StBiHlfmiiliMmfmratirffi'imiHUmJiHmBUTOfifianMiuimiiiaM ■-\ Cornell University Law Library. THE GIFT OF LILLIAN HUFFCUT BINGHAMTON, N. Y. November 27, 1915 9I8I Cornell University Library HF 5635.M82 Accountfna and business, jpractice,, for us 3 1924 024 912 929 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924024912929 AccouNTma and business PRACTICE FOR USE IN ALL SCHOOLS WHERE BOOKKEEPIWa IS TAUaHT BY JOHNH. MOORE COMMEEOIAL DEPAKTMENT, BOSTON HIGH SCHOOLS GEORGE W. MINER Commercial Depaktment, Westfield (Mass.) High School BOSTON, U.S.A. GINN & COMPANY, PUBLISHERS gCbe atfiensettm JJresa 1903 fbsif^. Copyright, 1902, by JOHN H. MOOEE and GEOEGE W. MINBB ALL BIGHTS BESERTED PEEFACE Accounting and Business Practice presents a methodical and practical development of the subject of bookkeeping. The student's introduction to his work is simple and interesting, and every step taken is clearly explained and illustrated. Important definitions are grouped so as to be readily accessible for reference. The memoranda of business transactions may be used either as a study of the theory of accounting, or as a study of theory and business practice. Unusual or complicated transactions are avoided. Nearly all entries in bookkeeping are simple and easily understood. It is worse than useless to attempt to introduce a student to all business forms used in all lines of business. After the most important business forms are mastered, the modification of such forms, as found in different lines of business, will be readily comprehended. The authors have endeavored to deal with the essentials of accounting. They believe that it is better to use difficult and exceptional transactions for special drills rather than to embody them in the different sets of the text. Business men have been frequently consulted in securing material for the memoranda of transactions. The forms used are such as may be found in modern commercial houses in every business center. The book is so arranged as to aid the teacher very materially in performing his work. JOHN H. MOORE, GEO. W. MINER. August, 1902. ui ACCOUNTING AND BUSINESS PRACTICE PART I— INTRODUCTORY WORK DEFINITIONS AND EXPLANATIONS ^ Bookkeeping is the art of making a systematic record of business trans- actions, enabling the proprietor to ascertain the true condition of his business. ■ A Business Transaction is an exchange of values. Value is the relation existing between two exchanges. There are two methods of keeping accounts, Double Entry and Single Entry. In Double Entry accounts are kept with persons, property, and allowances. In Single Entry accounts are kept, usually, with persons only. Debit is that which costs value. Credit is that which produces value. An Account is a collection of debits and credits under one heading. There are two classes of accounts : 1. Resource and liability accounts. 2. Loss and gain accounts. Resources or Assets are property belonging to the business or amounts due the business. Liabilities are amounts owed by the business. Inventories are all resources and liabilities of the business that are not found in the regular books of entry. Gains are realized when resources increase in value or liabilities diminish in value. Losses occur when resources decrease in value or liabilities increase in value. 1 To THE Teacher. — The student's work should hegin at Preliminary Drills, page 12. The definitions will be referred to and studied from time to time as the work progresses. 1 2 ACCOUNTING AND BUSINESS PEACTICE There are three kinds of accounts : 1. Accounts with property. 2. Accounts with persons. 