Buy the draft by check. Exchange, 25(^. Indorse the draft. A note in favor of Boyd, Evans & Co. is due to-day, payable at The Union Bank. Issue a check in payment. Receive of Frank Moore & Son, City, their check, in payment of the invoice of Sept. 29, less 2%, Form 52. The letter inclosing the above check contained the following order : 100 1-lb. cans Huyler's Cocoa 15 bbl. S. P. Flour 20 bx. E.. Apples 250 lb. E. Raspberries 25 bu. N. Y. Medium Beans 10 bbl. Wh. C Sugar Fill the order. Terms : 2/5, net 30 da. Draw a sight draft on Fred W. Hill & Co., Rome, in favor of your firm, for $300. Place the draft in the Business Cash envelope, and write a letter to Fred W. Hill & Co., informing them of the draft drawn on them at sight through your bank. Credit Fred W. Hill & Co. in the cashbook, as they have agreed to honor the draft on presentation. Fill an order just received from Williams, Harmon & Co., Troy, for : 15 bbl. L. L. Salt 15 bbl. S. P. Flour 25 half chests C. J. Tea 10 bbl. Br. C Sugar Terms: 2/10, net 60 da. 238 BOOKKEEPING T. B. Welch & Co., Medford, order: 20 bbl. N. O. Molasses 20 bbl. P. K. Molasses 10 bbl. F. G. Sugar 5 bbl. L. Starch Fill the order. Terms: 2/10, net 60 da. Inclosed in the above letter was a sight draft on D. O. Mosher, City, in your favor, for $79.60, to apply on account. Form 53. Credit T. B. Welch & Co. in the cashbook, as D. O. Mosher has agreed to honor the draft on presentation. Place the draft in the Business Cash envelope. Receive returns from the C.O.D. shipment to W. M. Beach, Pitts- field, Form 54. Deposit the sight draft of T. B. Welch & Co., the draft drawn on Fred W. Hill & Co., the check received from Frank Moore & Son, and the returns from the C.O.D. shipment to W. M. Beach. -J^^ collection on the draft on Fred W. Hill & Co. Make out a daily statement. Post. Hand all books to the instructor for approval. "Thursday, Oct. 4 The following orders were received in this morning's mail. 1. From John P. Kennedy & Co., City : 2 half chests C. J. Tea 10 pails No. 1 Mackerel 5 cases E,. Baking Powder 5 bbl. C. R. Oatmeal 6 bx. H. L. Chocolate 10 bx. C. Raisins 5 bu. N. Y. Medium Beans 5 bbl. N. 0. Molasses 20 bx. C. Codfish 10 bx. Wool Soap The references are satisfactory and you fill the above order, quoting your regular terms : 2/5, net 30 da. 2. From W. W. Williams, City: 5 half chests F. 0. Tea 2 bbl. H. W. Starch 10 bags Ice-cream Salt 25 pkg. N. Yeast Cakes 5 bx. W. L. Soap The references are satisfactory and you fill the order. Terms: 2/5, net 30 da. Receive from J. D. Manning, Albany, a New York draft, in settlement of the invoice of Oct. l,.less 2%, Form 55. The Enterprise Carting Co. has delivered to you the goods ordered of Bates, Aldrich & Co. on Oct. 1, Form 56. SET VI. WHOLESALE GKOCERY 239 Buy of The Union Bank a New York draft, by check, and remit it to D. W. Smith & Co., New York, to apply on account, $500, Form 57. Exchange, 25^. Remit Smith, Perkins & Co., New York, a check for the invoice of Sept. 24, less 5%. Deposit the New York draft received from J. D. Manning. Make out a daily statement. Post. Hand all books to the instructor for approval. Friday, Oct. 5 Pay D. W. Smith & Co.'s sight draft, on you, in favor of C. W. Mobray, by check, $300, Form 58. The Enterprise Carting Co. has just delivered to you the goods ordered of Smith, Perkins &; Co. on Oct. 1, Form 59. The following orders were received this morning, and are to be filled in the regular way. Terms : 2/5, net 30 da. 1. From Frank Moore & Son, City : 10 bbl. 0. Crackers 10 bbl. C. S. Crackers 5 bx. C. Codfish 10 bbl. R. P. Flour 2 bbl. P. R. Molasses 2. From F. E. Rogers, City : 10 bbl. 0. Crackers 5 bbl. C. S. Crackers 2 bags P. R. Coffee 2 bales G. M. Coffee 10 bx. E. Chocolate Drops Accept, payable at The Union Bank, for the private account of Arthur M. Black, Olney P. Davis & Co.'s draft in favor of themselves, at 1 day's sight, for $75.96, Form 60. This draft is the outcome of some matter connected with the private business of Arthur M. Black, and the sum is charged directly to his private account. Enter in the journal and the bill book. A call has just come over the telephone from L. H. Pierson, City, for : 3 bbl. 0. Crackers 10 bags Ice-cream Salt 5 bbl. C. S. Crackers 5 bx. Wool Soap 3 bbl. R. P. Flour 3 bbl. F. G. Sugar 5 bx. Butter Color 3 mats F. J. Coffee He offers to accept your draft at 20 da. from date of the bill for the amount. Fill the order. Draw a draft at 20 da. from date, in favor of your j&rm, indorse it, and leave it with the bank for collection. Make the proper records in the journal and the bill book. 240 BOOKKEEPmG Pay John Sampson cash, for carpenter work in making repairs in the store, $7.50. Pay Roby Real Estate Co. by check, for rent of the store for October, $300. Charge the Rent account in the cashbook. Pay Wm. Jennings by check, for keeping and feeding horses, |29. Receive a check from F. W. Earl & Co., Weedsport, in payment of the invoice of Oct. 1, less 2%, Form 61. Deposit the check just received. Collection, ^V %• Make out a daily statement. Post. Hand all books to the instructor for approval. Saturday, Oct. 6 Your team has delivered the goods ordered of Walter Baker & Co. on Oct. 1, Form 62. The Enterprise Carting Co. has delivered the goods ordered of Gray, Dunkle & Co., Chicago, on Oct. 1, Form 63. Fred O. Wolven, City, telephones for the following goods : 1 bbl. 0. Crackers 1 bbl. F. G. Sugar ■ 1 half chest F. 0. Tea Because of some special dealing with Mr. Wolven, the goods are furnished to him at cost prices. Terms : on account. Receive a New York draft from W. D. Greene, Dansville, in payment of the bill of Oct. 2, less 2%, Form 64. Pay salaries for the week in cash as follows : Albert B. Curtis $25. Edward McDorman 10. F. E. Ramsey 10.50 Receive a check from W. D. Packard & Co., City, in payment of the invoice of Sept. 29, less 2%, Form 65. The following orders, which were received in this morning's mail, are to be filled in the regular way. Terms : 2/5, net 30 da. 1. From D. L. Hinman & Co., City : 2 bags P. R. Coffee 5 bbl. S. Pastry Flour 2 bales G. M. Coffee 5 bx. C. Codfish 5 bbl. 0. Crackers 5 bbl. N. 0. Molasses 5 bbl. C. S. Crackers 5 bbl. P. R. Molasses. SET VI. WHOLESALE GROCERY 241 2. From James K. Lusk, City : 15 bbl. 0. Crackers 6 bbl. C. S. Crackers 3 bbl. St. A Sugar 6 bu. N. Y. Medium Beans 1 bbl. H. W. Starch 5 pkg. S. Yeast Cakes 3 half chests M. Y. H. Tea 3. From Salisbury, Gray & Co., Rochester : 8 bbl. St. A Sugar 15 bbl. C. Soda Crackers 10 bbl. Br. C Sugar Salisbury, Gray & Co. inclose a sight draft in your favor, on J. E. Seel & Co., City, for $76.42, to apply on account. Form 66. Write a letter to J. E. Seel & Co., inclosing the above draft to apply on account. Pay for postage, etc., in cash, $7.50. The acceptance in favor of Olney P. Davis & Co. is due to-day, pay- able at The Union Bank. Issue a check in payment. Albert B. Curtis, your shipping clerk, has made application for a position with Perry, Mason & Co., Boston. The position with that firm promises to develop an excellent future for Mr. Curtis, and you have decided to aid him in securing the place. Write a letter of recommen- dation for Mr. Curtis, placing a high estimate on his integrity and general business ability. SUGGESTIONS BEARING UPON LETTERS OF RECOMMENDATION 1. Avoid exaggerated expressions. They injure the one recommended. 2. Be thoroughly acquainted with the qualities of which you speak. 3. Recommend only those who are worthy of some praise. 4. Be sincere ; do not entirely pass over defects when you know that they exist. 5. Generally speaking, do not write a letter of recommendation addressed, To whom it may concern, as such a letter cannot give a specific commendation. 6. Aim to be original in your expressions. 7. A good letter of recommendation usually conforms with the following arrange- ment of thoughts : Paragraph No. 1 : Introduction. Paragraph No. 2 : General estimate of character and ability. Paragraph No. 3 : Brief summary and courteous closing. Give Geo. H. Dobbin a check, for private use, |25. Student withdraws by check, from the busmess for private use, |50. Deposit the check, the New York draft, the sight draft on R. D. Fowler & Co., and all the currency on hand. 242 BOOKKEEPING Make out a daily statement and have it examined. Post. Proceed to adjust the interest on the Proprietors' accounts, preparatory to making the statements and closing the general ledger. HOW TO ADJUST INTEREST BETWEEN PARTNERS 1. The investments were all paid on Sept. 15. Determine the exact number of days from that date to Oct. 6. Find the interest on each investment for this time. 2. The private accounts were credited for salaries Sept. 29. Determine the exact number of days from that date to Oct. 6. Find the interest on each private account credit for this time. 3. Find the total interest due the partners. 4. Find the interest on each man's withdrawals from the time of such with- drawals to Oct. 6. 5. Find the total interest due the business from the withdrawals of the partners. 6. Find the difference between the two totals above. This sum is the net interest due the partners from the business. 7. Next, find the difference between the total interest due each and the total interest to be charged to each. These sums represent the amounts to be credited to each partner and debited to Interest account. This interest does not properly belong to the regular Interest account, since that account is intended solely for interest arising from transactions with others. HOW INTEREST DUE ON THE PROPRIETORS' ACCOUNTS MAY BE KEPT OUT OF THE REGULAR INTEREST ACCOUNT In this set gains and losses are to be shared equally ; therefore one third of any sum placed in the Interest account will finally be transferred to the opposite of the proprietors' accounts when the proper shares of profits or losses are carried to these accounts. For example : Suppose the total interest due the partners is $60. Of this sum there is due A $17, B $21, and C $22. If this was entered on the books it would appear as follows : Interest $60 A $17 B 21 C 22 If the $60 interest was to be closed to Loss and Gain and then distributed to the partners as a cost to the business, each partner's gain would be decreased $20, or his loss increased $20. Then we should have : 1. A's debit is $20, and his credit $17. He owes the business $3. 2. B's debit is $20, and his credit $21. The business owes him $1. 3. C's debit is $20, and his credit $22. The business owes him $2. Instead of this, one entry will adjust the interest between partners, as follows : A $3 B $1 C 2 SET VI. WHOLESALE GROCERY 243 On this basis of reasoning, make the proper entry to adjust the interest on the proprietors' accounts in the business. Have the entry approved before posting it to the ledger. Closing the Work for October 1. Close the cashbook. Proceed carefully and study the model cash- book. Post the summary of the cashbook. 2. Rule and foot the sales book and make the proper entry. Post the entry. 3. Rule and foot the journal and make the proper entry. Post the entry. 4. Rule and foot the invoice book and make the proper entry. Post the entry. 5. Prove the sales ledger. (See model, page 229.) 6. Prove the purchase ledger. (See model, page 229.) 7. Have your abstracts approved by the instructor. 8. Make a trial balance from the general ledger and have it approved. 9. The following is a statement of the inventories. Inventories. October 6, 19 — Merchandise (Resource) : Per schedule on file $24057.59 Merchandise (Liability) : Due Enterprise Carting Co. for freight and cartage to date $339.45 Horse and Wagon : Cost $525. Depreciation 5.25 $519.75 Rent: Due for subrentals ■*15. Unexpired rent 225. $240. Insurance : Unexpired premiimi $195. Office fixtures : Cost $1920. Depreciation 192. $1728. 244 BOOKKEEPING Expense (Resource) : 2 tons Coal *9. Stationery, etc. 6.50 $15.50 Expense (Liability) : Unpaid gas bill *15.69 Due proprietors on salary 68.75 Due traveling salesmen on salary 31.50 Due Bell Telephone 5 Co. 9.50 $125.44 10. Make a statement of losses and gains and have it approved. The following is suggestive of the form for the statement of losses and gains in this set. Statement of Losses and Gains, October 6, 19 — Mdse. bought of A. J. Weaver & Co, Mdse., regular purchases to Oct. 6 Freight and drayage paid to date 120. Freight and drayage due to date, per inv. 390. Mdse. sales to date Mdse. on hand, per inv. Gain on Mdse., carried down Gain on Mdse., brought down Expense, total per ledger 790. Expense, unpaid items, per inv. 340. Expense, total outlay 1130. Expense, less items on hand, per inv. 120. 14500 21.500 510 4860 90 10 24170 17200 90 10 41371 41371 1010 270 10 50 17 120 15 160 3207 50 50 10 4860 10 Mdse. Disc, on purchases 120. Mdse. Disc, on sales 390. Interest allowed to us 10. Interest allowed by us 20.50 Insurance, paid premium 340. Insurance, unexpired premium 290. Coll. and Exch., total outlay Rent, paid to date 420. Rent, unexpired 250 Rent, due for subrentals 50 300. Depreciation a. Horse and Wagon, on account of use b. Office Fixtures, on account of use Net gain of the firm 4860 10 4860 10 11. Make a statement of resources and liabilities and have it approved. The following is suggestive of the form for the statement of resources and liabilities in this set. SET VI. WHOLESALE GROCERY 245 Statement of Resources and Liabilities, October 6, 19- Cash iu bank Properties classified as follows : Good Will, estimated value Mdse., per inv. Mdse., unpaid freight and cartage Horse and Wagon, cost Horse and Wagon, depreciation Office Fixtures, cost Office Fixtures, depreciation Expense, unpaid items, per iuv. Expense, per inv. Insurance, unexpired premium Rent, unexpired Rent, due from subrentals Accts. Receivable, per sales ledger Bills Receivable Accts. Payable, per purchase ledger Bills Payable Total resources Total liabilities Edw. S. Rose, Priv. Acct. H. A. Lester, Priv. Acct. Benj. F. Custer, Priv. Acct. Capital of the firm Net gain of the firm 17200.10 390. 555. •15. 1960. 160. 340. 120. 250. 50. 4357 2000 16810 540 1800 290 300 7200 200 33497 100 33597 10 10 10 220 9020 750 9990 138 261 20000 S207 33597 12. Make a statement proof and have it approved. 13. Close the general ledger. Distribute the net gain or the net loss to the partners' private accounts. The firm account should not be closed. Bring down all inventories below the rulings under Oct. 8. 14. Prove the bill book. 15. Close all accounts in the sales ledger and the purchase ledger which balance. 16. Hand in all books for examination and approval. This set will now be discontinued to afford the student additional practice along somewhat different lines of work. Draw a check in favor of the instructor for the amount to the credit of your firm in The Union Bank, and hand it in. Also hand in everything in the Personal Cash envelope. Remember the monthly statement of your bank account. 246 BOOKKEEPING EXERCISE 61 A Writtex Review The following review exercise is suggested : The following is the trial balance of an msolvent business in which the proprietors have equal investments : John H. Reader, Prop. $1250 H. J. Cuiiy, Prop. 1250 Cash $880.20 Merchandise 3350, Accounts Receivable 2404. Bills Receivable 2065.80 Furniture and Fixtures 850. Expense 2062.90 Interest 26.10 Accounts Payable 7400 Bills Payable 1739 $11639. $11639 The following is a summary of the resource and liability inventories ; Furniture and Fixtures, > on hand $875. Expense, items on hand 167.25 Unpaid telephone bill 21.70 Merchandise, on hand 1500. Unpaid freight bill 67.25 Interest accrued on Bills Pay. 5.60 Interest accrued on Bills Rec. 7.80 a. Make the usual statements and the proof. b. What will the business pay on the dollar, that is, what per cent ? EXERCISE 62 SET H. CARPETS Directions. Record the following transactions in the journal, the cash- book, the sales book, and the purchase book ; post to one ledger ; take a trial balance ; make the two statements, using the forms given in Set VI ; close the ledger ; take a trial balance after closing. The mvestments of the partners are equal, and the losses or the gains are to be shared equally. The firm name is to be Student & Fox. Use loose sheets of journal paper and ledger paper for recordmg the transactions. Do not use special columns in the cashbook or the journal. Note. This set is to be finished without assistance from the instructor. A WRITTEN REVIEW 247 May 1. Student and Henry I. Fox begin the Carpet business with the following resources and liabilities : Cash on hand, $1000 Cash on deposit in The Union Bank, $750 A. K. Johnson's note, $240 Interest accrued on the above note, $10 The following owe them on account : Reader & Co., $350 Ray S. Baker, $525 0. H. Barker, $225 A note in favor of John F. Carrier, $485.50 Interest accrued on the above note, $14.50. 2. Buy of Howard S. Crane, on account, 2% 10 da. : 300 yd. Moquette at $1.25 250 yd. Brussels at $1.10 400 yd. Ingrain at 58^ 2. Sell Donald & Son, for cash : 100 yd. Moquette at $1.50 50 yd. Ingrain at 80^ Receive their check for the amount of the bill. 4. Give A. G. Curry a check for $35.50, for office books and supplies. 5. Draw a sight draft on Reader & Co., ui your own favor, for $250, and leave it at the bank for collection. 6. Receive of Ray S. Baker his note at 10 da., with interest, for $200. 8. Sell Frank S. Brady on account : 100 yd. Brussels at $1.35 100 yd. Ingrain at 80^ 9. Buy of David S. Wells on account : 500 yd. Matting at 47(^ 10. Pay Howard S. Crane by check, for the invoice of May 2, less 2% 11. Sell Wm. H. Garland on account, 1% 10 da.: 150 yd. Matting at 60^ 100 yd. Ingrain at 78^ 12. Your bank reports the collection of the draft left on May 5. Collection, J^^^. 12. Buy an office safe of the Howard Safe Co. for $90. Give them your sight draft on Ray S. Baker for the amount of the bill. 13. Receive of Reader & Co. their note at 30 da. for $100. 15. Give David S. Wells your sight draft on Ray S. Baker for the invoice of May 9. 