3. Allowances. Allowances are made for the use of money, for early payment of invoices, etc. Interest and discount are allowances. The Left side of an account represents Debits ; the Right side of an account represents Credits. An Entry is the recording of a transaction. Net Credit is the difference between the debit and credit of the pro- prietor's account. Capital, at the beginning of business, usually, is the amount invested ; at other times it is the excess of resources over liabilities. Merchandise includes all commodities that are held for purposes of exchange. Expense is money paid out to carry on the business. Interest is money paid for the use of money. Discount is usually an allowance for early payment. Bills Receivable are the written promises of others to pay us, and are in our possession. Bills Payable are our written promises to pay others, and are held by others. Cash applies to money, bank checks, sight drafts, money orders, etc. On Account means that goods bought are to be paid for at some future time. Posting is transferring debit and credit items to their respective accounts in the ledger. (We post from journal, cash book, sales book, etc.) Present Worth of the proprietor's account : 1. Is net credit plus net gain ; or 2. Net credit minus net loss ; or 3. The excess of resources over liabilities. A Receipt is a written acknowledgment pertaining to the payment of money, labor, etc. A Voucher is some written statement the production of which estab- lishes a fact. When resources exceed liabilities a business is Solvent. When liabilities exceed resources a business is Insolvent. The Proprietor's Account shows his relation to the business, his invest- ments, withdrawals, etc. It is sometimes called the Stock Account. DEFINITIONS AND EXPLANATIONS 3 A Trial Balance is a testing of the ledger to show that the debits and credits are equal. It does not prove conclusively that the ledger is correct. (The teacher should explain why.) A Balance Sheet is a classification of resources and liabilities, of losses and gains, and of net results of the business to the proprietor. A Statement of the business shows the present condition and results of the business. A Statement of a ledger account is an abstract of the account, and shows the balance due thereon. The Journal contains debits and credits systematically arranged, the history of transactions, and amounts. The Ledger is a book containing the accounts of the business, the debits and credits having been collected from other books of entry. The Cash Book contains a record of cash received and paid out. A Book of Original Entry is a book in which entries are first made. An Auxiliary Book is subordinate to a book of original entry. A Sales Book contains a record of all merchandise sold. A Bill Book contains an itemized record of all notes received or given out by the business. The term Charge, used in bookkeeping, means debit. Red ink is used for : 1. All rulings. 2. Recording inventories in accounts. 3. Entering items that are to be transferred. Meaning of Red Ink. — In closing accounts a single red line means that the items above it are to be added. Double red lines, in closing an account, mean that the account is closed — the items and totals above the ruling are not to be used again. Any amount written in red ink is to be transferred, always to the oppo- site side of an account ; that is, if a red-ink entry is made on the debit side of an account, when transferred it is placed on the credit side. Closing by Balance. — In closing by balance (see model, page 11) the amount of an account appears as one item. When a page is filled the balance is carried to another page and to a new account of the same name. It is not necessary to close any account by balance when the books are closed. Such balances are made in the text-book to give the student practice in closing accounts. An Invoice is an itemized statement of goods bought or sold, contain- ing quantities, names, prices, etc. 4 ACCOUNTING AND BUSINESS PEACTICE A Compound Entry consists of the following : Several debits and one credit ; or One debit and several credits ; or Several debits and several credits. RULES FOR JOURNALIZING General Rule : 1. Debit that which comes into the possession of the business and costs value. 2. Credit that which goes out of the possession of the business and produces value. Note. — It must be borne in mind that it is the business that receives and parts with value, and not the proprietor. This distinction is of the utmost importance. Rule I. Proprietor's Account. — The proprietor is debited : 1. For withdrawals from the business for personal use. 2. For liabilities assumed by the business. 