15. Receive of Frank S. Brady a sight draft on Meeker & Co. for $100, and his check for $115, for the invoice of May 8, 248 . BOOKKEEPING May 16. Receive of Ray S. Baker a New York exchange for his note and the interest, due to-day. 17. Sell Ford & Co. on account, 1% 10 da. : 100 yd. Moquette at $1.50 100 yd. Matting at 60<^ 18. Give each partner a check, for personal use, |50. 19. Receive of Wm. H. Garland his check for the invoice of May 11, less 1%. 20. Receive of A. K. Johnson cash, for his note and the interest, due to-day. Face of the note, $240 ; interest, $10.75. 23. Draw a sight draft on O. H. Barker, in your own favor, for $225, and leave it at the bank for collection. 24. Buy of Howard S. Crane on account, 2% 10 da.: 100 yd. Moquette at $1.25 100 yd. Brussels at $1.10 25. Give John F. Carrier your check for your note and the interest, due to-day. Face of the note, $485.50 ; interest, $16.45. 25. Sell Frank S. Brady on account : 50 yd. Moquette at $1.50 50 yd. Brussels at $1.35 100 yd. Matting at 60<^ 26. Sell Wm. H. Garland on account, 1% 10 da.: 50 yd. Moquette at $1.55 100 yd. Brussels at $1.35 26. Receive of Ford & Co. their sight draft on Henry F. Grady for the invoice of May 17, less 1%. 27. Sell Ford & Co. on account, 1% 10 da. : 100 yd. Matting at 60^ 29. Your bank reports the collection of the draft left on May 23. Collection, ^-^^0- 30. Buy of Henry W. Elson on account : 100 yd. Matting at 47^ 31. Give Harry S. Carmen a check for his monthly salary, $30. Inventories, May 31, 19 — Merchandise : 100 yd. Moquette at $1.25 150 yd. Ingrain at 58^ 100 yd. Brussels at $1.10 150 yd. Matting at 48^ Expense : Office Books and Stationery, $30 Office Safe at cost, less %10. PART III. ADVANCED WORK SET VII. DRY-GOODS BUSINESS The Object of this set is to illustrate, as concisely as possible, a system of bookkeeping which, with slight modifications, may be adapted to the general routine of a wholesale or a jobbing dry-goods house. No at- tempt is made to enter into an explanation of the minor details of bookkeeping, which are different in all large dry-goods houses. Some of the special features of this set are : 1. Suggestions bearing upon general business correspondence. 2. The introduction and the use of the Cash Suspense account, and the significance of Protest as applied to commercial paper. 3. A more complete explanation and illustration of special columns. 4. The use of the Power of Attorney. 5. A personal account closed into the Loss and Gain account. 6. A classification of the Merchandise account. 7. An illustration of goods returned, both a purchase and a sale. The following books are used : the cashbook, the sales book, the in- voice book, the journal, the general ledger, the sales ledger, the purchase ledger, and the bill book. The cashbook used in this set is essentially the same as the one explained and illustrated in Set VI, but several new special columns have been added. The Bills Receivable column on the left side of the cashbook is for the cash received for notes and acceptances paid or discounted. Only the total of this column is posted. Such a column may be used when a large number of notes are received on account. The Bills Payable column on the right side of the cashbook is for the cash paid for our notes and acceptances. Only the total of this column is posted. Such a column may be used when our notes and accept- ances are given frequently on account. Owing to the introduction of the classified Merchandise account, the totals of the Merchandise Discount columns, in the cashbook, are closed under the names Merchandise Sales and Merchandise Purchases^ and posted to the ledger accounts bearing these names. Make a careful study of the cashbook illustrated on pages 250 and 251. 249 250 BOOKKEEPING Cash Receipts, November, 19- ACCTS. RECEIVABLE DATE F ACCOUNT CREDITED EXPLANATION BILLS DISC. RECEIVABLE DR. NET CASH Nov. 19 Balance In bank 5000 20 21 F. Cole In full, less 3% 100 90 3262 57 24 16 J. H. Miner On account 900 26 \/ Bills Rec. J. Miner's note 900 26 6 Interest On above 50 27 17 C. B. Gray Inv. 11/16, 2% 20 980 28 v/ Bills Rec. Daniel's note 500 28 s/ Bills Rec. Osborn's note 250 29 18 Green & Co. On account 1210 29 19 D. M. Snow Inv. 11/14, 2% 10 490 30 \/ Bills Rec. M. D. Cobb's note 600 30 4 Mdse. Sales, Dr. Total discount on sales 130 m 30 30 8 8 To Accts. Rec. Accts. Rec. Receipts 130 JO 6842 6842 57 57 30 6 Bills Rec. Total paid ■ 2250 2250 / 1 14142 ~E- Special Columns in Sales Book and Invoice Book. The sales book used in many wholesale and jobbing dry-goods houses is provided with special columns for the several departments of the business. These columns are indispensable when a special Merchandise account is used for each depart- ment. When these departmental accounts are kept, the invoice book should be provided with special columns for the several departments. Note. When accounts with the several departments of a business are kept, they are debited with their approximate share of the general expenses of the concern. This, in most cases, means an additional number of special columns in the cashbook. The inven- tories belonging to each department will then be recorded separately, and the several departmental accounts closed separately into a general Merchandise account ; or directly into the Loss and Gain account, if there are no goods kept in stock except those covered by the different departments. SET VII. DRY GOODS 251 Cash Payments ,N ovem ber, 19 F ACCOUNT DEBITED EXPLANATION ACCTS. PAYABLE EXPENSE COLL. AND EXCH. BILLS PAYABLE GENERAL DATE DISC. CR. NET CASH 1 Nov. 18 19 20 21 22 23 23 24 24 24 25 25 23 28 29 29 30 30 30 30 30 30 30 s/ 31 30 5 2 v' \f 6 29 6 V 32 34 y/ 4 2 4 8 Expense Stamps Expeuse Coal bill Mason & Co. Inv. 11/16, 2% Ely & Co. Inv. 11/19, 2% Salary For week Trav. Exp. W. Conway Coll. and Ex. On checks Bills Pay. Favor S. Lake Bills Pay. Favor H. May Interest On above iMay & Co. Inv. 11/18, 4% Coll. and Ex. On above Interest Daniel's note Bills Pay. Favor D. Keys Expense Gas bill W.K.Gay Private use Low & Co. On account Henry & Co. On account Coll. and Ex. On checks Accts. Pay. Total disc, on To Mdse. Purchases Cr. Accts. Pay. Payments Expense Total 40 38 60 138 138 1960 1862 1440 220 200 10 9 17 50 50 4 1 92 75 20 1200 200 500 140 200 10 14 100 5682 37 10 5682 37 30 30 30 7 3 Coll. and Ex. Total Bills Pay. Total paid Balance In Bank 6 87 6 1900 6052 87 1900 60 14142 57 Incoming Business Forms for November The student is requested to read the instructions given on page 209, preceding the hst of business forms for September. The instructions there given apply to the work for Set VII. A tablet of business forms containing all the incoming papers is prepared for Set VII, if business practice is used. If the tablet is not used, prepare the following forms : Form 1. Power of attorney by which A. J. Morley & Co. confer upon you the right to sign and indorse their notes, checks, other negotiable paper, etc. Use legal cap paper. (See Form VI, Appendix F.) 252 BOOKKEEPING Price List for November and December American Black Dress Silk Amazon Cloth Barjeon Cashmere . . . Black English Camel's Hair Black Wool Lansdowne Black Wool Cr^pon . . . Bengaline Silk Bone Buttons Boys' Heavy Cotton Hose . Black Chantilly Lace . . Corticelli Silk Cotton Surah Lining . . Duchesse Lace Feather Ticking .... Fancy Wool Cheviot . . Fine English Serge . . . Fancy Plaids, all wool . . Fancy Boucle Stripe . . . Fancy Black Ribbon . . . Fancy Gingham .... Gilt Buttons Gunner's Duck Grosgrain Ribbon .... Jet Buttons ...... Ladies' Cashmere Hose . . Linen Torchon Lace . . . Ladies' Kid Gloves . . . Men's Kid Gloves .... Marquise Lace Men's Balbriggan Half Hose Percale Shirting .... Scotch Cheviot Striped Denim .... Simpson Mourning Print . Taffeta Silk Thompson Thread . . . Venetian Crape Cloth . . Velvet Ribbon Wash Silk Wamsutta Cotton . . . Whalebones QUANTITY yd. gro. doz. pc. doz. spools yd. pc. yd. pc. yd. gro. yd. pc. gro. doz. doz. pc. doz. pc. doz. yd. doz. spools yd. pc. yd. doz. ^1.00 .98 1.12^ 1.50 .52 1.50 .85 .11 1.00 .66| .87^ .50 2.25 .05^ 1.12^ 1.37^ .32 .12^ 2.75 .061 1.87^ .14 1.12^ 2.40 2.75 .86 7.50 7.00 1.75 5.50 .07^ .37^ .08 .05^ .87^ .43 • .871 2.121 .31 .31 .95 SELLING PRICE $1.25 1.25 1.37^ 1.87^ .68 2.00 1.10 .14 1.25 .90 1.05 .62 3.00 .08 1.35 1.55 .41 .15 3.50 .08 2.25 .17^ 1.50 3.00 3.50 1.10 9.50 9.00 2.20 0.87^ .09^ .50 .09^ .07 1.00 .50 1.00 2.871 .39 .39 1.27 SET VII. DRY GOODS 253 POWER OF ATTORNEY DEFINED A power of attorney is a written instrument by which one person appoints another to act for him along certain specified lines. It is frequently drawn up under seal ; indeed, when the authority conferred is to execute any instrument that must be recorded, the person signing the paper must go before a notary public or a similar officer and acknowledge that he, of his own free act and will, executed the same. Form 2. Cash check for $4834.44, dated City, Nov. 19, drawn by A. J. Morley & Co. on Traders National Bank. Form 3. Note of Green & Gregory, dated Clyde, Nov. 19, drawn at 3 mo., in favor of your firm, A. J. Morley & Co., for $188.44, payable at Briggs National Bank, Clyde. Form 4. Invoice of Jordan, Marsh & Co., Boston, dated Nov. 19. Terms : 10-day draft, $500 ; balance 60 da. net. Items as follows : 10 pc. (521, 40, 43, 45, 42, 47|, 46, 48, 49i, 50) Fancy Gingham 10 pc. (441, 45, 46, 53, 41^, 47, 52, 48, 511, 50) Fancy Boucle Stripe - 10 pc. (52, 41, 50, 49, 50, 56, 45, 53, 47, 50) Fancy Plaids, all wool 10 pc. (52, 47, 421, 45, 48, 491, 47, 56, 52, 58) Fine English Serge 150 doz. Boys' Heavy Cotton Hose 50 gro. Gilt Buttons 75 pc. Duchesse Lace The figures in parenthesis above indicate the number of yards in each piece. Observe the following form for such invoices. Follow this arrangement for all the invoicing in this set. 41^ is equal to 41^, 45^ is equal to 45|. Fractions having a denominator other than 2 or 4 are written out in full. In finding the total number of yards in any number of pieces, do not Mew York,. ^ C-rp-r^ ^C^, .I9j=l >^^^^. Bough of SIEGEL, COOPER ^ CO. Terms : ^//n,r^^^ / '«(^ r /^^ --rp-^ ^^^ f<^f 2=2. £a 2^1 ':^^:^.''-^ ^^ y^ /7>/: nA j:^ 254 BOOKKEEPING copy the various items on another sheet, but add them horizontally as they stand. Add the fractions first and reduce them to their simplest form ; then add the integers and write the sum on the bill in the manner shown in the illustration. Note. Your firm's name is A. J. Morley & Co. Form 5. Draft of Jordan, Marsh & Co., Boston, dated Nov. 19, drawn on your firm, in favor of themselves, at 10 days' sight, for $500. Form 6. Draft of Traders National Bank, Batavia, on Chemical National Bank, New York, dated Nov. 19, drawn in favor of F. M. Reed & Co., and transferred by them to your firm by full indorsement, for 1 3 26 2. 5 7, W. D. Fain, Cashier. Form 7. Invoice of R. W. White & Co., New York, dated Nov. 19. Terms: 3/15, net 30 da. Items as follows: 10 pc. (45, 52, 41, 50, 56, 62, 61, 50, 52, 58) Am. B. D. Silk 10 pc. (42, 45, 52, 58, 61, 64, 52, 49, 51, 50) Barj eon Cashmere 10 pc. (45, 52, 61i, 64|, 62, 50, 50f, 54, 51, 57) B. E. Camel's Hair 100 doz. spools Corticelli Silk 5 pc. (52, 41, 40, 47, 56) Feather Ticking 50 pc. Marquise Lace 10 pc. (421, 42, 47, 62, 56, 50, 58, 52, 57^, 54) Striped Denim 20 doz. Men's Balbriggan Half Hose Form 8. Draft of F. R. Stearns & Co., Boston, dated Nov. 20, drawn on your firm, in favor of themselves, at 4 days' sight, for |630. Form 9. Bill of F. M. Upton & Co., City, dated Nov. 21, for 6 T. coal at $5.25. Terms: cash. Bill is receipted by C. O. M. for F. M. Upton & Co. Form 10. Invoice of the Ellsworth Mills, Detroit, dated Nov. 19. Terms: 3/10, 1/30, net 60 da. Items as follows : 25 doz. Ladies' Cashmere Hose 10 pc. (52|, 51, 46, 42, 57, 52i, 56, 58, 57^, 59) V. C. Cloth 6 pc. (52, 41, 52, 48, 52, 51i) Wash Silk 10 pc. (42, 41, 46, 50, 49, 48, 49, 52, 47, 45) Taffeta Silk Form 11. Check of Knowlton & Beach, Rome, dated Nov. 20, drawn on Traders National Bank, in favor of your firm, for $275. Form 12. Bill of Fisher Bros., Tonawanda, dated Nov. 20, for 1 mahogany roll-top office desk, fl25. Terms: cash. Form 13. Invoice of Freeman Glove Co., City, dated Nov. 21. Terms : 2/20, net 30 da. Items as follows : 75 doz. Men's Kid Gloves 75 doz. Ladies' Kid Gloves SET VIL DRY GOODS 255 Form 14. Sight draft of C. D. Washburn, Bedford, drawn on Freeman Glove Co., City, Nov. 20, in favor of your firm, for |56.25. Form 15. Check of Gardiner & Sprong, Rush, dated Nov. 21, drawn on Traders National Bank, in favor of your firm, for $300. Form 16. Sight draft of Fred S. Goodwin, Savannah, dated Nov. 21, drawn on Geo. R. Tillison, City, in favor of your firm, for |250. Form 17. Invoice of Ellis Mfg. Coi, Springfield, dated Nov. 21. Terms : 3/10, net 30 da. Items as follows : 50 gro. Bone Buttons 100 gro. Gilt Buttons 100 gro. Jet Buttons Form 18. Receipted bill of Citizens Carting Co., City, dated Nov. 23. Terms : cash. Items as follows : Nov. 19, Cartage, $4.75 ; Freight, |69.54 20, Cartage, 1.00 ; Freight, 24.50 21, Cartage, 3.50 ; Freight, 62.50 22, Cartage, 3.75 Form 19. Note of B. N. Acker, Byron, dated Nov. 21, drawn at 30 da., with interest at 6%, in favor of your firm, payable at Alliance Bank of Byron, for flOOO. Form 20. Draft of J. V. Richardson & Co., Earlville, dated Nov. 22, on H. A. McDowell & Co., City, in favor of your firm, drawn at 10 da. from date, for |150. Form 21. Check of John B. Howard & Co., City, dated Nov. 22, drawn on Traders National Bank, in favor of your firm, for 1600.47. Form 22. Invoice of C. O. Bond & Co., Philadelphia, dated Nov. 22. Terms: 10-day draft for |250; balance in 30 da., less 2%. Items as follows : 10 pc. (521-, 50, 52, 56, 42, 48, 53f , 54, 56, 50) Gunner's Duck 10 pc. (47, 45^, 47^, 46, 54, 56, 62, 50, 54, 51) S. M. Print 5 pc. (471, 41, 48, 46^, 49) Scotch Cheviot 25 pc. Duchesse Lace 10 pc. (49, 42, 52, 47, 41, 46, 40, 54, 62, 60) B. E. Camel's Hair Form 23. Draft of C. O. Bond & Co., Philadelphia, dated Nov. 22, drawn in their own favor at 10 da. from date, on your firm, for |250. Form 24. Check of C. D. Washburn, Bedford, dated Nov. 22, drawn on Traders National Bank, in favor of your firm, for |605.19. Form 25. Check of Knowlton & Beach, Rome, dated Nov. 23, drawn on Traders National Bank, in favor of your firm, for $1200. 256 BOOKKEEPING Form 26. Sight draft of Houghton, Button & Co., Chicago, dated Nov. 22, drawn on your firm, in favor of themselves, for $750, and indorsed by them to Merchants Bank, Chicago. Transferred by Merchants Bank to The Union Bank of your place, C. E. Rogers, Cashier. Form 27. Draft of Traders National Bank, Tonawanda, on Chemical National Bank, New York, dated Nov. 22, drawn in favor of D. E. Mosher, and transferred by him to your firm by full indorsement, for $392, S. H. Lyman, Cashier. Form 28. Notice of protest of note of J. N. Smith & Co., left at The Union Bank for collection. The notice is dated Nov. 25, W. E. King, Notary Public. The note is dated Sept. 26. If business practice is used and the Incoming Business Forms are not used, the notice of protest may be prepared by the student; be guided by Form VIII, Appendix F. Note. A notice of protest is generally partly printed and partly written, but this is not necessary. A notice of protest must include the following items of information : A full description of the paper. A statement to the effect that payment has been demanded and refused. A statement to the effect that the holder depends on the indorser for settlement. Form 29. Invoice of Eureka Mills, Little Falls, dated Nov. 24. Terms : 5-day draft for $150; balance in 30 da., less 1%. Items as follows : 10 pc. (52, 45, 40, 41, 42, 40, 52, 50, 52, 47) Taffeta Silk 10 pc. (52, 51, 60, 60, 61, 60, 62, 61, 58, 53) Wamsutta Cotton 50 doz. spools Thompson Thread 25 doz. Whalebones 12 pc. (42, 401, 45, 40, 45, 47f , 41i, 44, 47, 49, 50, 50) Wash Silk 15 pc. (41, 52, 48, 62, 61, 47, 58, 57, 56, 52, 41, 42, 43|, 41, 42) Striped Denim 10 pc. (48, 42, 53, 47, 49, 41, 48, 52, 52, 48) B. W. Crepon 5 pc. (42, 48, 52, 58, 50) Fancy Wool Cheviot Form 30. Draft of Eureka Mills, Little Falls, dated Nov. 24, drawn on your firm, in favor of themselves, at 5 da. from date, for *150. Form 31. Note of Eaton & Co., Williamson, dated Nov. 26, drawn at 30 da., in favor of your firm, with interest at 6%, payable at The Union Bank, for $750. Form 32. Check of J. N. Badger, City, dated Nov. 27, drawn on Traders National Bank in favor of your firm, for $313.35. SET VII. DRY GOODS 257 Form 33. Sight draft of C. D. Washburn, Bedford, dated Nov. 27, drawn on Howard, Fitzsimmons & Co., City, in favor of your firm, for $150. Form 34. Draft of Traders National Bank, Rush, on Chemical National Bank, New York, dated Nov. 27, drawn payable to Gardiner & Sprong, and transferred by them to your firm by full in- dorsement, for 1596.33, C. O. Moran, Cashier. Form 35. Check of L. O. Sweetland, Buffalo, dated Nov. 27, drawn on Traders National Bank, in favor of your firm, for 1533.70. Form 36. Bill of Citizens Carting Co., City, dated Nov. 29. Terms : cash. Items as follows : Nov. 24, Cartage, |2.25; Freight,. $39.42 25, Cartage, 1.75 26, Cartage, 1.75 ; Freight, 42.69 27, Cartage, 2.00 ; Freight, 16.20 28, Cartage, 1.50 29, Cartage, .75 The bill is receipted for Citizens Carting Co. Form 37. Invoice of Freeman Glove Co., City, dated Nov. 28. Terms 2/10, net 30 da. Items as follows : 25 doz. Ladies' Kid Gloves 25 doz. Men's Kid Gloves Form 38. Invoice of Geo. A Wright & Co., Brooklyn, dated Nov. 28. Terms: 3/10, net 60 da. Items as follows: 20 pc. Velvet Ribbon 20 pc. Marquise Lace 20 pc. Black Chantilly Lace 10 pc. (42, 48, 52, 58, 62, 38, 49, 51, 54, 46) Percale Shirting 10 pc. (58, 42, 49, 51, 54, 46, 58, 42, 57, 43) F. W. Cheviot 10 pc. (47, 53, 64, 36, 52, 48, 49, 51, 48, 52) C. S. Lining 6 pc. (47, 52, 62, 38, 45, 55) Amazon Cloth 5 pc. (49|, 40^, 60f , 50^, 49) Barjeon Cashmere Form 39. Invoice of Clinton Mills, Syracuse, dated Nov. 28. Terms : 3/10, net 60 da. Items as