3. For net loss when the books are closed. The proprietor is credited : 1. For all investments in the business. 2. For net gain when the books are closed. Rule II. Property Accounts. — Property is debited, under its given name, when it comes into the possession of the business. Property is credited, under its given name, when the business parts with it. Note Property includes cash, merchandise, real estate, notes, etc. In order that the journalizing of bills receivable and bills payable may be more clearly understood, separate rules are given below. Rule III. Accounts with Persons. — Persons are debited: 1. When they get into our debt. 2. When we get out of their debt. Persons are credited: 1. When we get into their debt. 2. When they get out of our debt. Rule IV. Expense Account. — Expense account is debited for money paid out to carry on the business. Expense account is credited for the proceeds of the sale of any item previously debited to expense account. Note. — Expense includes rent, salaries, insurance, etc. In a large business separate accounts are kept with these items. RULES FOR JOURNALIZING 5 Rule V. Bills Receivable. — They are debited when received by the business. They are credited when the business parts with them. Rule VI. Bills Payable. — They are debited when redeemed by the business. They are credited when issued by the business. Rule VII. Allowances. — Allowances are debited, under their given names, when allowed by us to others. Allowances are credited, under their given names, when allowed by others to us. Note Allowances include interest, discount, collection, etc. In a large busi- ness separate accounts are frequently kept with these difierent items. THE SCRIPT FORMS AND MODELS In connection with the student's preliminary work he is directed to write some of the script forms given on subsequent pages. These forms represent the highest excellence in penmanship and will serve as models for the student in writing. The plan, statement, and arrangement of these models will 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. All the model forms given in the text merit the most careful study. In writing these models the student is learning how to place business transactions on the written page in the most approved manner. Business records are not only valuable when made but may be of especial impor- tance 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 in court as evidence, the explanatory part of the records is often the most important of all. It is the experience of attorneys that very few books of record that are produced in court have any value as evidence, and this is gen- erally true because of the incompleteness of explanatory matter. If explanations are not clearly made a correct entry is of little value as conclusive evidence. ACCOUNTING AND BUSINESS PEACTICB PflBC. Model Journal ,i:Z^-2.^^^^^^ / /^- Debits and Qaiaits. Explan/ilons. Debit Amoutit. Credit Amoaat. xaipff. ■" -U^^£?^.. y,^i!^ y-i^ ^v-. '^Sf 3 •i^S- 'C'tp^ L^^z^L^^t.-e^ '..Ji:n^'&=2^-?^kic^- t-.^P^-z^^'Si-i^^JW^.^fi'^'-aV- J.. Ofl.''Z^-l/-C-£^£---< /.^ /JTl Z0t?i! J-O fJ'O zyo Z'^O Z^4^ /zs- j/~s /■^^ //J- '(^0 ^0 zaa zyo Z4^4^ /zj- //J A^O ^6> SCKIPT FOEMS AND MODELS Model Ledger Woi Diy; 'Exprtiafloii. Puce. '.$ ; j .. Mb. Day. EijplanatloB. ^.Pafee. . $' 4 /- Zff^^ J' zyc /2-J // (py2:^2-^■^1?^L■,d-<^ ^a ^^^-^^2^ // , //^ <^,^ i^a^rn^. f 'j/j 4^a ACCOUNTING AND BUSINESS PKACTICE Model Trial Balance PaoB. / Name ol flccouirt. DeUl. Credn. 2 e?ff / "& O'A'Jzy ZS^f / ^/S ^a / (Oy:zJ^i,.£.-^>^i.^L£^ J-ff / yyZ^::^l,d-£^ /s6s ^0 6jf / c=^Ly^<:y^^c--:^'7^z,-iP-7-t^.d-^ Z^6^ /^^ / Model Balance Sheet /7S '/