follows : 10 pc. (49|, 50J, 52|, 471, 42^, 47^, 62, 48, 61, 39) B. W. Lansdowne 5 pc. (47|, 521, 48^, 51f , 50) Scotch Cheviot 20 pc. Grosgrain Ribbon 258 BOOKKEEPING Memoranda of Transactions iTor November Wednesday, Nov. 19 In this set, the student will not be a member of the firm as in the pre- vious sets, but he will act as bookkeeper and confidential clerk for the wholesale dry-goods house of A. J. Morley & Co., located at 624 North Ave., City. The members of the firm have decided to give him a power of at- torney, in order that he may sign and indorse notes, checks, and all other negotiable paper of the firm. Take the power of attorney. Form 1, fold it properly, and in the upper right-hand corner write: Power of Attorney A. J. Morley & Co. to Student Nov. 19, 19 — Note. If the tablet of rncoming Business Forms is not used in the business practice, the power of attorney may be prepared by the student as suggested in Form 1. Your firm has decided to withdraw the balance on deposit in Traders National Bank, City, with whom they have heretofore done their banking business, and deposit it in The Union Bank. Take the check. Form 2, for $4834.44, indorse it, make out a deposit ticket, place both in the pass book, and open an account at The Union Bank. The firm name must be written as follows on all indorsements, etc., in this set : A. J. Morley & Co., by Student, Atty. In opening an account for the firm by whom you are employed as above, you may take with you to the bank your power of attorney, showing the right conferred upon you. Enter the amount of the check in the check book ; also, as a balance in the cashbook. Keep the bank account as in the previous sets. The student should bear in mind that he is not opening a set of books, but that he is taking up the work where another left it. SET VII. DRY GOODS 259 INSTRUCTIONS WHEN ASSUMING CHARGE OF A SET OF BOOKS 1. Prove the cash. a. Xi it proves, balance the cashbook and post the items that are not already in the ledgers. h. If it does not prove, determine the date on which it did prove, and trace the errors if you can. If unable to find the errors, report to your employers and proceed as instructed by them. 2. Post all the books to date, and take a trial balance from the general ledger. If unable to get a trial balance, find the last trial balance and compare it with the ledger items of that date. If there are no discrepancies in that sheet, proceed to trace the posting to the general ledger since the date of the trial balance which is correct. Report errors and discrepancies to your employers and proceed as instructed by them. 3. In like manner, test the correctness of the sales ledger and the purchase ledger. If there are any errors, try t© locate them. After inspecting the books of your firm you find that everything is correct. The following is the trial balance of the general ledger : Trial Balance, A. J. Morley & Co., November 19, 15 Accts. Rec. 16119 10 " 32 Mdse. General 16142 96 33 Bills Rec. 4102 50 19 Interest 15 62 C.B. Cash 4834 44 14 Office Fixtures 1750 42 Real Estate 10500 40 Insurance 150 47 52 52 1 1 1 Expense Accts. Pay. Bills Pay. A. J. Morley & Co., Investment account A. J. Morley, Private account D. 0. Mills, Private account 50 60 10302 4260 38750 162 150 22 50 44 Cash Suspense 40 50 53665 22 53665 22 Your firm has decided to open new books. Enter the items of the trial balance in the general ledger. For the date and explanation, write : Nov. 19, per General Ledger A, and use the page of the old ledger as shown on the trial balance. Allow one third of a page for each account. Write the name of the firm and the names of the two proprietors on pagel. 260 BOOKKEEPING Write these names on page 2 : Merchandise General^ Merchandise Pur- chases, Merchandise Sales. The two accounts last named will be nsed when posting the work at the close of November. Prepare an index for each ledger, allowing a full page for each. An abstract of the sales ledger shows the following balances : Abstract of Sales Ledger, November 19, 19— 8 Baker, Shaw & Co., Clifton Springs 1250 5 C. D. Washburn, Bedford 1300 7 F. M. Reed & Co., Batavia 3363 47 8 B, N. Acker, Byron 1307 44 9 Chas. H. Dean & Co., Northampton 490 25 10 F. 0. Saunders, Sodus 275 12 Knowlton & Beach, Rome 2363 47 16 J. V. Richardson & Co., Earlville 612 25 19 D. E. Mosher, Tonawanda 894 09 20 Eaton & Co., Williamson 1540 71 21 Gardiner & Sprong, Rush 1316 70 24 Fred S. Goodwin, Savannah 1028 84 27 Green & Gregory, Clyde 376 88 15 Balance per Accts. Bee. in G. L. 16119 10 16119 10 16119 10 Enter the above accounts in the sales ledger, four to the page. For the date and explanation, write : Nov. 19, per Sales Ledger A, and give the page of the old sales ledger indicated in the above abstract. Write the addresses of the firms in the ledger. An abstract of the purchase ledger shows the following balances : Abstract of Purchase Ledger, November 19, 19- 24 Jordan, Marsh & Co., Boston 1807 33 27 R. W. White & Co. , New York 1556 14 29 F. R. Stearns & Co., Boston 3030 ' 34 Houghton, Dutton & Co., Chicago 2014 m 35 Eureka Mills, Little Falls 681 I'o 36 Ellis Mfg. Co., Springfield 912 34 43 McDowell, Cook & Co., Trenton 75 49 45 Ogden Mills, Akron Balance per Accts. Pay. in G. L. 10302 22 224 51 10302 22 10302 22 I SET VII. DRY GOODS 261 Enter the foregoing accounts in the purchase ledger, four to the page. For the date and the explanation, write : Nov. 19, per Purchase Ledger A, and give the page of the old purchase ledger indicated in the foregoing abstract. Write the addresses of the firms in the ledger. The bill book shows that the following notes, left at The Union Bank for collection at the close of yesterday's business, are unpaid. 1. Note of J. E. King, dated Akron, Ohio, Oct. 24, payable at Alliance Banl^, Akron, Ohio, drawn at 30 da., in favor of A. J. Morley & Co., for tl02.50. 2. Note of J. N. Smith & Co., dated City, Sept. 26, payable at The Union Bank, City, drawn at 60 da., with interest at 6%, in favor of A. J. Morley & Co., for $500. 3. Note of C. W. Gray & Co., dated Bath, Oct. 27, payable at First National Bank of Bath, drawn at 30 da., with interest at 6%, in favor of A. J. Morley & Co., for $1500. 4. Note of Jaggard & Co., dated Trenton, Oct. 29, payable at Mer- chants Bank, Trenton, drawn at SO da., in favor of A. J. Morley & Co., for $700. 5. Note of S. C. Williams, Warsaw, dated Nov. 3, payable at Com- mercial Bank, Warsaw, drawn at 30 da., in favor of A. J. Morley & Co., for 11300. Enter the above notes in the bill book. They were all left at The Union Bank for collection on Nov. 18. The following outstanding notes are also shown in the bill book : 1. Note in favor of D. N. Snow & Co., dated Nov. 3, payable at The Union Bank, drawn at 30 da., with interest at 6%, by A. J. Morley & Co., for $3000. 2. Note in favor of Jones Mfg. Co., dated Oct. 31, payable at The Union Bank, drawn at 30 da., by A. J. Morley & Co., for |1260. Enter the above bills payable in the bill book. Note. It is assumed that the two bills payable are with The Union Bank for collec- tion. The student will therefore need to write both notes and hand them in. (See note, page 216.) Check carefully all the work in the new books. If everything is cor- rect, hand them in for examination. Thursday, Nov. 20 The account of Green & Gregory, Clyde, cannot be collected in full, as the firm is financially involved, but they have effected a compromise with their creditors. 262 BOOKKEEPING A Receive of them their note, at 3 mo. from Nov. 19, at the rate of 50(^ on the dollar, in full of account to date, $188.44, Form 3. Debit Bills Receivable and Loss and Gain, ai^d credit Green Sf Gregory. Post the entry and close the account of Green & Gregory. In the account, make two items of their credit as follows : Nov. 20, Bills Rec, $188.44 ; Nov. 20, Loss and Gain, $188.44. This is done so that the account on its face shows the loss resulting from the failure of the firm. The Citizens Carting Co. has delivered to you the goods ordered of Jordan, Marsh & Co., on Nov. 14, Form 4. Accept, payable at The Union Bank, their draft dated Nov. 19, at 10 days' sight, for $500, Form 5. Drawji sight draft on Chas. H. Dean & Co., Northampton, in favor of your"^rm, for $300. Indorse it properly and leave it with the bank for collection. - — Receive of F. M. Reed & Co., Batavia, a New York draft, in full of account, less 3%, Form 6. ---Draw a cash check for office use, $^50. Ask for $5 in change. Pay Geo. Ellis cash, for cleaning the store and tlie basement, $10. Make out a daily statement. Post. Submit all books to the instructor for approval. Friday, Nov. 21 The Citizens Carting Co. has completed the delivery of the goods ordered of R. W. White & Co., on Nov. 15, Form 7. D. O. Mills and A. J. Morley each withdraw for private use cash, $50. Accept the draft of F. R. Stearns & Co., Boston, in favor of them- selves, dated Nov. 20. at 4 days' sight, payable at The Union Bank, for $630, Form 8. Pay F. M. Upton & Co.'s bill for coal, by check, $31.50, Form 9. Goods ordered of the Ellsworth Mills, Detroit, on Nov. 13, have been received to-day. Form 10. Receive of Knowlton & Beach, Rome, their check, to apply on account, for $275, Form 11. Receive of Fisher Bros., Tonawanda, a bill for 1 mahogany roll-top office desk, $125, Form 12. Pay the bill by a sight draft on D. E. Mosher, Tonawanda, as he has agreed to honor the draft on presentation. Enter in the journal. Debit Office Fixtures. Goods ordered of Freeman Glove Co., City, on Nov. 18, have been received, Form 13. SET VII. DRY GOODS 263 Receive of C. D. Washburn, Bedford, a sight draft on Freeman Glove Co., City, in favor of your firm, for $56.25, Form 14. He also orders the following goods : 5 pc. (42J, 40, 52, 53^, 49) Am. B. D. Silk 3 pc. (47^, 48, 52^) Amazon Cloth 25 doz. Boys' Heavy Cotton Hose 15 gro. Bone Buttons 15 doz. spools Corticelli Silk 25 pc. Fancy Black Ribbon Fill the order. Terms : 2/10, 1/30, net 60 da. The box and goods when packed for shipment weigh 200 lb. Prepare the bill of lading in the regular way, but do not itemize the articles sent. The whole order may be described as follows : 1 box Dry Goods Write a letter to Freeman Glove Co., inclosing C. D. Washburn's draft, to apply on account. Deposit the New York draft and the check on hand ; ^V % collection on the check. Make out a daily statement and have it approved. Post. Submit all books to the instructor for approval. Saturday, Nov. 22 The following orders were received in this morning's mail. 1. From F. O. Saunders, Sodus : 5 doz. Ladies' Kid Gloves 2 pc. (50i, 42) Taffeta Silk 15 doz. pc. L. Torchon Lace 5 doz. Men's Balbriggan Half Hose 5 pc. (54|, 50, 47^, 48, 49) Striped Denim Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 175 lb. 2. From Eaton & Co., Williamson : 9 doz. Whalebones 5 doz. Men's Kid Gloves 5 pc. Velvet Bibbon 5 pc. (42, 47, 52, 54, 49) P. Shirting 4 pc. (52, 60, 49^, 50) Simpson Mourning Print Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 200 lb. 3. From Gardiner & Sprong, Rush : 5 pc. Duchesse Lace 4 pc. (47, 52, 45, 50) S. Cheviot 5 doz. Men's Kid Gloves 3 pc. (49^, 47f , 49i) B. W. Crepon 5 doz. spools Thompson Thread 3 pc. (51|, 52, 52|) V. C. Cloth 264 BOOKKEEPING Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 200 lb. With the above order was a check, to apply on account, for |300, Form 15. -, Receive of Fred S. Goodwin, Savannah, a sight draft on Geo. R. Tilli- son. City, to apply on account, for |250, Form 16. Our firm is assured that the draft will be paid on presentation ; credit Goodwin for its face. Place the draft in the Business Cash envelope. Goods ordered of Ellis Manufacturing Co. on Nov. 17 have been de- livered by the Citizens Carting Co., Form 17. — Pay by check the bill of the Citizens Carting Co., for freight and cartage to date, $169.54, Form 18. Charge this to Merchandise Purchases account. Pay salaries for the week in cash, |135. Charge Salary. Write a letter to William J. Tenny, Albany, inclosing a check in payment of his November salary, |140. He is to start on Monday on a two weeks' vacation. Charge Traveling Expenses. (This is the salary of a traveling salesman.) Receive of B. N. Acker, Byron, his note, in favor of your firm, drawn at 30 da. from Nov. 21, with interest at 6%, payable at Alliance Bank of Byron, for flOOO, Form 19. Receive of J. V. Richardson & Co., Earlville, their draft, drawn at 10 da. after date, on H. A. McDowell & Co., your city, in favor of your firm, to apply on account, for $150, Form 20. Take the above draft to your offices or to the instructor for acceptance. They also order the following goods : 5 gro. Gilt Buttons 5 pc. (45, 42, 54, 56, 55|) Fancy Gingham 4 pc. (56, 621, 66|, 64) Cotton Surah Lining 2 pc. (45|, 47) Black Wool Crepon 5 pc. (451, 453^ u, 46, 45) Bengaline Silk Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 320 lb. _-^ John B. Howard & Co., City, order : 5 pc. (471, 48, 52, 60, 57) Barjeon Cashmere 3 pc. (42^, 44J, 46) Black English Camel's Hair SET VII. DRY GOODS 265 They inclose their check in payment of the bill, less 2%, Form 21. Enter the foregoing in the sales book, deducting the 2% discount. Enter the check to the credit of John B. Howard & Co. in the cashbook. Place a small V in the folio columns of the sales book and the cashbook, opposite the firm name, to indicate that neither item should be posted. This illustrates how some business houses keep spot cash sales out of the sales ledger. ,.^-— -D. O. Mills, who has been out of town several days, has just returned. In looking over the books he notices the Cash Suspense account of $40.50, and is reminded that on the day he left for Boston, Nov. 17, he sold Joseph L. Dillingham, City, for cash, 2 pc. (40, 41) Scotch cheviot ; the cash was put in the cash drawer, but no bill was rendered or memorandum made. ' — Make the proper entries to adjust this blunder, proceeding as follows : .- — '1. Make an entry on the right side of the cashbook, debiting Cash Suspense, $40.50. (This sum has been carried as a cash-over item.) 2. Enter in the sales book in the regular way. Check the amount V, so that it will not be posted. , 3. Credit Joseph L. Dillingham on the left side of the cashbook in the regular way. Check the amount V, so that it will not be posted. SUSPENSE ACCOUNT EXPLAINED ^- The Suspense account, as it is sometimes used, contains the items of cash over or cash shortage. Sometimes when several persons handle the cash, money is taken in or paid out and no memorandum made ; and, again, sometimes a remittance is made in such a way as to fail to disclose the name of the person who made it. In such cases, proceed as follows : a. For cash over: debit Cash and credit Cash Suspense account. b. For cash shortage : debit Cash Suspense account and credit Cash. The Cash Suspense account may represent either a resource or a liability or a loss or a gain ; as, a. When items of suspense have been of long standing at the time of making a statement of the business, the balance is usually carried into loss or gain. b. When such items have not been of long standing, they are treated either as a resource or a liability. Give M. P. Keeler a check for the private account of D. O. Mills, $100. Give H. C. Benway a check for painting the store, $120. Charge Expense. Deposit the two checks and the sight draft on hand ; ^^ % collection on Gardiner & Sprong's check. Make out a daily statement and have it approved. Post. Submit all books to the instructor for approval. 266 BOOKKEEPING Monday, Nov. 24 — Discount at The Union Bank the note received of B. N. Acker on Nov. 22. HOW TO DISCOUNT AN INTEREST-BEARING NOTE 1. Add the interest for the full time to the face of the note. 2. Discount the amount of the note (the face plus the interest) for the time from the date of discount to the maturity of the note. 3. Subtract the discount found from the amount of the note, and the difference is the sum for which you should receive credit. Credit Bills Receivable in the cashbook for the face of the note ; credit Interest for the total amount of the interest, and debit Interest for the discount. Make the proper record in the bill book. Goods ordered of C. O. Bond & Co., Philadelphia, on Nov. 17 have been received. Form 22. Accept, payable at The Union Bank, the draft which was inclosed with the above invoice, for |250, Form 23. The draft is dated Nov. 22 and is payable in 10 da. A telegraphic order has been received from Evans, Hoyt & Co., Troy, ordering the following goods to be shipped by fast freight, subject to the order of the bank : 6 pc. (45, 42, 45, 47f , 41i, 40) Bengaline Silk - 25 pc. Black Chantilly Lace 5 doz. Whalebones 5 pc. (47^, 45, 41, 45^, 47) Fancy Boucle Stripe 5 pc. (47, 52, 60, 65, 67) Cotton Surah Lining 5 pc. (42, 40, 41, 40, 54) Fine English Serge , . Ship to the order, of The Union Bank, less 2%. Remember to make out all the necessary papers, using an Order bill of lading. Indorse the draft, attach it to the bill of lading, and leave it at The Union Bank for collection. The box and goods weigh 350 lb. The following orders were received in this morning's mail. Fill them hi the regular way. Terms on the first: 2/10, 1/30, net 60 da.; on the second, 30-day note, with interest, in 10 da., less 1%. 