^-^-^JJ^i.^.<^V^ =.^-i-c.^i^Oi:>-i^c,'?-z.y/^ /^i7 zi? 7 z/o /iPffff /r '/J -^L^.^^-u^A. * To be written in red ink. /r4^z J/ff 2 /J.JJ '£t. j//a vz s/j i^ ^ ^ 7^ J. U /faj 'Z4^jyff /// '/^/JJ a 4^/JJ J fa ~3<^j' Z33 0/ 3/7J \ <^/JJ #^ ZJ jr SCRIPT POEMS AND MODELS Ledger Closed /l^ / X z/ ¥2 J-tn.-^^. J 1 1 r z /r /^ J z/^ 3^ Z¥ s 3Z3 // 3/ /z 3^ 3/ t^J^'i't-'z^-e.'TtZi'-/^ ^ rsff 3/ ?^// /^fl 33 r^(ya-/a^7'i^c^£^ / » / Zff 1^0 J(9 / ^/,f 7^ sO^z^^-^^^^s-^^ 3i?7Z r4^ SC77Z rv^ .£J. / - /S^S 2^ Model for recording Inventories >'?^/2^T2^^^-^^W-^i.-^-f^ Jff C^z 7' V 7 r4^ ■z.^.^^ 2?. /i:f 4^, /boo ^/ A/'i^rf^ |5o.^ •^r^^^^A^. S>ate, /^ ^tt ^g^y?"-^ Slmount, $ //Z 4^r Forms of Indorsement for Notes and Checks A check is a written order upon a bank for the payment of a desig- nated sura of money. Checks are treated as cash. The use of business forms is an essential part of the student's work. The accompanying illustrations show how such forms should be written. 44 ACCOUNTING AND BUSINESS PEACTICE The student will copy each business form, being very exact in everypar- ticular, using ordinary writing paper, and then write the examples given after each form. Model Receipt SBoston, ,Mass..^)e^.-^^ '^J9. ff)n/A,r„ —^^^^.^^^^ ,^-^^ /^.^or..-/7-f^.^^^. /y^ / Z t ^ r P , ^-yo-T^^^^ y^-€'t/^^^<^^A.u-f^-^i-;'^ After copying the above write receipts for the following : S. M. Howe owes you $165, and pays you the whole amount. Note. — The last part of the receipt has these -words : in full of account. James Hess owes you $86.75, and pays you $36.75. Note. — The last part of the receipt has these words : to apply on account. Model Deposit Tickets THE UNION BANK DEPOSITED BY Boston, Mass., --^^^^ /, 19 Please list each check separately Bills JcT^^ Gold Silver Checks THE UNION BANK DEPOSITED BY Boston, Mass.r^^j^,f^. L^ ■£ ^ • — Cash paid per cash hook, total. . / o^ <^ • . a Cash on hand per cash drawer A^ <^ <^ l^ o Cash in bank per check book 4^^^^ ^^ Total 4^4^ (^ ^ A^ a On the next page is the proper form for a promissory note. The student will copy it a number of times until the form is clearly in mind. The person who signs a note is the maker; the person in whose favor it is drawn is the payee. ' 48 ACCOUNTING AND BUSINESS PRACTICE Model Note '.^^^Kpronuse to , >^^iC>^^ /i:r^.^^,^'-g-;^,^<5^ ,^:^^^;>^^ Value received To THE Teacher. — Give memoranda for a number of notes and have the class write the notes. Model Letter ordering Goods -■(:i^^C^--a- 7 r 7.^ /oo z6o / ssC A^O ^/^■SJ- y.r 50 ACCOUNTING AND BUSINESS PRACTICE SET III— MARCH AND APRIL WORK FOR MARCH The object of this set is to instruct the student in the elementary principles of business practice. Business forms are employed, and all transactions of cash admit of the handling of currency. The student is required to write letters ordering goods. He has an account with the bank and makes deposits and draws checks. The set covers a period of two months, March and April, the books being closed at the end of each month. Price Lists for March and April ARTICLE 1 2 3 4 5 COST SELLING PRICE COST SELLING PRICE COST SELLING PRICE COST SELLING PRICE COST SELLING PRICE Clover Seed, bu. Dwarf Beans, " Field Corn, Garden Corn, " Millet, Com., " Oats, Spring Rye, " Timothy Seed, " Wheat, $3.50 4.00 .44 1.75 .90 .30 1.00 2.25 .80 13.70 4.20 .48 1.90 .98 .34 1.10 2.40 .90 13.40 4.10 .45 1.80 .95 .32 1.05 2.30 .85 ?3.65 4.30 .50 1.95 1.05 .37 1.16 2.50 .96 P.60 3.95 .42 1.70 .85 .28 .95 2.20 .75 $3.80 4.15 .48 1.90 .95 .33 1.06 2.40 .90 $3.55 4.05 .43 1.65 .88 .33 1.00 2.35 .90 $3.75 4.25 .48 1.80 .98 .38 1.15 2.50 1.00 P.75 3.90 .40 1.60 .80 .35 .90 2.45 .85 $4.00 4.15 .46 1.80 .90 .40 1.05 2.65 1.00 To THE Teacher. — Assign price lists to the different students, and note that all buying and selling is to be according to the list assigned. Have the prices copied on a price card for convenience. The books to be used in this set are: journal; ledger; sales book; cash book ; purchase book. Directions and Suggestions. — The teacher may require that this set be written in either of the following ways : 1. Simply recording the transactions as in the preceding sets. 2. In addition to the above all business forms may be written. 