1. From F. M. Reed & Co., Batavia : 10 pc. (47^, 51, 45, 48, 49, 51^, 46, 49, 53, 52) Gunner's Duck 10 pc. Grosgrain Ribbon 5 doz. Ladies' Cashmere Hose 5 pc. Marquise Lace 4 pc. (42^, 47^, 45, 50) Percale Shirting 2 pc. (45, 46) Simpson Mourning Print The box and goods weigh 320 lb. SET VIL DRY GOODS 267 2. From Berriman & Co., Syracuse : 5 pc. Velvet Ribbon 3 pc. (52|, 50|, 42) Taffeta Silk 2 pc. (42i, 45f ) Wash Silk 4 pc. (46^, 47^, 50, 52) S. Cheviot 3 pc. (46^, 47, 41) Venetian Crape Cloth The box and goods weigh 230 lb. Pay the balance due Ogden Mills, Akron, by check, less 2%. Write a letter, inclosing the check. Receive of C. D.Washburn, Bedford, a check in payment of the invoice of Nov. 21, less 2%, Form 24. Write a letter to R. W. White & Co., New York, inclosing a check in payment of the invoice of Nov. 14, less 3%. Amount of the invoice, *950.50. Also, write a letter to Houghton, Dutton & Co., Chicago, inclosing a check in payment of the invoice of Nov. 15, less 2%. Amount of the mvoice, J|379.50. Deposit the check on hand. Collection, ^0%. Make out a daily statement and hand it in. Post. Submit all books to the instructor for approval. Tuesday, Nov. 25 Your firm has received a letter from Williams, Howard & Co., Spring- field, asking for information with regard to the financial standing and general business equipment of Starr, Jordan & Co., of your city. You are asked to wire your reply. You confer with A. J. Morley, the senior member of your firm, and at his suggestion send a telegram, giving the following information : The firm of Starr, Jordan & Co. does not stand well financially in this section. They were losers to the extent of over $10,000 by the faikire of Smith, Jones & Co., Buffalo, who became insolvent about six months ago ; from this they have not fully recovered, and, in our opinion, will not recover for some time to come. The members of the firm are, however, men of sterling integrity, and their statements can be depended upon. Write the telegram and observe the following : 1. Do not refer to the firm of Starr, Jordan & Co. by name, since^ your report is somewhat unfavorable. 2. Limit your message to eighteen words. 3. Do not prepay the charges. The following orders were received in this morning's mail. Fill each of them in the regular way. Terms : 2/10, 1/30, net 60 da. 268 BOOKKEEPING 1. From Gardiner & Sprong, Rush : 5 pc. (40, 41, 42, 45, 46) Black Wool Lansdowne 4 pc. (42, 41^, 45|, 46) Amazon Cloth 3 pc. (47, 52, 64) Cotton Surah Lining 4 pc. (52, 47, 48, 51) Fancy Wool Cheviot 5 pc. (461, 47|, 52^, 56^, 50) Barjeon Cashmere 5 gro. Gilt Buttons 10 pc. Fancy Black Ribbon 12 doz. spools Corticelli Silk 10 doz. Boys' Heavy Cotton Hose 2 doz. Men's Kid Gloves 3 pc. (47, 421, 45) Simpson Mourning Print The above was shipped in two boxes weighing when packed 270 lb. and 190 lb. respectively. 2. From L. O. Sweetland, Buffalo : 3 pc. (42|, 41, 45) Simpson Mourning Print 10 pc. Velvet Ribbon 10 pc. (50, 42, 53, 47, 41, 40, 45, 48^, 47^, 50) Wash Silk 3 pc. (42, 41, 45) Fancy Gingham 3 pc. (47, 42, 45) Fine English Serge 6 pc. (42^, 42^, 45, 48^, 45, 40) Fancy Plaids The box and goods weigh 390 lb. — Your bank informs you that the draft drawn on Chas. H. Dean & Co. on Nov. 20 has been collected. Collection, ^^q%. Receive of Knowlton & Beach, Rome, a check, to apply on account, for $1200, Form 25. Pay the sight draft of Houghton, Button & Co., Chicago, by check, *750, Form 26. Make the check in favor of The Union Bank, as the draft is presented by them. The draft in favor of F. R. Stearns & Co. is due to-day, payable at The Union Bank. Issue a check in payment, and receive the canceled acceptance. Receive of D. E. Mosher, Tonawanda, a New York draft, in settle- ment of the mvoice of Nov. 15, less 2%, for $392, Form 27. Find the face of the invoice. Deposit the check and the New York draft on hand. Collection on the check, iV%* Your bank notifies you that the note of J. E. King, left for collection, has been paid. No collection charged. SET VII. DRY GOODS 269 Write a letter to Jordan, Marsh & Co., Boston, inclosing a check in payment of the invoice of Nov. 16, less 3%. Amount of the invoice, |;719.50. Make out a daily statement and hand it in. Post. Submit all books to the instructor for approval. Wednesday, Nov. 26 ^Receive from The Union Bank a notice of protest of J. N. Smith & Co.'s note, due yesterday. Form 28. Pay the protest fees in cash, |1. Write Protested in the Remarks column of the bill book, and debit Protest Fees in the cashbook for the notary's charge for protesting. ^^^11 paper that goes to protest should be taken out of the Bills Receiv- able account, therefore make the following journal entry : Protested Paper to Bills Receivable. In the general ledger, open an account with Protested Paper. WHEN PROTEST IS NECESSARY 1. When payment of a note or a draft has been formally demanded and refused, it should be protested. 2. All foreign drafts must be protested, either for nonpayment or for non- acceptance, or the drawers or indorsers will be relieved of all responsibility. 3. While it is quite unnecessary to protest a note on which there is no indorser, the majority of banks will protest all paper that is not paid at maturity, unless they are specifically instructed to the contrary. No protest is sometimes printed on a perforated slip at the end of a note or draft. These words may be left on or detached at the discretion of the indorser of the paper. VALUE OF PROTEST 1. In a general way a protest aids in securing prompt attention on the part of the payer to all his maturing negotiable obligations payable at a bank. — 2. A protest in an indirect way aids the business man in the collection of over- due accounts. A debtor will give, in most cases, more serious attention to a sight draft drawn upon him, which may go to protest, than he will to the ordinary state- ment of an account or to a request for a remittance. METHOD OF PROTESTING 1. The notary takes the bill and demands payment, which is refused. 2. He writes a statement to the effect : a. That he has presented and demanded payment of the bill. h. That payment has been refused. c That he protests against the drawers and the indorsers. a. That due notice has been given to the indorsers, etc. 270 BOOKKEEPING 3. He affixes his name and seal to the paper. 4. The protest is then attached to the note or the draft and is filed by the holder. (For Certificate of Protest, see Form VII, Appendix F.) W. E. Simpson, City, has telephoned for the following goods. He instructs you to draw on him at sight for the amount of the bill. 5 pc. (421, 44|, 48, 51, 62) Feather Ticking 2 pc. (42^, 45) Black Wool Crepon 5 doz. Boys' Heavy Cotton Hose 3 pc. (47, 45, 52) Bar j eon Cashmere 4 pc. (45^, 46, 43, 41) Amazon Cloth 3 pc. (48, 52, 40) Black English CamePs Hair Fill the order. Terms: sight draft, less 2%. Draw the draft and place it in the Business Cash envelope. Enter in the sales book and the cashbook. Check the items in each. J. N. Badger, City, has telephoned for the following goods : 6 pc. (45, 42, 41, 40, 53, 49) Fancy Boucle Stripe 25 pc. Fancy Black Ribbon 5 doz. Ladies' Kid Gloves 5 doz. Men's Kid Gloves 2 pc. (42|, 41^) Taffeta Silk 5 gro. Jet Buttons Fill the order. Terms : 2/10, 1/30, net 60 da. The Citizens Carting Co. has completed the delivery of the goods ordered of Eureka Mills on Nov. 18, Form 29. Accept, payable at The Union Bank, the draft hi favor of Eureka Mills, for $150, Form 30. Receive of Eaton & Co., Williamson, their note at 30 da., in favor of your firm, with interest at 6%, for $750, Form 31. Write a letter to Ogden Mills, Akron, ordering : 10 pc. Am. Black Dress Silk 10 pc. Fancy Plaids 10 pc. Black Wool Crepon 10 pc, Amazon Cloth 100 doz. spools CorticelH Silk 10 pc. B. E. Camel's Hair 10 pc. Velvet Ribbon Write a letter to Ellis Manufacturmg Co., inclosing a check in pay- ment of the invoice of Nov. 21, less 3%. Deposit the sight draft on hand. Make out a daily statement. Post. Submit all books to the instructor for approval. SET VII. DRY GOODS 271 Thursday, Nov. 27 > Write a letter to McDowell, Cook & Co., Trenton, ordering : 10 pc. Wamsutta Cotton 10 pc. Taffeta Silk 10 pc. Wash Silk 7 pc. Striped Denim 10 pc. Venetian Crape Cloth 7 pc. Scotch Cheviot Give A. J. Morley a check for private use, for ^50. Give S. M. Wells a check for the private account of D. O. Mills, for |50. Telegraph Houghton, Button & Co., Chicago, ordering : 50 pc. Black Chantilly Lace 125 pc. Velvet Ribbon 50 pc. Fancy Black Ribbon 60 pc. Duchesse Lace Pay the cost of the telegram in cash, |1.50. Fill the following orders, which were received in this morning's mail. Terms: 2/10, 1/30, net 60 da. 1. From Jas. B. Stillman, Rochester: 3 pc. (47, 42, 45) P. Shirting 2 pc. (52, 61) S. Denim 4 doz. Men's B. Half Hose 2 gro. Jet Buttons 3 doz. pc. L. Torchon Lace 3 pc. Grosgrain Ribbon The box and goods weigh 140 lb. 2. From Earl & Sampson, Hopewell: 2 pc. (42, 45) P. Shirting 2 pc. (42, 47) G. Duck 2 pc. (45, 52) Fine English Serge 2 pc. (47, 45) S. Cheviot 2 pc. (48, 411) Fancy Wool Cheviot The box and goods weigh 160 lb. Your bank notifies you that the note of C. W. Gray & Co., left for collection, has been paid. Face of the note, |1500. Interest to date, ^7.50. Collection charged, |1.50. Receive a check of J. N. Badger in full for the bill of Nov. 26, less 2%, Form 32. Deposit the check just received. Make out a daily statement. Post. Submit all books to the instructor for approval. Friday, Nov. 28 Receive of C. D. Washburn, Bedford, a sight draft on Howard, Fitz- simmons & Co., City, to apply on account, for $150, Form 33. It has been agreed that the draft will be paid on presentation. Place it in your Business Cash envelope and credit C. D. Washburn in the cashbook. 272 BOOKKEEPIKG Receive of Gardiner & Sprong, Rush, a New York draft in payment of the invoice of Nov. 22, less 2%, Form 34. Discount at The Union Bank the note received of Eaton & Co. on Nov. 26 and receive credit for the proceeds. Telephone Freeman Glove Co., City, ordering : 25 doz. Ladies' Kid Gloves 25 doz. Men's Kid Gloves Write a letter to Jordan, Marsh & Co., Boston, ordering : 25 pc. Bar j eon Cashmere 25 pc. Fancy Wool Cheviot 10 pc. Amazon Cloth 25 pc. Black Wool Crepon Remit Freeman Glove Co., City, a check in payment of the balanj.* due on the invoice of Nov. 21, less 2%. Compute the 2% on the face of the invoice, then subtract the payment of Nov. 21 ; issue a check for the balance. Fill the following orders. Terms: 2/10, 1/30, net 60 da. 1. From Benj. Tracy & Co., City : 15 doz. Men's Kid Gloves 15 doz. Ladies' Kid Gloves 6 pc. (42, 411, 45|, 42^, 44^, 40) Fine English Serge 6 pc. (421, 43^, 45, 47i, 48, 49) Fancy Plaids 3 pc. (42^, 40, 44) Fancy Gingham 2. From F. M. Reed & Co., Batavia: 7 pc. (42, 41, 40|, 45, 47i, 42, 47) Am. Black Dress Silk 5 pc. (42^, 46, 42, 43, 40) Amazon Cloth 5 pc. (42^, 40, 42, 43i, 45) Black Wool Lansdowne 5 doz. Ladies' Kid Gloves 10 doz. Whalebones 5 pc. Duchesse Lace The box and goods weigh 390 lb. Deposit the sight draft on hand, also the New York draft. Collection on the sight draft, yo%. Make out a daily statement. Post. Submit all books to the instructor for approval. Saturday, Nov. 29 Your bank informs you that the sight draft attached to a bill of lading of Nov. 24 has been collected. Collection, yV^- Receive a check from L. O. Sweetland, Buffalo, in payment of the invoice of Nov. 25, less 2%, Form 35. SET VII. DRY GOODS 273 Your acceptance in favor of Eureka Mills is due to-day, payable at The Union Bank. Issue a check in payment. Pay the bill of Citizens Carting Co. by check, for freight and cartage to date, $108.31, Form 36. Charge this to Merchandise Purche^ses account. Draw a cash check for ofhce expenses, |150. Pay salaries for the week in cash, |135. Goods ordered of Freeman Glove Co. on Nov. 28 have been delivQred, Form 37. Fill the following orders. Terms: 2/10, 1/30, net 60 da. 1. From F. O. Saunders, Sodus : 6 pc. (42, 45, 47, 42, 47, 48^) S. Denim 10 gro. Gilt Buttons 4 pc. (52, 47, 531, 48) Taffeta Silk 10 doz. Boys' H. C. Hose 7 pc. (45|, 42, 45, 46, 47|, 40, 42) Fancy Gingham The box and goods weigh 350 lb. 2. From B. N. Acker, Byron : 25 doz. spools Corticelli Silk 25 gro. Bone Buttons 5 pc. (421, 43, 45, 44^, 40) Bengaline Silk 5 pc. (401, 42^, 40, 41, 42) Cotton Surah Lining 5 pc. (42|, 45, 46, 42, 47) Feather Ticking The box and goods weigh 320 lb. Goods ordered of Geo. A. Wright & Co., Brooklyn, on Nov. 17, have been delivered. Form 38 ; also the goods ordered of Clinton Mills, Syracuse, on Nov. 16, Form 39. Deposit the check on hand ; no collection charged. / — Your bank informs you that J. N. Smith & Co. have paid their note which was protested on Nov. 26, the interest to date, $5.33, and the notary fees, $1. —-An the cashbook credit the following : Protested Paper, $500 ; Interest, $5.33 ; Protest Fees, $1. Have the amount entered in the pass book. Record $506.33 as a deposit in the check book. Make out a daily statement. Post. Submit all books to the instructor for approval. Before closing the books for November give careful attention to the classifica- tion of the Merchandise account as explained on page 274. 274 BOOKKEEPING CLASSIFICATION^ OF THE MERCHANDISE ACCOUNT In small lines of business it is the general custom to enter all trans- actions with merchandise in one account, the Merchandise account ; but in a large business the subdivision of this account is important as a means of setting forth the facts regarding the different transactions with the merchandise bought, sold, or exchanged. In this set, three accounts are opened with merchandise, as follows: Merchandise General^ which, as an open account, shows the merchandise inventory ; Merchandise Purchases^ which, as an open account, shows on the debit side all goods bought, and the freight and drayage, and on the credit side all discounts allowed and all goods returned, if any ; Mer- chandise Sales, which, as an open account, shows on the credit side all goods sold, and on the debit side all discounts allowed and all goods returned, if any. The manner of posting to these accounts is explained in Closing the Work for November. The closing of these accounts, when the books are closed on Dec. 6, is illustrated on page 292. Closing the Work for November 1. Balance the cashbook and post the totals to the general ledger. Note. The footing of the Merchandise Discount columns is closed under the names Merclmndise Sales Dr., and Merchandise Purchases Cr., and posted to those accounts in the general ledger. 2. Rule and foot the sales book. The following is the closing entry: Accounts Receivable to Merchandise Sales. Post these items to the general ledger. 3. Rule and foot the invoice book. The following is the closing entry : Merchandise Purchases to Accounts Payable. Post these items to the general ledger. 4. Rule and foot the journal ; make the proper entry for the total of the Purchase Ledger column and Sales Ledger column. Post to the general ledger. 5. Prove the bill book. 6. Make an abstract of the sales ledger and have it approved. 7. Make an abstract of the purchase ledger and have it approved. 8. Take a trial balance of the general ledger and have it approved. 9. Compare the monthly bank statement with the check book. 10. Hand all books to the instructor for approval. REVIEW EXERCISES 275 EXERCISE 63 ) A Written Review 1. INIake the statements and the proof from the following trial balance John Hughes, Prop. $12000. Harrison F. Lee, Prop. ^ 6000. Samuel S. Farmer, Prop. 6000. Cash, in safe $248.80 Deposit, 2d National Bank 2537.32 Expense 974.30 Salaries 846.98 Real Estate 7325. Chattels 250. Office Fixtures 725. Horse and Wagon 410. Loss and Gain 377.80 H. & F. Ry. Stock 2000. M. & D. Ry. Stock 1200. Interest 89.45 Merchandise General 8835.65 Merchandise Purchases 2125.50 Merchandise Sales 8495.40 Bills Receivable 2169.90 Bills Payable 1545.20 Accounts Receivable 6400. Accounts Payable 1880.40 John Hughes, Priv. 155.20 Harrison F. Lee, Priv. 78.35 Samuel S. Farmer, Priv. 84.05 $36377.15 $36377.15 Inventories : Resource Liability Merchandise $4978.50 $37.60 Expense 125. 9.60 Salaries 50. Real Estate 7200. Chattels 150. Office Fixtures 710. Horse and Wagon 400. Interest 26.50 13.50 20 shares H. & F. Ry. Stock at 98^ 12 shares M. & D. Ry. Stock at 100 276 BOOKKEEPING 2. Enter all the accounts in the trial balance on ledger paper, four accounts to the page, and close the ledger. In the Loss and Gain account, distribute the net gain according to the investment of each partner; carry the net gain to the private accounts. Incoming Business Forms for December Form 40. Invoice of Ogden Mills, Akron, dated Nov. 29. Terms: 2/10, net 30 da. Items as follows : 10 pc. (57^, 52, 49, 48, 46, 53^, 51, 56, 50^, 51) Am. Black Dress Silk 10 pc. (52, 49, 52, 47, 56^, 51, 54^, 53, 57^, 59) Amazon Cloth 10 pc. (52, 50, 46^, 471, 48, 52, 51, 50f , 54, 51) B. E. Camel's Hair 10 pc. (52, 48, 46|, 47, 49, 61, 58, 53, 56^, 54) B. W. Crepon 100 doz. spools Corticelli Silk 10 pc. (54^, 53, 57, 56, 50, 48, 47, 49, 52i , 54) Fancy Plaids 10 pc. Velvet Bibbon Form 41. Check of B. N. Acker, Byron, dated Nov. 29, drawn on Traders National Bank, in favor of your firm, for $403.14. Form 42. Sight draft of Earl & Sampson, Hopewell, dated Nov. 29, drawn on Williams, Seamans & Co., City, in favor of your firm, for |29.45. Form 43. Draft of Traders National Bank, Rochester, on Chemical National Bank, New York, dated Nov. 29, drawn in favor of Jas. B. Stillman, and transferred by him to your firm by full indorse- ment, for 163.47, C. C. Canan, Cashier. Form 44. Draft of The Union Bank, City, on Chemical National Bank, New York, dated Dec. 1, drawn in favor of your firm, for $718.27, W. B. Frey, Cashier. Form 45. Check of H. A. McDowell & Co., City, dated Dec. 2, drawn on ■ Traders National Bank, in favor of your firm, for $150. Form 46. Bill of Myers, Teeter & Co. Savannah, dated Nov. 29. Terms; cash. Items as follows : 5 M 28-lb. M. Envelopes at $1.25 1 M R. B. Envelopes at $2 25 lb. ^ Billheads at 12^(^ 25 lb. Statement Blanks at 140 10 lb. Blotting Paper at 80 5 rm. L. T. Paper at $1.75 Form 47. Check of Gardiner & Sprong, Rush, dated Dec. 1, drawn oi Traders National Bank, in favor of your firm, for $1155.67^ Form 48. Invoice of Houghton, Dutton & Co, Chicago, dated Dec. Terms : 2/15, net 60 da. Items as follows : 50 pc. Fancy Black Ribbon 60 pc. Duchesse Lace 50 pc. Black Chantilly Lace 125 pc. Velvet Ribbon SET VII. DRY GOODS 277 Form 49. Check of Benj. Tracy & Co., City, dated Dec. 3, drawn on Traders National Bank, in favor of your firm, for |781.21. Form 50. Invoice of McDowell, Cook & Co., Trenton, dated Dec. 2. Terms: 2/10, net 60 da. Items as follows: 10 pc. (47^, 45, 50, 51, 52^, 56, 54, 51, 56, 50|) Wamsutta Cotton 10 pc. (47, 46, 52, 40, 42, 41, 40, 42, 42i, 40) Wash Silk 10 pc. (42i, 46, 52, 47, 55, 31, 52, 47, 51i, 50) V. C. Cloth 10 pc. (42, 50, 47, 50, 51, 52, 46, 52, 41, 50) Taffeta Silk 7 pc. (48, 52, 57, 54, 56, 51, 503) Striped Denim 7 pc. (47, 52, 49^, 47, 52, 46, 42) Scotch Cheviot Form 51. Sight draft of Chas. H. Dean & Co., Northampton, dated Dec. 3, drawn on N. P. Pond, City, in favor of your firm, for $29.32. Form 52. Check of W. F. Pratt, Utica, dated Dec. 8, drawn on Traders National Bank, in favor of your firm, for $321.57. Form 53. Check of Knowlton & Beach, Rome, dated Dec. 8, drawn on Traders National Bank, in favor of your firm, for |250. Form 54. Check of J. V. Richardson & Co., Earlville, dated Dec. 8, drawn on Traders National Bank, in favor of your firm, for $850. Form 55. Note of Berriman & Co., Syracuse, dated Dec. 1, drawn at 30 da., with interest at 6%, in favor of your firm, for $421.94. Form 56. Invoice of Jordan, Marsh & Co., Boston, dated Dec. 4. Terms : 8/10, net 60 da. Items as follows : 25 pc. (42, 41, 46, 52, 41, 50, 52, 48, 40, 41, 40, 50, 51, 52, 46, 42, 41i, 48, 52, 40, 42, 47^, 48, 49, 51) Barjeon Cashmere 10 pc. (47 1 , 50, 52, 61, 62, 48, 53, 57, 49, 54) Amazon Cloth 25 pc. (47^, 48, 52, 49, 51, 48, 52, 49, 50-1, 52, 56, 52, 47, 50, 50i, 49, 52|, 51^, 521, 56, 52, 56, 49, 42, 41) Black Wool Crepon 25 pc. (47^, 49, 51, 48^, 47, 50, 41, 46, 52, 47i, 46, 52i, 56, 40, 41, 43, 46, 44, 481, 49, 52, 52, 47, 48, 50^) Fancy Wool Cheviot Form 57. Draft of Traders National Bank, Auburn, dated Dec. 4, drawn on Chemical National Bank, New York, in favor of Hender- son & Everett, and transferred by them to your firm by full indorsement, $805.53, C. E. Denison, Cashier. Form 58. Sight draft of Eaton & Co., Williamson, dated Dec. 4, drawn on F. M. Everett, City, in favor of your firm, for $24.17. Form 59. Check of F. O. Saunders, Sodus, dated Dec. 4, drawn on Traders National Bank, in favor of your firm, for $279.97. Form 60. Draft of Traders National Bank, Albany, dated Dec. 4, drawn on Chemical National Bank, New York, in favor of Harlan & Wilson, and transferred by them to your firm by full indorse- ment, $786.23, D. O. Morehouse, Cashier. 