3. In addition to recording the transactions, writing the business forms, etc., the student may do the business called for, such business to be trans- acted at the teacher's desk, or at offices. The latter plan is the most helpful, and the memoranda and all direc- tions are prepared for business practice. SET III — MARCH 51 i Prove the cash at the close of each day's work. No matter how little has been done, prove the cash each day. The form to be used in proving cash is given on page 47. i After writing each form have the same corrected by your teacher before recording in your regular books. Do not neglect this. To THE Teacher. — Before writing the set have the students journalize the work given in March, and note which items will be placed in the cash book. Have the cash book written, in the regular work, on journal paper, all other work to be put in the regular books. Do much drilling on business forms. Business Forms for March Note Each student will be supplied by his teacher with a large envelope of blank business forms. The following forms are to be made out by the student before begin- ning work for March. In all the invoices the student is represented as the purchaser. In signing notes, receipts, etc., the student will write the name given simply as a matter of convenience. Number the forms consecutively. Form I : Invoice of E. C. Ferry, City, March 2. Terms : cash. 50 bu. Clover Seed 100 bu. Field Corn 100 bu. Oats Receipt the bill in the following manner : Received payment, E. G. Ferry. Use invoice paper from your envelope of blank business forms. Fold and brief and have the same corrected by your teacher. Place it in the Incoming Papers envelope. Form 2 : Invoice of S. D. Welch, City, March 5. Terms: on account. 20 bu. Dwarf Beans 40 bu. Garden Corn 100 bu. Millet 100 bu. Wheat Do not receipt the bill. Fold and brief, have it corrected, and place it in the Unpaid Bills envelope. Form 3 : March 7 Amos Graves receives of you |35 for rent of the store. Make the receipt in your favor. Form 4 : Bill of David Ross for office books and stationery, March 8 Terms : cash. Office Books $8.60 Stationery 4. $12.50 Make out the bill and receipt it. Fold and brief. 52 ACCOUNTING AND BUSINESS PRACTICE Form 5 : Invoice of Henry Bruce, City, March 10. Terms : on accovmt. 100 bu. Spring Eye 50 bu. Timothy Seed Make out the bill in the usual form but do not receipt it. Form 6: Bill of I. N. Moss for 2 tons of coal at 15.20 per ton, March 11. Terms: cash. Receipt the bill. Form 7: Bill of A. C. Webb, City, for office safe, |75, March 12. Terms: cash. Receipt the bill. Form 8 : Invoice of Haynes & Co., City, March 14. Terms : on account. 30 bu. Dwarf Beans 100 bu. Spring Eye 200 bu. Field Corn 200 bu. Wheat 100 bu. Millet Make out the bill but do not receipt it. Fold and brief. Form 9 : Invoice of S. D. Welch, City, March 27. Terms : on account. 10 bu. Dwarf Beans 100 bu. Millet 100 bu. Eield Corn 100 bu. Oats 20 bu. Garden Corn Make out the bill but do not receipt it. Fold and brief. Form 10 : Invoice of Henry Bruce, City, March 28. Terms : on account. 100 bu. Spring Eye 200 bu. Wheat Make out the bill but do not receipt it. Fold and brief. Form 11: Write a note, in your favor, at 30 days, with interest, for fl80, dated March 29. Sign as follows : Jesse Watson. Form 12 : Write a receipt, in your favor, for f 30, dated March 31. Sign the name of your teacher. All the above forms should be examined and corrected by your teacher. If approved by him, place all in the envelope marked Incoming Papers. To THE Tbacher. — After the incoming forms have been completed and cor- rected the envelope containing them maybe returned to the student, to be retained by him and the forms -withdrawn as they are needed. If no offices are used this plan should be adopted. If the teacher so desires, all outgoing papers may be retained by the student until the completion of any given set. An ordinary legal envelope properly labeled may be used for filing such papers. The student will now take up the work of Set III. SET III — MARCH 53 Memoranda of Transactions for March * 1. Commence the Grain and Seed Business tliis day, investing cash, 12400. Place the above memoranda in your journal, but make no journal entry. Enter in the cash book. Receive the cur- rency from your teacher. 