278 BOOKKEEPING Form 61. Sight draft of F. R. Stearns & Co., Boston, dated Dec. 4, drawn on your firm, in favor of themselves, for |500 ; indorsed by F. R. Stearns & Co. to Commercial Bank, Boston, and by Commercial Bank to The Union Bank, City. Form 62. Invoice of R. W. White & Co., New York, dated Dec. 5. Terms: 3/15, net 60 da. Items as follows : 10 pc. (47^, 45, 56, 52, 49, 51, 52, 47, 49, 50) Am. Black Dress Silk 10 pc. (421, 43, 44, 411, 46, 47, 49, 52, 44, 43) Bengaline Silk 10 pc. (421, 46, 44, 42i, 45, 46, 45, 45, 50, 50) B. E. Camel's Hair 12 pc. (44, 41, 42, 39, 62, 47, 52, 41, 46, 54, 61, 52^) Feather Ticking 12 pc. (421, 47, 43, 45, 52, 57^, 59, 56, 54i, 54^, 50, 48) S. Denim 5 doz. Men's Balbriggan Half Hose 10 pc. Marquise Lace Form 63. Draft of Traders National Bank, Lynn, dated Dec. 4, drawn on Chemical National Bank, New York, in favor of Ellis & Farmer, and transferred by them to your firm, for |683.57, F. O. Simpson, Cashier. Form 64. Bill of the Citizens Carting Co., City, dated Dec. 6. Terms : cash. Items as follows : Dec. 1, Cartage, |3.75 ; Freight, $47.50 2, Cartage, 1.50 3, Cartage, 2.50 4, Cartage, 3.00 ; Freight, 27.56 5, Cartage, 4.00 ; Freight, 32.05 6, Cartage, 1.00 Form 65. Check of D. E. Mosher, Tonawanda, dated Dec. 5, drawn on Traders National Bank, in favor of your firm, for $150. Form 66. Invoice of Macy, Cooper & Co., New York, dated Dec. 5. Terms : 3/10, net 30 da. Items as follows : 100 gro. Bone Buttons 100 gro. Gilt Buttons 100 gro. Jet Buttons 25 doz. Whalebones Form 67. Draft of Traders National Bank, Rush, on Chemical National Bank, New York, dated Dec. 4, payable to Gardiner & Sprong, and transferred by them to your firm by full indorsement, for $1006.53, C. O. Moran, Cashier. Form 68. Draft of Traders National Bank, Savannah, on Chemical National Bank, New York, dated Dec. 5, payable to Fred S. Goodwin, indorsed to your firm for $1110.89, D. D. Sprague, Cashier. Form 69. Check of Benj. Tracy & Co., City, dated Dec. 6, drawn on Traders National Bank, in favor of your firm, for $1244.38. SET VII. DRY GOODS 279 Monday, Dec. 1 Draft in favor of Jordan, Marsh & Co., made payable at The Union Bank, was due yesterday (Sunday). Issue a check in payment. The bank also notifies you that the note of Jaggard & Co. has been credited to your account, less 75(^ collection. A note in favor of Jones Manufacturing Co. was due yesterday, payable at The Union Bank. Issue a check in payment. The Citizens Carting Co. has delivered to you the goods ordered of Ogden Mills on Nov. 26, Form 40. Receive of B. N. Acker, Byron, a check for the invoice of Nov. 29, less 2%, Form 41. Wm. J. Tenhy has resumed his work in eastern New Yo\'k after a vacation of two weeks. He sends you the following orders : 1. Harlan & Wilson, Albany : 5 pc. (45^, 40, 47, 52, 67) American Black Dress Silk 8 pc. (47, 52, 613, 49, 63, 49, 59, 61) Black Wool Lansdowne 12 doz. Boys' Heavy Cotton Hose 12 doz. Ladies' Cashmere Hose 9 pc. Marquise Lace 8 pc. (49, 52, 54, 52|, 57^, 56, 49, 61|) Percale Shirting 12 doz. spools Thompson Thread 9 doz. Whalebones 3 pc. (47, 45, 42) Wash Silk Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 420 lb. 2. W. F. Pratt, Utica: 6 pc. (49, 51|, 54, 56, 61, 68) Gunner's Duck 25 pc. Grosgrain Ribbon 7 gro. Jet Buttons 3 gro. Gilt Buttons 8 pc. (52, 47, 48^, 45 J, 47|, 49, 47^, 49J) Scotch Cheviot 3 pc. (47^, 49|, 50^) Simpson Mourning Print Fill the order. Terms: 2/10, 1/30, net 60 da. The box and goods weigh 320 lb. Send Wm. J. Tenny, at Albany, a check for traveling expenses, $100. In your letter ask him to visit, as soon as possible, Hall, Balliet & Co., Springfield, from whom you received an inquiry this morning. Give some general instructions. 280 BOOKKEEPING SOME THINGS THAT CONTRIBUTE TO A GOOD BUSINESS LETTER 1. The use of good materials, especially stationery. 2. Good mechanical form, such as sufficient margins and correct paragraphing. 3. The use of good English, — short, concise sentences; correct spelling; right capitalization ; careful punctuation. 4. Completeness in all statements. 5. In perplexing business letters, the general tone is of the greatest importance. One should aim to express a. Sincerity b. Frankness c. Fairness 6. Use a complimentary close consistent with the salutation. The business letter is the expression of the firm that sends it, and it should, as far as possible, create a feeling of good will and confidence. Receive of Earl & Sampson, Hopewell, a sight draft on Williams, Seaman & Co., City, in favor of your firm, to apply on account, for $29.45, Form 42. Treat the draft as cash and place it in the Business Cash envelope. Receive of James B. Stillman, Rochester, a New York draft in full for the invoice of Nov. 27, less 2%, Form 43. He orders the following goods : 5 pc. (45, 47, 52, 51, 47|) American Black Dress Silk 6 pc. (49, 51, 56, 52, 62i, 67) Amazon Cloth 10 doz. spools Corticelli Silk 2 pc. (471, 49) Fancy Plaids Fill the order. Terms : 2/10, 1/30, net 60 da. The box and goods weigh 225 lb. Remit C. O. Bond & Co., Philadelphia, a New York draft for the balance due on the invoice of Nov. 22, less 2%, Form 44. Buy the draft by check. The bank charges 500 for exchange. Discount at The Union Bank the note received of Green & Gregory, on Nov. 20, and receive credit for the proceeds. Return to Geo. A. Wright & Co., Brooklyn, the 20 pc. Black Chan- tilly Lace received in the invoice of Nov. 28. These goods are returned, owing to a misunderstanding in regard to the quality. Compute the charge at the price named in the invoice. Make the following journal entry : Geo. A. Wright & Co. (Purchase Ledger Debits) to Mdse. Purchases (General Ledger Credits), SET VIL DRY GOODS 281 Deposit the New York draft, the sight draft, and the check on hand. Collection on the check, 50(f. Make out a daily statement. Post. Submit all books to the instructor for approval. Tuesday, Dec. 2 Write a letter to R. W. White & Co., New York, ordering : 10 pc. Am. B. D. Silk 12 pc. Striped Denim 10 pc. Bengaline Silk 5 doz. Men's B. Half Hose 12 pc. Feather Ticking 10 pc. Marquise Lace 10 pc. Black English Camel's Hair Inclose your note at 30 da. for $650, to apply on account. The following orders, received this morning, are to be filled in the regular way. Terms : 2/10, 1/30, net 60 da. 1. From Knowlton & Beach, Rome : 10 pc. (54, 52, 47|, 48, 56, 62, 50, 52^, 57, 59) Bengaline Silk 4 pc. (42J, 45, 46, 49) Feather Ticking 4 doz. Boys' Heavy Cotton Hose 9 doz. Whalebones 3 pc. (47|, 49, 56) Striped Denim The box and goods weigh 320 lb. 2. From Fred S. Goodwin, Savannah : 6 pc. (47^, 49|, 47, 52, 60i, 64) Black English Camel's Hair 12 doz. Men's Kid Gloves 12 doz. Ladies' Kid Gloves 5 pc. (47^, 49, 51, 43|, 58) American Black Dress Silk The box and goods weigh 200 lb. Receive of H. A. McDowell & Co., City, their check, in payment of the draft on them due to-day, $150, Form 45. Stationery manufactured for your firm by Myers, Teeter & Co., Savan- nah, has been received. Form 46. Draw at sight on Fred S. Goodwin, Savannah, in favor of Myers, Teeter & Co., for $24.43, and remit the draft to them in settlement, as Goodwin has agreed to honor the draft. Enter in the journal. Charge Expense. Draft in favor of C. O. Bond & Co., Philadelphia, is due to-day, payable at The Union Bank. Issue a check in payment. Remit R. W. White & Co., New York, a check in payment of the invoice of Nov. 19, less 3%. 282 BOOKKEEPING Remit Jordan, Marsh & Co., Boston, a check, in payment of the invoice of Oct. 30, $587.83. Receive of Gardiner & Sprong, Rush, a check, for the invoice of Nov. 25, less 2%, Form 47. Deposit the two checks on hand and |50 in currency. Collection charged on Gardiner & Sprong's check, -^^^o- Make out a daily statement. Post. Submit all books to the instructor for approval. Wednesday, Dec. 3 The Citizens Carting Co. has delivered to your firm the goods ordered of Houghton, Dutton & Co., on Nov. 27, Form 48. — ^Traver, Stillman & Co., Penfield, order: 8 pc. (47^, 48, 49, 50, 52^, 58, 59, 60) Gunner's Duck 10 pc. Marquise Lace 15 pc. Velvet Ribbon 7 pc. Grosgrain Ribbon 5 pc. (52, 57, 48|, 51, 50) Wash Silk 7 pc. (48^, 49, 51, 521, 57, 48, 49) AVamsutta Cotton 3 pc. (48^, 49, 50) Percale Shirting These men are entire strangers to you and instruct you to ship by freight, subject to the order of the bank, at once, as they are in need of the goods. Fill the order as they suggest, less 2%. Leave the draft attached to the bill of lading with The Union Bank for collection. The box and goods weigh 390 lb. As investigations regarding this firm are satisfactory, write a letter, thanking them for the order and express your willingness to open an account with them on your regular terms : 2/10, 1/30, net 60 da. Inclose the invoice in this letter. Fill the following order of Benj. Tracy & Co., City. Terms: 2/10, 1/30, net 60 da. 5 pc. (471 52i, 62, 60, 61) Bengaline Silk 7 pc. (47^, 41, 46, 42^, 47^, 45, 46) Black Wool Crepon 4 pc. (47^, 51, 50, 52) Black Wool Lansdowne 3 pc. (471 45, 41) Barjeon Cashmere 4 doz. Whalebones 5 doz. spools Thompson Thread They inclose with the above order a check, in settlement of the invoice of Nov. 28, less 2%, Form 49. SET VII. DRY GOODS 283 Note in favor of D. N. Snow & Co. is due to-day, payable at The Union Bank. Face of note, |3000 ; interest accrued, |15. Issue a check in payment. Deposit the check on hand. Make out a daily statement. Post. Submit all books to the instructor for approval. Thursday, Dec. 4 Draw from the bank for office expenses, by a cash check, $150. You draw one half month's salary in cash, |50. Charge Salary account in the cashbook. Pay Chas. Denman cash for cleaning the basement, $4.50. Pay for sundry repairs about the store, cash, $5.50. Charge Expense for the above items. Pay for letter press and stand, cash, $10. Charge Office Fixtures. D. A. Delano, Sodus, writes, asking you to ship him by express, C.O.D. : 15 doz. Ladies' Kid Gloves 15 doz. Men's Kid Gloves 5 doz. Ladies' Cashmere Hose Fill the order as he suggests, less 2%. The Citizens Carting Co. has delivered the goods ordered of McDowell, Cook & Co., on Nov. 27, Form 50. Receive of Chas. H. Dean & Co., Northampton, a sight draft on N. P. Pond, City, for $29.32, Form 51. Leave the draft with The Union Bank for collection. D. O. Mills draws cash for private use, $50. Place the currency in the Personal Cash envelope. B. E. Valentine, Rose, writes asking you to ship him by express, C.O.D. : .3 pc. (47^, 41, 451) Am. Black Dress Silk 3 pc. (45^, 411, 40) Wash Silk 15 doz. Boys' Heavy Cotton Hose 5 doz. Ladies' Cashmere Hose Fill the order as he suggests, less 2%. Receive of W. F. Pratt, Utica, a check, in payment of the invoice of Dec. 1, less .2%, Form 52. Receive of Knowlton & Beach, Rome, a check, to apply on account, for $250, Form 53. 284 BOOKKEEPING Receive of J. V. Richardson & Co., Earlville, a check, to apply on account, for $350, Form 54. They order the following : 7 pc. (47|, 48, 52, 51|, 48, 53, 50^) Am. Black Dress Silk 3 pc. (491, 51, 48f ) Wamsutta Cotton 3 pc. (471, 49, 42) Black Wool Crepon 6 pc. (42, 47, 50, 51, 60, 47^) Simpson Mourning Print 5 doz. spools Thompson Thread 3 doz. Whalebones 3 pc. Marquise Lace 3 pc. Velvet Ribbon 2 pc. (47, 49) Striped Denim 2 pc. (42^, 47) Bengaline Silk Fill the order. Terms : 2/10, 1/30, net 60 da. The goods are shipped in two boxes weighing, when packed, 200 lb. and 225 lb respectively. Your bank informs you that the sight draft on N. P. Pond, City, left for collection, has been paid. Credit Chas. H. Dean & Co. Deposit the checks on hand ; collection, $1.25. Make out a daily statement. Post. Submit all books to the instructor for approval. Friday, Dec 5 Receive of Berriman & Co., Syracuse, their note, at 30 da., with interest at 6%, in full for the invoice of Nov. 24, less 1%, Form 55. The note is dated Dec. 1. Charge the discount to Merchandise Sales. An inquiry has been received from Nester & Worden, retail dry-goods merchants, Geneva, relative to a general line of dry goods. They refer you to sevv^ral well-known houses, state that they are rated by Dun's and Bradstreet's agencies, and ask you to quote them your best terms. An investigation of their financial standing by your firm proves the desirability of securing this firm as regular customers, and you write them a courteous letter, thanking them for their inquiry and soliciting a share of their patronage. Call brief attention to your general facilities for doing business, and try to make them feel that it would be to their advantage to enter into business relations with your firm. Have the letter criticized before handing it in. Note. Dun's and Bradstreet's commercial agencies are two large corporations of the. United States engaged in the business of collecting information with regard to the finan- cial standing, the ability, and the rating of persons engaged in business enterprises, and sending it to subscribers to their service. I SET VII. DRY GOODS 285 These two agencies have become extensive factors in modern commercial transactions by furnishing information to retail jobbers, wholesale merchants, etc. The prudent business man before selling to a stranger on credit should inform himself first, through these commercial agencies, of the financial standing of the prospective customer. SUGGESTIONS BEARING UPON LETTERS SOLICITING TRADE A very fruitful source of new business is the letter soliciting trade ; and since no accomplishment is of more importance to the business man than that of securing trade, all these letters should be handled diplomatically. The following points should receive consideration in the writing of such a letter. 1. Follow up inquiries promptly and tactfully. 2. If you are not satisfied with the references given you, be careful how you say so. 3. Do not hesitate to show your unwillingness to fill orders when references are unsatisfactory. 4. Avoid all extravagant claims for goods and facilities for doing business. 5. Use good materials and write an attractive letter. The letters sent out, in most cases, stamp pretty accurately the kind of a house they represent. 6. Do not beg for trade. 7. Be brief. In letters similar to the foregoing, especially, do not say too much. Business men are not likely even to read long circular letters. Goods ordered of Jordan, Marsh & Co., on Nov. 28, have been delivered by the Citizens Carting Co., Form 56. You ship Sumner Bros., Union Springs, as per their instructions in a letter received this morning, the following goods by freight, subject to Ae order of the bank. 12 pc. Black Chantilly Lace 4 pc. (421, 42, 45|, 47) Bengaline Silk 7 pc. (421, 471, 51, 50, 52J, 53, 54) Cotton Surah Lining 3 pc. (471, 41|, 49) Fancy Plaids 3 gro. Gilt Buttons 10 pc. (47^, 49, 41, 47, 45, 52, 61i, 59|, 57^, 51^) Feather Ticking 2 gro. Bone Buttons 2 doz. spools Corticelli Silk 3 pc. (47|, 48, 45) Fine English Serge You allow them a 2% discount on the bill. Handle this order in the usual way. Write a letter, quoting your regular terms, and inclose the invoice. These goods are shipped in two boxes, weighing, when packed, 200 lb. and 250 lb. respectively. J. V. Richardson & Co., Earlville, return the following goods, from the invoice sent to them on Dec. 4, owing to a slight damage in shipment : 3 pc. Marquise Lace 3 pc. Velvet Eibbon 286 BOOKKEEPING Compute the credit at the prices named in the invoice. Make the following journal entry : Mdse. Sales (General Ledger Debits) to J. V. Richardson & Co. (Sales Ledger Credits). Henderson & Everett, Auburn, to whom you quoted prices and terms Nov. 17, have sent the following order: 3 pc. (521, 533^ 50) American Black Dress Silk 2 pc. (47, 43) Amazon Cloth 2 pc. (471, 42) Black English Camel's Hair 2 pc. (47 J, 45) Fancy Wool Cheviot 5 doz. Men's Kid Gloves 10 doz. pc. Linen Torchon Lace 10 doz. spools Thompson Thread 3 pc. (521, 57, 52) Venetian Crape Cloth They inclose a New York draft, in payment of the above bill, less 2%, Form 57. Check the entry in each book. The box and goods weigh 190 lb. The following orders, received in this morning's mail, are to be filled in the regular way. Terms: 2/10, 1/30, net 60 da. 1. Chas. H. Dean & Co., Northampton : 10 pc. Fancy Black Kibbon 3 pc. (47|, 41, 49) Fancy Gingham # 5 pc. Marquise Lace 7 pc. (47^, 41, 49, 52, 51|, 57, 56) Scotch Cheviot 3 pc. (47^, 41, 49) Simpson Mourning Print 7 gro. Jet Buttons 3 pc. Grosgrain Ribbon 5 doz. spools Thompson Thread 5 doz. spools Corticelli Silk 3 pc. (47|, 49, 52) Striped Denim 3 doz. Whalebones The box and goods weigh 250 lb. 2. Eaton & Co., Williamson : 7 pc. (47^, 41, 40, 43, 45, 47^, 48) Fancy Boucle Stripe 3 doz. spools Corticelli Silk 4 gro. Bone Buttons 10 pc. (521, 47^, 52, 51, 53i, 50, 54, 56, 59, 60^) Fancy Gingham 10 pc. (521, 471, 52, 51, 53J, 50, 49, 56, 58, 59) Cotton Surah Lining 7 doz. Ladies' Cashmere Hose 7 doz. Boys' Heavy Cotton Hose SET VII. DRY GOODS 287 These goods are shipped in two boxes weighing, when packed, 220 lb. and 210 lb. respectively. Eaton & Co. inclose a sight draft on F. M. Everett, City, to apply on account, for |24.17, Form 58. Enter the draft in the cashbook, as Everett has agreed to pay it on presen- tation. Receive of F. O. Saunders, Sodus, a check, in payment of the invoice of Nov. 29, less 2%, Form 59. Remit Houghton, Button & Co., by check, in full for the invoice of Dec. 1, less 2%. Your firm wishes to engage the services of a competent and experi- enced stenographer, and Mr. Morley has asked you to prepare an advertisement to be inserted in the Daily Morning Transcript. Write the advertisement, stating the qualifications necessary for a candidate who applies for the position. Fay for the advertisement in cash, 50(^. Receive of Harlan & Wilson, Albany, a New York draft, in payment of the invoice of Dec. 1, less 2%* Form 60. In their letter they order: 25 doz. Men's Kid Gloves 25 doz. Ladies' Kid Gloves Fill the order. Terms: 2/10, 1/30, net 60 da. Remit Ogden Mills a check for the invoice of Nov. 29, less 2%. Pay by check a sight draft of F. R. Stearns & Co., Boston, on your firm, in favor of themselves, for $500, Form 61. "Write the check in favor of your bankers, who presented the draft for collection. Deposit the two New York drafts, the check, and the sight draft on hand; collection on check, ^^0%. Make out a daily statement. Post. Submit all books to the instructor for approval. Saturday, Dec. 6 The balance due on the account of Baker, Shaw & Co., Clifton Springs, is over 60 da. past due. At maturity of their bills a statement of account was sent them. No attention was paid to this, and on Nov. 1 Mr. Morley wrote them a mild dunning letter, calling attention to their overdue balance and urging a prompt settlement. Nov. 8 a letter was received from them, stating their inability to pay then, but making a definite promise to settle in full by Nov. 25. No word has been received from 288 BOOKKEEPING them since. At Mr. Morley's suggestion you write a letter, asking for an immediate settlement of the account. These points are set forth in your letter : 1. The firm has the ability to pay its debts, you think. 2. You want to continue to do business with them. 3. You must have a settlement at once. SUGGESTIONS BEARING UPON DUNNING LETTERS 1. Promptness and accuracy in the matter of sending statements and other reminders of overdue accounts are of the greatest importance in securing prompt settlements. 2. When no attention is paid to statements of account, dunning letters generally follow. How soon they should follow depends upon circumstances. 3. The tone of a dunning letter should be governed by existing conditions. No dunning letter should a. Lack in courtesy. b. Contain accusations of any sort. c. Show that the temper of the writer is overwrought. , (L Intimate court proceedings unless that seems to be the last resort. 4. Dunning letters should a. Aim to make the tone of the appeal consistent with the facts of the case. For instance, the first of a series of dunning letters should be entirely different in tone from the second or the third letter. &. Be brief and to the point c. As far as possible show that the writer has confidence in his debtor and expects a prompt payment. d. Make proper reference to the amount of the account. e. Be fair and, as far as. consistent with good business management, lenient. f. Avoid the imperative form of statement. Goods ordered of R. W. White & Co., New York, on Dec. 2 have been delivered by the Citizens Carting Co., Form 62. Ellis & Farmer, Lynn, write, inclosing a New York draft. Form 63, in settlement for the following goods, which they wish sent at once : 7 pc. (57, 52, 51, 52, 50, 52|, 52) Fancy Gingham 7 pc. (47, 49, 50, 42, 44, 53, 48) Fine English Serge 8 pc. (47, 48, 47, 42, 46, 42i, 43|, 42) Fancy Plaids 5 doz. spools Corticelli Silk Fill the order. Terms: cash, less 2%. The box and goods weigh 420 lb. Discount at The Union Bank the note received of Berriman & Co. on Dec. 5, and receive credit for the proceeds. Remember that the note bears interest. SET VII. DRY GOODS 289 Your bank informs you that the sight draft attached to the bill of lading on Dec. 3 has been collected ; collection, J^-% of the draft. Also that the note of S. C. Williams, left for collection Nov. 18, has been paid, and that the amount, less |1 for collection, has been placed to your credit. Pay by check the bill of the Citizens Carting Co., $122.86, Form 64. Charge this to Merchandise Purchases account. D. E. Mosher, Tonawanda, orders : 3 doz. Boys' Heavy Cotton Hose 2 pc. (47, 50) Cotton Surah Lining 5 pc. Marquise Lace 3 pc. (47^, 45, 41) Venetian Crape Cloth 5 pc. Velvet Ribbon 3 pc. (42, 47, 45) Wamsutta Cotton 3 doz. Whalebones 2 doz. Ladies' Kid Gloves Fill the order. Terras: 2/10, 1/30, net 60 da. The box and goods weigh 140 lb. In the above letter was a check on Traders National Bank, to apply on account, for $150, Form 65. Goods ordered of Macy, Cooper & Co., New York, on Nov. 16, to be delivered not later than Dec. 10, have been received. Form QQ. Remit Jordan, Marsh & Co., Boston, a check, in payment of the invoice of Dec. 4, less 3%. Receive the following remittances on account : 1. Of Gardiner & Sprong, a New York draft, in full of account, less 1%, Form 67. 2. Of Fred S. Goodwin, Savannah, a New York draft, in payment of the invoice of Dec. 2, less 2%, Form 68. 3. Of Benj. Tracy & Co., City, a check, in payment of the invoice of Dec. 3, less 2%, Form 69. Draw a cash check for office expenses, |50. Pay salaries for the week in cash, |135. Deposit the two checks, the three New York drafts, and all the cur- rency on hand. No collection charged. Make out a daily statement. Post. Submit all books to the instructor for approval. 290 BOOKKEEPING Closing the Work for December 1. Make a journal entry to adjust the interest on the proprietors' accounts. (See explanation, page 242.) Take into consideration the following : a. Interest was last adjusted Nov. 15. h. Morley's share of the capital stock is $20,000 ; Mills's share, 118,750 ; these sums draw interest from Nov. 15 to date. (Count the exact number of days.) c. The credit of Morley's private account draws interest from Nov. 15 to date ; also, the credit of Mills's private account draws interest from Nov. 15 to date. d. The withdrawals on each personal account are charged with interest from the date of withdrawal to Dec. 6. e. According to the articles of agreement, the gains and the losses are to be shared equally. Outline the entry on paper for the above adjustment of interest, and have it approved by the instructor before you make it in your books. 2. Post the above entry. Rule and foot the journal and make the proper entry for the totals. Post the entry to the general ledger. Note. Before closing the cashbook, the sales book, and the purchase book, refer to the instructions given for closing the work in November, page 274. 3. Balance the cashbook and post the items in the summary. 4. Rule and foot the sales book and make the proper entry for the total. Post the entry to the general ledger. 5. Rule and foot the invoice book and make the proper entry for the total. Post the entry to the general ledger. 6. Prove the bill book. 7. Make an abstract of the sales ledger and have it approved. 8. Make an abstract of the purchase ledger and have it approved. 9. Make a trial balance from the general ledger and have it approved. To THE Student. If the trial balance and abstracts do not prove, look for tlie errors systematically. Never verify portions of the work at random and expect to locate the discrepancies. Be sure that errors actually exist before you begin to look for them. Revise the additions of the trial balance and abstracts before looking for the error in the ledger or other books. Find the exact amount of the discrepancy and see if the sum is not some footing which has been improperly forwarded or posted, or the posting of this footing may have been omitted. Errors of one figure are usually mistakes in addition. Verify the additions of the ledgers and the various books from which totals are posted. If dollars have been written as cents, or vice versa, dividing the difference by 9, 99, or 999 respectively will indicate a figure which has been misplaced one, two, or three orders to the right or left. SET VII. DRY GOODS 291 10. The following is a statement of everything inventoried at this time : Inventories, December 6, 19 — Merchandise : Per schedule on file - $22569.44 Office fixtures : Cost Depreciation $1885. 188.50 $1696.50 Expense (Resource) : Stationery, etc. Coal *18. 9.50 $27.50 Expense (Liability) : Due for telephone service $12.50 Real Estate (Resource) : Cost $10500.00 Real Estate (Liability) : Unpaid taxes on property $125.00 Insurance : Unearned premium $126.50 11. Make a statement of losses and gains and have it approved. Use the following form to find the gain on Merchandise Sales : Mdse. Sales, net Inv. Nov. 19 Net purchases Total Inv. Dec. 6 Cost of sales Gain on sales Gain on sales brought down 6000 8000 14000 4500 9500 2500 12000 12000 12000 2500 Note. The remainder of this statement is to be made in the same form as the one given on page 244. 12. Make a statement of resources and liabilities and have it approved. The private accounts of the proprietors are included in this statement. If the debit of any private account is the larger, it shows a resource ; if the credit is the larger, a liability. 292 BOOKKEEPINGl Note. Make a careful study of the following accounts before closing the general ledger. The Net Purchases, $8000, are transferred to the Merchandise General account, and then the total purchases appear on the debit side of that account. Enter the inventory, $4500, record the Cost of Sales, $9500 ; transfer this last item to the Merchandise Sales account. The balance of this account now shows the Gain on Sales ; record this amount and then transfer it to the Loss and Gain account. Merchandise Gteneral 19- 1 19— — Nov. 19 Inv. 6000 Dec. 6 Inv. 4500 Dec. 6 Net Pur. Inv. 4 8000 6 Cost of Sales 9 9500 14000 14000 Dec. 8 4500 Merchandise Purchases 19— 19- Nov. 29 Purchases 1 4438 10 Nov. 29 Dis. on Pur. 6 81 10 29 Fr't and Dray. 6 170 Dec. 3 Goods ret. 5 15 Dec. 6 Purchases 3 3438 6 Dis. on Pur. 6 160 6 Fr't and Dray. 8 210 6 Net. Pur. 2 8000 8256 10 8256 10 1^ 1 ^ERCHAND ISE Sa LES 19- 19- Nov. 29 Dis. on Sales 6 142 10 Nov. 29 Sales 4 6211 25 Dec. 5 6 6 6 Goods ret. Dis. on Sales Cost of Sales Gain on Sales 5 6 2 20 16 126 9500 2500 20 10 Dec. 6 Sales 7 6073 15 12284 40 12284 40 Loss AX D Gai: V 19- Dec. 6 Gain on Sales 9- 2500 I 13. Close the general ledger accounts. Carry each partner's share of the net gain or the net loss to his private account. These accounts should always be closed by Balance, The firm account contains but one item in this instance, therefore it should not be closed. 14. Draw a check in favor of the instructor for the credit balance of your firm at The Union Bank. Receive your monthly bank statement. 15. Hand in all books to the instructor for approval. DEPRECIATION 293 GENERAL REVIEW QUESTIONS 1. What new features were introduced in the cash book for this set? 2. Explain the advantage of the special columns used in the journal. 3. Under what circum- stances would it be advisable to open special columns for different departments of merchandise in the sales book? If these special columns were opened in the sales book, what necessary changes would be made in the invoice book? 4. What is a power of attorney ? When must it be drawn up under seal ? 5. Briefly outline what should be done by a bookkeeper on assuming charge of a set of books. 6. Give an example of a personal account, showing a loss. 7. Under what circumstances should a suspense account be opened ? 8. To which of the two general classes of accounts does the suspense account belong? May it belong to either class? 9. What is meant by protest as applied to negotiable paper? When is it necessary? 10. State briefly the process of making a protest. 11. What is the general value of a protest? 12. What is a notice of protest? What items of information must it always give? Who serves such a notice ? 13. Briefly outline some of the things that contribute to a good business letter. 14. State some of the essentials of a good letter soliciting trade. 15. State some of the things that should never be incorporated in a dunning letter. 16. State some of the things that help to make a strong dunning letter. 17. Explain how the personal accounts with partners are usually closed. 18. To which of the two general classes of accounts do each of the following belong: (a) the proprietors' private accounts ; (b) the investment account or accounts of a business ; (c) C.O.D. accounts ? 19. Give an example of a cash account showing an overdraft.^ 20. Name the two leading mercantile agencies of the United States. What is their principal business ? HOW TEMPORARY OVERDRAFTS ARE TREATED 1. The amount of the overdraft should be indicated in red ink in the check book. 2. If there is no cash in the safe, the amount of the overdraft should equal the excess of the cash credits over the cash debits in the cashbook. 3. If there is cash in the safe, the difference between the overdraft and the amount in the safe should equal the balance shown in the cashbook. DEPRECIATION The term depreciation, in bookkeeping, indicates a certain loss on prop- erty due to wearing out, deterioration, or disintegration. This loss applies to all forms of personal property, such as buildings, machinery, furniture and fixtures, such loss being due to the action of the elements, to wearing out by use, and to other causes which tend to lessen values. When property is first bought or comes into the possession of the busi- ness its value as an asset is the cost price, but as time goes on this property ^ An overdraft is in reality a loan advanced by the bank. Not infrequently the de- positor leaves some security with the bank as a pledge in case an overdraft occurs. Over- drafts are not of vejy frequent occurrence in actual business, and when they do occur they are but temporary balances which are generally made good as soon as they are discovered. 294 BOOKKEEPING as a machine or a building becomes through use or exposure in need of repair, and this is true even though repairs may not yet be imperative. This fact indicates clearly that the value has lessened. To illustrate : an automobile in regular use is constantly wearing out and its value de- creasing, but it must necessarily be some time before the wearing out reaches such a stage that repairs are needed, or that some parts must be replaced. This decrease in the value of the machine is depreciation. An ever-present question is how to show this depreciation in a way to approximate the loss without introducing difficult methods of bookkeep- ing. The importance of setting forth these facts depends somewhat on the kind of business under consideration, — whether it is an individual proprietorship, or a partnership managed by the owners, or a corporation which must give extended information to many stockholders who have nothing to do with the direct management or control of the business, but to whom definite reports must be given. A building in which a factory is situated is constantly wearing out, even though it may be repaired as often as repairs are needed. This lessening of the value is a cost of conducting the business and ought to go in with other losses in the financial showing. One of the simplest ways of showing that loss would be every year to calculate how much depreciation had gone on and charge that impairment to Loss and Grain •and credit Property/. For example : the property is a factory building listed on the balance sheet at |1 0,000 ; at the end of a year there is a 5% depreciation calculated; this 5%, |500, should be charged to Loss and Gain, with the explanation that it is the depreciation on the building, and the amount should be credited to the Building Account; at the begin- ning of the next financial period the building must appear on the balance sheet at a valuation of only $9500. If any additions or improvements had been made on the building, that would be a separate matter and should be treated separately, based upon the facts ; the amount involved would be charged to Building Account and credited to Cash. Many accountants, especially when the business is large and the property complicated, have devised various schemes for equalizing depre- ciation. For instance: charges are made every month to loss and gain for 1/12 of the estimated annual amount for impairments, to be credited to the building or other property account. For example, referring to the previous illustration, the |500 might appear as a liability under some such name as reserve for depreciation, indicating, for the purpose of book- keeping, that the amount provided for depreciation on the liability side is to be subtracted from the original cost on the asset side, the difference being the true value. • A WRITTEN REVIEW 296 The particular plan for showing the depreciation is secondary in im- portance to the fact that the property shown on the balance sheet should not be overvalued, under conditions that will tend to deceive those who examine it. It will be sufficient if the amount of the property to be written off is actually taken from the property account. What has been said about depreciation for buildings may be applied to all other property which tends to wear out, to waste, or to become less valuable as time passes on. Nothing, in short, should be carried at its full value when such value has been materially lessened. EXERCISE 64 A Written Review The following review exercises are suggested : 1. A, B, and C are partners, with investments of $6000, $4000, and $2000 respectively. After paying A a salary of |750, which was charged to expense, the net profit for the year is $2466.24. During the year A withdrew $750, in addition to his salary, B $600, and C $450. Required: the net gain of each, on the basis of the original invest- ment ; the present worth of each. 2. D, E, and F invested equal amounts, and agreed to share all results equally. When the firm dissolved, the resources amounted to $9768.45, and the liabilities to $11,268.45. The net loss was $9000. Required ; the net insolvency of the business ; each partner's invest- ment. 3. A and B engaged in business as partners, investing $8000 and $4000 respectively. They agreed to share all gains or losses in propor- tion to the investment. At dissolution the following were the resources and liabilities : Cash $2050 Bills Rec. 4075 Real Estate • 2050 Merchandise 9655 Accounts Rec. 2170 Bills Pay. 2945 Accounts Pay. 2788 Of the Accounts Receivable 10% cannot be collected. If the partnership lasted 1 yr., and A drew out $500, and B drew out $300, what is the interest of each partner at closing ? 296 BOOKKEEPING 4. X, Y, and Z made equal investments in a total capital of $9000. During the year, on the same date, each partner added |1000 to his investment. At the end of one year the resources and liabilities were as follows : Cash $2864.75 Keal Estate 3850. Accounts Pay. 1534.50 Bills Rec. 1675.25 Bills Pay. 1480. Office Fixtures 264.20 Horses and Wagons 376.20 Accounts Rec. 2654.25 Merchandise 6329.85 At the close of the year what was due each partner, gains or losses being shared equally ? In examples 2, 3, and 4, in addition to the necessary statements to find the results or the condition of the business, accounts may be opened on ledger paper with the proprietors and for the other items, and the present worth of each pro- prietor may be shown. OKGAKIZATIOK OF CORPORATIONS 297 CORPORATIONS AND KINDRED ORGANIZATIONS COMBINATIONS OF CAPITAL Commercial interests of the present day require such large invest- ments as to make combinations of capital a necessity. Neither the individual nor the ordinary partnership can command sufficient funds to carry on the manufacturing or the transportation enterprises of to- day. The result is that corporations and kindred organizations have been formed generally throughout the country. The Partnership. A partnership ordinarily represents but a limited amount of capital, is formed by agreement, and may be dissolved by the action of any one partner. Each partner, except in the case of a limited partnership, is also liable for all of the debts of the business. The Joint-Stock Company. A joint-stock company is in reality a partnership, the affairs of the business being conducted by officers chosen by the stockholders. A larger number of investors may associate themselves under a joint-stock-company agreement than can work to- gether effectually as partners, and the action of one stockholder cannot dissolve a joint-stock company. In general, the liability of the stock- holders is the same as that of partners in a copartnership. Note. The statutes of most of the states provide for limited joint-stock companies, thereby limiting each stockholder's liability to the amount of stock owned. A limited joint-stock company may be known by the manner in which its name is written or printed ; for instance, "Walter Baker Company, Limited. The Corporation. A corporation is said to be an artificial person. It is composed of a number of persons endowed with the power to act as one individual. It is ordinarily organized under a general statute of any given state, but it may be organized under a special charter granted by the legislature. The liability of each stockholder is generally limited to the amount of stock owned. A corporation affords an opportunity for many persons of small means to unite in carrying on large enterprises under efficient management. ORGANIZATION OF CORPORATIONS Some details of the organization of corporations will be of interest to the student. The laws of the various states are very different regarding such organization. Persons who desire to form a corporation should employ an attorney to conduct every step, thus insuring a compliance 298 BOOKKEEPING with the requirements of the statute of the state under whose laws the corporation is organized. How Formed. The following general statements apply to the forma- tion of corporations. 1. The statute specifies the least number of persons who can form a corporation. These persons or a greater number unite in a written state- ment to the Secretary of State setting forth the following : a. The corporate name assumed. h. The purpose for which the corporation is formed. c. The place where it is to be established or located. d. The amount of capital stock. e. The par value and the number of shares of capital stock. Any other information which a particular statute may re- quire must be included. Fees. Certain fees are required by the state for issuing a charter, and for recording and filing certificates. Powers. The powers of a corporation may be stated as follows : a. To have succession. h. To sue or to be sued under its corporate name. c. To use a common seal. d. To purchase, to hold, and to convey lands and chattels. e. To elect officers and to appoint agents. /. To make by-laws. Board of Directors. After incorporation a meeting of the subscribers is held to determine the number of directors and to elect them. In the election of the board of directors each stockholder is entitled to a vote for each share of stock. Officers and Management. After the directors are chosen they elect from their number the necessary officers of the board. The general man- agement of a corporation is entirely in the hands of the board of directors. Capital Stock. The capital stock of a corporation is the amount of capital authorized by the charter, and represents the combined invested interests of all the stockholders. Classes of Stock. The varying conditions and limitations under which stock is issued to the stockholders of a corporation give rise in many states to several distinct classes of stock, among the more important of which are common stock, preferred stock, and treasury stock. Common Stock is stock upon which dividends are paid after certain dividends have been allowed on the preferred stock. Preferred Stock is stock upon which dividends are paid out of the accrued profits before any allowance is made for dividends on common stock. BOOKS PECULIAR TO CORPORATIONS 299 Treasury Stock may be either common or preferred stock purchased from, or forfeited or donated by, the stockholders. Note. Sometimes the number of shares of stock of a corporation is increased without a corresponding increase of the property owned. This act is known as watering stock. Stock is sometimes watered in the reorganization of a railroad or the consolidation of different railway lines by fictitiously increasing the value of the franchise or property. To water stock Is deceptive, if not dishonest, and therefore is never justifiable. If the capital stock of a concern is not commensurate with the demands of the enterprise, it can be increased in a legitimate manner. The term watered stock is said to be derived from the action of some farmers in giving their live stock, just before weighing them for market, a plentiful supply of water as a means of increasing their weight. Certificates of Stock. As soon as a subscription is paid a certificate is issued to the subscriber. A stockholder may transfer his certificate by an instrument in writing signed by him, which is recorded in a book kept for that purpose. Liabilities of Stockholders. The liability of stockholders for the debts of a corporation differs widely under varying conditions. Ordinarily a stockholder is liable for a sum equal to the par value of the stock that stands in his name. Reports. In some states the corporation is required to file an annual report with the Secretary of State. Dividends. A dividend is a pro rata division of the profits, or some portion thereof, among the stockholders of a corporation. Franchise is a particular privilege granted by a government to a corporation. The right to use the streets of a city for laying railway tracks, for placing water mains underground, etc., are illustrations of franchises commonly granted. AUXILIARY BOOKS PECULIAR TO CORPORATIONS The principal books of record in a corporation do not differ materially from those used in any other business. Several special books, however, are necessary to facilitate the issue and transfer of stock. Among these are the following : Minute Book. This book contains a record of all the meetings of the stockholders or of the board of directors, and is usually kept by the secretary of the corporation. Installment Scrip Book. This is a book of blank receipts to be filled put and signed by the secretary and the treasurer as the installments are paid. Upon payment of the last installment the scrip is exchanged for certificates of stock. 300 BOOKKEEPING Stock Transfer Book. This book is used to record the transfer of stock and contains the permanent records, which are finally posted to the stock ledger. Form of Stock Transfer Book No. of Certificate canceled 2- No. of New Certificate issued / 2- Shares canceled /o New Shares issued /^ Ledger Folio 7- ^^^^^;^^ J TRANSFERRED BY TO For Value T^ece/uecfc^do hereby assign and transfer to ^ .^s j -"Z^-^'-Z^ Shares of the Capital Stock of *^Ae Union Whip Co., Springfield, t^ass. W'i7ne53^?»^2^ hand and seal, thia44^day of i4^^^/ /f/Z^ Sealed and delivered presence of [L.S.] Subscription Book. This book contains the date of record, the names and the addresses of subscribers, the number of shares, and the amount subscribed for by each stockholder. Form of Subscription Book We, the undersigned, do hereby subscribe for and agree to take the number of shares of The Union Whip Company's stock set opposite our respective names DATE NAME OF STOCKHOLDER ADDRESS NO. OF SHARES AMOUNT Feb. J. W. Melton E. M. Williams Geo. Inman A. P. Zaner L. H. Messier Springfield, Mass. 11 u 50 50 50 50 50 5000 5000 5000 5000 5000 25000 Note. If subscriptions are paid in installments, the subscription and installment records are usually combined in one book, an extra column being provided for the installment records. Dividend Book. This book contains information furnished by the state- ments of the business and shows the names of the stockholders, tlie number of sliares of stock, the par value of each share, the amount of OPENING ENTRIES FOR CORPORATIONS 301 dividend due each stockholder, and the date on which the dividend was paid. The stockholder sometimes receipts for dividends in the dividend book. When payment is by dividend check, this is, of course, unnecessary. Form of Dividend Book ist Semiannual Dividend, Aug. i, 1912, 3% STOCKHOLDER CERTIFI- CATE NO. NUMBER OF SHARES PAR VALUE PER SHARE AMOUNT OF DIVIDEND WHEN PAID SIGNATURE FOR PAYMENT J. W. Melton 1 50 100 150 Aug. 5 J. W. Melton E. M. Williams 2 50 100 150 5 E. M. Williams Geo. Inman 3 50 100 150 5 Geo. Inman A. P. Zaner 4 50 100 1.50 5 A. P. Zaner L. H. Messier 5 50 100 150 5 L. H. Messier Stock Certificate Book. This book contains blank certificates, with stubs, to be filled out and signed, usually by the president and the secre- tary of the corporation. For convenience these certificates are numbered consecutively. The stockholder signs the stub as a receipt when the certificates are issued to him. A bill of sale in blank is always printed on the back of the certificate to facilitate the sale and transfer of stock. Stock Ledger. This book contains an account with capital stock, debited at par value, and with each stockholder, credited for his stock at par value. When stock is sold the seller is debited and the buyer credited, thus preserving the equality of the ledger. The stock ledger is similar in form to the ordinary ledger ; it is purely a private book, and is not referred to in making the business and financial statements. EXERCISE 65 OPENING ENTRIES IN CORPORATION BOOKKEEPING ILLUSTRATED 1. A corporation has been formed with a capital stock of |75,000. This sum has been fully paid in cash. Required, the necessary entry. The following entry should be made on the left side of the cashbook : Jan. 1 Capital Stock Paid in capital 75000 Note. If it is desired to show the subscription account in the ledger, two entries should be made for the above transaction, as follows : 1. Subscription, To Capital Stock, in the journal, for the investment decided upon. 2. Cash, To Subscription, in the cashbook, for the capital stock paid in. HP" ^P 'IP' ^P '^P 'WfiUJ^ %W '*fP' **tSi> ^iir^ On N ^ 1 ^ ^ ^ O ^ On 4^ •v» 1 •&^ ^^ fe; 1* "^ € q ^l; « i?^ 9 302 OPENING ENTRIES .FOR CORPORATIONS 303 2. A corporation has been formed with a capital stock of $150,000. Of this sum |1 25,000 has been subscribed and paid ; the balance is to be held in reserve, unissued. Required, the necessary entries. The first entry should appear in the journal. Subscription Capital Stock Capital stock this day subscribed 125000 125000 The second entry should appear on the left side of the cashbook. Jan. 1 Subscription Subscribed capital stock paid 125000 3. A corporation has been formed with a capital stock of $100,000 : $75,000 has been subscribed ; of this sum $50,000 has been paid in cash ; the balance, $25,000, is to be paid in five equal monthly install- ments. The balance of the capital stock is to be held in reserve, unissued. Required, the necessary entries. The first entry should appear in the journal. Subscription Capital Stock Capital stock this day subscribed 75000 75000 The second entry should appear on the left side of the cashbook. Jan. 2 Subscription First payment on sub- scribed stock 50000 4. One month after the organization of the corporation the first pay- ment on installments was made. Required, the necessary entry. The entry should be made on the left side of the cashbook as follows : Feb. 1 Subscription Installment No. 1 5000 304 BOOKKEEPING Note. If it is desired to show the installment account in the ledger, Exercise 3 would require the following entry : Cash and Installments debited, to Subscription credited. Should Exercise 3 be entered in this manner, the necessary entry for Exercise 4 would be Installments debited, and Cash credited. The first form of entry is preferable. 5. J. W. Ball is the owner of a wagon manufactory located at 492 Causeway St. A statement just made exhibits the resources and liabilities as follows : Resources Real Estate $5000 Machinery 6000 Baw Material 5000 Patents 2000 Finished Products 2000 Accounts Beceivable 3000 Liabilities Accounts Payable $4000 Mortgage Payable 5000 He decides to join with C. W. Henry, B. H. Bobbins, and W. E. Law in the formation of a corporation, under the name of The Ball Wagon Co. The capital stock is to be $68,000, divided mto 680 shares of $100 each, of which each of the incorporators is to have 160 shares. J. W. Ball is to receive 160 shares of paid-up stock for his interest as above. The balance, 40 shares, is to be held in reserve, unissued. Note. The shares received by J. W. Ball represent not only the net resources of the business which he owned, but the Good Will also. The business is to be continued at the old location of J. W. Ball, and a new set of books opened. Required, the necessary entries. a. To close the old books of J. W. Ball, the followuig journal entyy should be made : J. W. Ball Mortgage Pay. Accts. Pay. Real Estate Machinery Raw Material Patents Accts. Rec. Finished Products For closing the accounts on the books of J. W. Ball 14000 5000 4000 5000 6000 5000 2000 3000 2000 OPENING ENTRIES FOR CORPORATIONS 305 h. The good will of the business of J. W. Ball is estimated at $2000. The journal entry to open the new books is as follows : Real Estate Machinery Raw material Patents Accts. Rec. Finished Products Good Will Subscription Mortgage Pay. Accts. Pay. Capital Stock Mill property Plant, tools, etc. On hand Held by corporation Due the corporation On hand Estimated value Stock subscribed for Mortgage on real estate Owed by the corporation Invested capital 5000 6000 5000 2000 3000 2000 2000 48000 5000 4000 64000 6. C. W. Henry, B. H. Robbins, and W. E. Law pay for their sub- scriptions in cash. Required, the necessary entry. The following entry should appear on the left side of the cashbook. Jan. 6 Subscription C. W. Henry, 160 shares, 16000 B. H. Robbins, 160 shares, 16000 W. E. Law, 160 shares 16000 48000 7. Sell 10 shares of the unsold capital stock referred to in Exercise 5 at $100 a share to A. B. Miller on his note at 30 da. Required, the necessary entry. The following entry should be made in the journal. Bills Rec. Capital Stock 10 shares sold A. B. Miller on his note at 30 da. 1000 1000 8. I. N. Salsbury, F. O. Gray, and E. W. Masten are associated as partners in a knitting mill under the firm name of Salsbury, Gray & Co. Their investments are as follows : I. N. Salsbury F. 0. Gray E. W. Masten $7400 7200 4900 They decide to reorganize and incorporate their business. A capital stock of $30,000, consisting of 300 shares at |100 per share, is decided 306 BOOKKEEPING upon. The partners are to receive paid-up stock for their respective interests and the Good Will, as follows: I. N. Salsbury 80 shares F. 0. Gray 80 shares E. W. Hasten 65 shares Of the remaining capital D. E. Mosher subscribes for 25 shares ; M. P. Keeler, 15 shares ; R. Cronk, 10 shares. The balance of the capital stock, 25 shares, is to be held in reserve, unissued. A statement of the present resources and liabilities has been submitted by the old partners and is accepted by the corporation. This statement is as follows : Resources Accounts Receivable 14000 Raw Material 3000 Plant 3000 Real Estate 6000 Cash 2700 Finished Product 2900 Liabilities Accounts Payable $1600 Bills Payable 500 The books of the old firm will be used by the corporation. Required, the necessary entry to change the partnership accounts so that they will serve the purposes of a corporation. The following entry should be made in the journal. I. N. Salsbury F. O. Gray E. W. Hasten Subscription Good Will Capital Stock To close account To close account To close account Subscribed Estimated value Subscribed 7400 7200 4900 5000 3000 27500 It should be noticed that the amount charged to the G-ood Will account is the difference between the net resources of the private partnership and the total stock to be received by Salsbury, Gray, and Hasten. After this entry is posted, the books are in condition to proceed with the records of the cor23oration. OPENING ENTRIES FOR CORPORATIONS 307 EXERCISE 66 OPENING ENTRIES IN CORPORATION BOOKKEEPING Directions. After studying the foregoing illustrations, take a sheet of journal paper and make the proper records for the following transactions : 1. A corporation has been formed with a capital stock of $85,000. This sum has been subscribed and paid in cash. Make the necessary entry. 2. A corporation has been formed with a capital stock of $75,000 ; ♦50,000 has been subscribed and paid; the balance, |25,000, is to be held in reserve, unissued. Make the necessary entries. 3. A corporation has been formed for the manufacture of paper-box machinery with a capital stock of $150,000. The owner of the patents is to receive 400 shares of stock, at |100 per share, for his inventions. Of the stock remaining, 800 shares have been subscribed and paid in full. The remainder of the stock, 300 shares, is to be held in reserve, unissued. Make the necessary entries to open the books of the corporation. 4. A joint-stock company has been formed for the purpose of manu- facturing paper boxes. The capital stock is to be $50,000, divided into 1000 shares of $50 each, 200 shares of which are preferred stock, and the remaining 800 shares common stock. The preferred stock has been subscribed and paid. Of the common stock 60% has been subscribed at par. Of this latter sum 40% has been paid in cash, and the balance is to be settled for in five equal monthly installments. The balance of the capital stock is to be held in reserve, unissued. Make the necessary entries to open the books of the joint-stock company. 5. A corporation has been formed with a capital stock of $40,000, divided into 400 shares at $100 per share. Of the capital stock 75% has been subscribed at par, and full payment made in cash ; the remainder is to be held in reserve, unissued. Make the necessary opening entries. 6. C. W. Williams is the sole owner of a manufacturing plant. He has resources and liabilities as follows : Resources Cash $5000 Plant 6000 Real Estate 5000 Raw Material 5000 Accounts Receivable 2000 Liabilities Accounts Payable $2000 Mortgage Payable 5000 308 BOOKKEEPING He decides to join with E. B. Monroe, H. L. Hinnan, and W. E. Rollins in the formation of a corporation. The capital stock is to be $70,000, divided into 700 shares at $100 each, of which each of the incorporators is to have 170 shares. The balance, 20 shares, is to be held in reserve, unissued. - The business is to be continued at the^ old location of C. W. Williams and a new set of books opened. Make the necessary entries to close the books of C. W. Williams and to open those of the corporation. Note. The difference between the resources and liabilities of C. W. Williams and the total stock credited to him is charged to the Good Will account. 7. Sell to A. B. Miller, on his note at 30 da., 5 shares of the unsold capital stock referred to in Exercise 6, at par. Make the necessary entry. 8. W. E. Frye, C. W. Gray, and E. O. Burrill are associated as part- ners in the manufacture of shoes, under the firm name of Frye & Gray. Their investments are as follows : W. E. Frye $14800 C. W. Gray 14400 . E. 0. Burrill 9800 They decide to reorganize and incorporate their business. A capital stock of $60,000, consisting of 600 shares at $100 per share, is decided upon. The partners are to receive paid-up stock for their respective interests and the Good Will, as follows : W. E. Frye 160 shares C. W. Gray 160 shares E. 0. Burrill 130 shares Of the remaining capital C. H. Dean subscribes 50 shares; Fred Everitt, 30 shares ; Charles Baker, 10 shares. The balance of the capital stock, 60 shares, is to be held in reserve, unissued. A statement of the present resources and liabilities has been submitted by the old partner and is accepted by the corporation. This statement is as follows : Resources ' Bills Receivable $8000 Operating Products 6000 Plant 3000 Real Estate 15000 Cash 5400 Finished Products 6800 Liabilities Mortgage Payable $4200 THE VOUCHER SYSTEM OF BOOKKEEPING 309 The books of the old firm will be used by the corporation. Make the necessary entry to change the pa,rtnership accounts so that they will serve the purposes of the corporation. 9. A corporation is organized with a capital stock of ^00,000 to work a gold mine in Alaska. C. L. Bender, who holds a deed to the mine, transfers it to the company in payment for 1000 shares of paid-up stock at a par value of |100 per share. Ninety per cent of the remainder of the stock has been subscribed and fully paid. The balance is to be held in reserve, unissued. Make the necessary opening entries. 10. Ten shares of the above stock has been sold for cash at |100 per share. Make the necessary entry. THE VOUCHER SYSTEM OF BOOKKEEPING Among the many modern devices for economically systematizing accounts and properly distributing the various items of expenditure is what is- known as the voucher system. This system was primarily planned for, and is particularly adapted to, large industrial and manufac- turing enterprises, such as railroad companies, street-car plants, etc.; but the general principles of the system are so susceptible of modifications that they have been found well adapted to some other lines of business. The system derives its name from a special form of combined abstract of invoice and receipt known as a voucher^ which is issued for purchases and other expenditures of the business. Where the system is found in its highest stage of development it is characterized by approved methods for filing paid and unpaid bills and recording firm and corporate disburse- ments. The method of filing vouchers, the classification and the distribu- tion of amounts paid, etc., vary greatly in different lines of business. In the bookkeeping of large railroad concerns and kindred organiza- tions, vouchers are usually issued for absolutely everything in the way of expenditures connected with the business, the fundamental idea being to have every recorded transaction, as far as possible and practicable, evidenced by a paper or voucher filed in the office. Some houses use vouchers only in making payments for certain classes of goods, usually such articles as are used in manufacturing processes, etc., the cost of which it is generally desirable to enter in "separate accounts in the books of record. Manner of issuing Vouchers. Vouchers are issued for both paid and unpaid bills. As soon as any bill has been received and audited a voucher, conveniently numbered, is issued for the transaction. The voucher is simply an abstract of the bill or the invoice with the necessary 310 BOOKKEEPING Form of Combined Voucher and Check Voucher 5^o. / d^ Boston, Mass., -^^ / ^:^>;^;^-t.^^^^^g^. (!^ INV. NO. /^<^-^ 7 DESCRIPTION OF PURCHASE /fZ 7 Account verifiedL b Auditor Apnp^seed for payment resident Tieceived of ^he Union Whip Company |/^Z- ( y7^^^/7^^.-y7^^^^ /f^^^^^ - "Doll ars In full for the above account Boston, Mass., ^?^' / i P, 19— d^o,lA^ traders d^ational ^ank V/^^ In full for Voucher tKp, /^4^ / -f^^J-r^ IDoll ars :^ -^2<. ^resident data for filing, etc. A record of every voucher is made on the stub of the voucher book. This record gives a condensed history of what is con- tained on the voucher. For convenience, the stub is printed with the names of the various accounts to be charged in the issuing of vouchers. When any bill is paid, the voucher representing it is detached from the stub and presented to some officer of the firm for approval and signature. The voucher is then sent, with a check, to the creditor. He THE VOUCHER SYSTEM OF BOOKKEEPING 311 § i CO o o V >t &0 •a be 3:^ S 2^ S § l^ ^ cS ^ m ^ .— I « a> 53 OT 5P > '1^ "S tJ c *S rf .S ^ •?; .- < a ^ 03 2 2 fH ni f g^P»4 H P4 C» M ,i3 &0 312 BOOKKEEPmG signs the receipt printed at the bottom of the voucher and returns it. This voucher, when returned, is filed for reference. For time purchases a voucher is made out at the time the goods are received and the bill is audited. It is not detached from the stub of the voucher book until the time of payment. When the bill becomes due the voucher is detached from the voucher stub in the regular way and presented to the proper officer for approval and signature. It is then sent away the same as the voucher used on a cash bill. Model Voucher Book. The model voucher book given on page 311 is seK-explanatory. The form of voucher given shows that the United States Whip Company, of Boston, Mass., has purchased of Bradley, Morgan & Co., of New York, goods as per invoice No. 74, amounting to $1269.40, for which a cash payment was made on Feb. 6, less 2%. The receipt at the bottom of the voucher shows that Bradley, Morgan & Co. received the remittance Feb. 7. The stub gives a complete history of everything connected with the voucher. Voucher Check. Payment for the voucher illustrated on page 311 was made by check. Many houses print the voucher and the voucher check as one blank (see page 310), to insure an early return of the voucher. When this is done it is necessary that the voucher be returned with the check, through the bank, before payment can be received. Banks, how- ever, object to the handling of this form of check, and what is known as the voucher check is largely taking the place of the old form of attached voucher and check. The illustration following is suggestive of the usual form of a voucher check. Boston, Mass.r ^^ 9.^=i ^o. / 2-f United States Whip Company 'Pay to the order n f ^-%^^^^^^ . >^^^^7-^,..^2>^ —V^yf/-eyC^/-^^^y(^ ^ ..^ ..^ r : ^ — — T>ollars It\ full for Voucher U^o. /Zf Vo Vhe Urjion Sank \ ^ ^ ^ ^y, /; , ^^^ -^ii^^-i^U/:y?f:^/^-g!.^L'%iQAyn &q^ vyi the^ yiLtuAy& w-ilZ 6^ (SxyyvdAMt&ci {yu thy& qxjuIxL (^A^&aZ&v H. fcyyv&a^, wAo- w-ilL jiUMf' OAui cLvQy&AaAxi& alt cL&6X^ am^cL Cia/>-vtttC&Qy^ ayyicL v&e^&uu-& a£t yyuyyieA^ ^^uiA^a/yte^ to- tA& oxuxi laZ& lOimv. [Siflrned] Form III. Circular announcing the Retirement of a Partner W. D. Martin Offict of Martin & Ward A. S. Ward Soston, Mass., Ciuc^. ^^, 19— din tk& 3/qZ vnoZ. tk& n&iAAlyJn kiXA&ito e^loZiyyic^ ^<5— tw'&e.'yi lA}-. cb-. TyioAjjyyi oi^^cL CL. of. WdvcL w-itt {y& cL'iQ^ata>-&cL (m^ "vyuiiXAUAL ^^(yyvQ.&nt. CLit&v tkaZ (£aZ& tk& 6-icQyt/yv&QyQy WA.tc 6-& n^an- ciu^t&ci (yu TVlv. IX^Oyui (yvL ki^ aw-n a^^/yumZ oavcL in kto^ aiAyyi na'my&. cJfv Qyati^itAyyva cl (S/>riLiymix^/yL&& of ifO^UAy v-Oytu&d '^aAAxyyia,a& i\}-& ciQyQA4.v& uo^ tJvoZ no- 'b&cUA^uyvv ^v-Ltt {>■& 'm(XcL& Ln tk& ^x^js^iZat ay tk& (yu/^uyi&QyQy , am^ci tAc\L cult iZ^ oA-iaLvO' wttt 6-& (?.oncUoeZ&cC w-vCk OQ^ av&at &piiy^&nM^ a^ tkaZ w-kteA uotv kcLV-^y e/pc/^&w&nS'&cl wyicL&v tk& ^&Q^emZ 'vyvam^cu^&'nv&nt. APPENDIX F XXUl Form IV. Contract of Sale and Purchase iSinoto all 0itn hv tljese presents that n^&, ^. 1/0^. lA^cnXAvyujLcyyi If (Px>-., o^ fSo^Xxyyi, iTlao^xMA'WQ.eXZay, in consideration of S^lj^&em' 3^k(yiiaxxrul 3w-o- /iftitulv&d Dollars paid hy cb. €.. lyO^vtlu^yfvO' V^ ^a., a^ oxMyci JSo^tan, the receipt iviiereof is hereby achnowledged, do hereby sell, transfer, and deliver unto the said ^. H. WHtCcuyn^ V^ ^., tA& (fao-cL w-itC, tac^eZkeA^ waXA alt otkeA^ cvoyo^eto^ oj^ tk& ox^icL jCvnt a^ (^. W". W^aitk- \yyiat(y}'u If €.0., vyiA't'wcLuyia a^tt tAa^& o/^&eA^i'i&cC vvu tA& Qy(S^h&cLti't& k&v&Co a/nm^&oc&cC a^ruL yyuAAJo&d^ *d. CLyvcL aoy a. '^a.vC o-^ tA& '^yuA^- eAa^&-'^vi^& tk&v&o^, tk& o^^uCcC 3. €. li^Lttiamm' If <^. heA^e/pu (M^Ai^yyv& oAici cup^& to- ^^um^, amx£ to- kotcC tA& ttn^yyv ot ^. lA)-. lAkyiXAiyyuj^xyyi If ^. kwunbteA^ tA&v&iuyyfL, tk& l^aAvtCtCe^ ot awicL tiA/yyL Q/^&&vit&cC 1/)^ tA& Q.€A&cOwt& keA^eAdrnto amm^£/?o&cl aruL yyuAAJoe^cl B. Co batoc anU to ()oHl, all and singular the said goods and chat- tels to the said ^. €,. WULioAn^ V^ (^., and tk&vv executors, ad- ministrators, and assigns forever. And w-& hereby covenant with the said vendee that w& ci\.& the lawful owners of the said goods and chattels, that they are free from all incumbrances, that u^& have good right to sell the same as aforesaid, and that w-& will Warrant anli liefenir the same against the lawful claiins and de- mands of all persons. 3rn tDttne0fi( ta)()ereof, ^i^& koAye, hereunto set oaca^ hando. and sealo, this tw-e/ntAf-'I'iA/QZ day of (Z^i^^oQt in the year one thousand nine hundred and tw-eZv-e^. ISigned^ ^. ZO-. l/(^ovtki/yu^to^1. If €^. [seal] xxlv BOOKKEEPING Form V. Articles of Copartnership 3ittiCltSi of COpatttTttSfi^ip made and entered into this first day of August, one thousand nine hundred and twelve, between Malcolm D. Gilbert, of the City of Boston, County of Suffolk, and Commonwealth of Massachusetts, and Chas. M. Wentworth, of said Boston : toitnejsjsetft : jFitfiit* This copartnership is formed for the purpose of carrying on in said City of Boston a Jobbing Furniture business under the firm name of M. D. Gilbert & Co., and shall continue for two years from the date hereof unless sooner dissolved by mutual consent. ^etOtltl* As his contribution to the capital of the firm said Malcolm D. Gilbert hereby transfers to the said firm his business now located at No. 467 East Street, and said firm assumes and agrees to pay the outstanding liabilities of the said business. Said business is taken over at the net value of ^14,225, and is more particularly de- scribed in the Schedule of Assets and Liabilities hereto annexed. QLhittl* Said Chas. M. Wentworth contributes as his share of the capital as follows: cash, ^7000 ; stock of furniture, $1500 ; account with Foley Bros., $5735 ; total, $14,225. iFottttI). Bach partner shall, semi-annually, be credited on the books of the firm with interest at the rate of 6 per cent per annum on his share of the capital for the time being standing to his credit, before any division of profits is made, such interest charge to be treated as an expense of the business. jFiftf)* Each partner shall be credited with the sum of $100 per month as salary, and he may withdraw the same monthly, for services rendered, or, at his option, any balance remaining undrawn may be carried to such partner's capital account. Such salaries shall be charged as an expense of the business and not reckoned as profits. i^iTCt^* Profits and losses shall belong to, and be borne by, the said partners in equal shares. S^tbtntl)* Neither partner shall, for the benefit of any third pefrson, indorse any notes or negotiable paper, or become surety or guarantor or otherwise liable for the benefit of third parties, without the assent in writing of the other partner first obtained. ^iff|)t()» An account of the stock and of the debts and liabilities of the firm shall be taken at least annually, and the profits or losses computed and credited or charged to each partner''s capital account. After such accounting, either party shall be at liberty to withdraw his share of any net profits of the firm, and any profits not so withdrawn shall be added to and deemed a part of the capital account of such copartner. if^liutl). Neither partner shall engage in any other business, but each shall devote his entire time and attention to and put forth his best efforts and energy for the further- ance of the business aforesaid. STtTltl)* Complete and accurate books of account shall be kept, used in common, and each partner shall, at all times, have access thereto. To the faithful performance of all the terms and conditions of these Articles of Copartnership, the undersigned partners hereby bind themselves each to the other, his heirs, executors, administrators, and assigns. 3^n QlMttneSfiS ^\Wi)^tVtOf, the parties have hereto affixed their hands and seals, in duplicate, the day and year first above written. [Signed] ^ ?yioiUx>tm. 3. ^M-eAt [SEAL] ^ 0ha^. ?J1. W^&nt/iv-cyM. [seal] appe:n^dix f xxv Form VI. Power of Attorney linotD all itten \)v t|)ese presents that i4^&f ^' 1(^' Iflcyufcuyu oa^^cL Ro^yeAt Halt, e^noZvUiti/Kc^ tk& ICvm, oi IS. 10^. TJ^tcyufoyyi V ^o-., of the City of JSa^n, THcm^., have made, constituted, and appointed, and hy these Presents do rnahe, constitute, and appoint, ^kavt&o^ 771. RoAfvyvcyyicL, of the City of cAeAA^tan, THcma.., cyuA. true and law ful Attorney , for ua- and in (yuAy naine, place, and stead to- tvam^a^t (>^i(AAjyi&^A^ ouncL to- qamti amci vyiclxyi^& am.u o^ oLt oj^ tA& uote^, ike^k^, ctvO'ltoy, C&tZeAyQy, oyKcl all otkeAy irvoXAAiAyvemtoy ijyi waaXA'TicJ' ve^£AA)-&ci iyvL tk& eAM4A^& o-i ov ta^uAyyia i\xyyyv o^w (M4^\yyi&QA/ , ^ivin^ and hereby granting unto o^ov said Attorney full power and authority to qax^tv oavcL vyuioAA.& oAieA Im^XAAoyyuemZo^, oa^cL to- 4i.eAAo\mv alt a'wcL ev-eAAf a72 UNIVERSITY OF CALIFORNIA UBRARY \ w