2. Write a letter to E. C. Ferry, City, ordering the goods outlined in Form 1, page 51. See model letter for ordering goods, on page 48. Hand the letter to your teacher and receive the invoice of Form 1, noting that it is correct in every detail. Pay for the invoice. Enter in the cash book, right side, Mdse. Place the invoice in the Paid Bills envelope. 3. John Williams, City, has written you a letter ordering the follow- ing goods. Fill the order. Terms : cash. 20 bu. Clover Seed 50 bu. Field Corn 40 bu. Oats Make-an invoice of the goods (see model form, page 46), receipt the bill, pass it to your teacher, and receive the money. Be careful in counting all the cash received or paid out. Enter in the cash book, left side, Mdse. 4. Deposit in Union Bank $1500, cash. Make out a deposit ticket ; then take your pass book, currency, and deposit ticket to your teacher and receive directions from him. Record only in the check book, under directions given by your teacher. Note. — When we make a deposit in a bank an account is opened with us by the bank. Before such an account is opened the depositor is required to write his name in a book provided by the bank, such book containing the signatures of all the depositors. One should write his name in just the manner or form he uses when signing any business paper or document. By reference to this book the bank can easily identify any signature. In large cities various requirements must be observed before opening an account. Nearly all banks require persons to be identified before receiving a first deposit. 6. Write a letter to S. D. Welch, City, ordering the goods outlined in Form 2. Hand in the letter and receive the invoice. Record in the pur- chase book. Place in the Unpaid Bills envelope. 54 ACCOUNTING AND BUSINESS PEACTICE 6. John Wells, City, has written you a letter ordering the following gepds. Fill the order. Terms : on account. 5 bu. Dwarf Beans 20 bu. Garden Corn 60 bu. Millet Make out the invoice, have the same corrected by your teacher, and then record in the sales book. After recording hand in the invoice. Consult your teacher about opening your sales book. 7. Pay rent of the store in cash, $35. Pay the money and get a receipt. Form 3. Record in the cash book. Expense. 8. Pay bill of David Ross, in cash, for office books and stationery, 112.50. Hand in the money and get the receipted biU, Form 4. Record in the cash book, Expense. 9. Give S. D. Welch your check, to apply on account, $200. Make out the check under the direction of your teacher. After recording in the cash book hand in the check. Note. — A receipt need not be taken when an amount is paid by check, as the canceled check will be returned to you as a receipt. 10. Write a letter to Henry Bruce, City, ordering the goods outlined in Form 5. Hand in the letter and receive the invoice. Record in the purchase book. 11. Pay bill of I. N. Moss, in cash, for 2 tons of coal, Form 6. Hand in the currency and get the receipted bill. Enter in the cash book, Expense. 12. Pay bill of A. C. Webb, City, by check, for office safe, $75, Form 7. Make out the check and hand it in, and receive the receipted bill. Enter in the cash book. Expense. Consult your teacher about carrying forward in your check book. 13. Receive cash of John Wells, to apply on account, |100. Make out the receipt, hand it in, and receive the money. Enter in the cash book. Place the money in the Business Cash envelope. 14. Write a letter to Haynes & Co., City, ordering the goods out- lined in Form 8. Receive the invoice and record it in the purchase book. SET III — MARCH 55 15. Boyd & Co., City, have written you a letter ordering the follow- ing goods. Fill the order. Terms : on account. 100 bu. Eield Corn 50 bu. Spring Eye 100 bu. Millet 10 bu. Dwarf Beans Make out the invoice and have it corrected. Enter in the sales hook. Hand in the bill. 16. Deposit cash, $300. Follow the preceding directions for deposits. 17. Pay Henry Bruce by check, $112.50, to apply on account. Enter in the cash book. 18. Howard Young, City, has written you a letter ordering the fol- lowing goods. Fill the order. Terms : on account. 20 bu. Clover Seed 10 bu. Timothy Seed Make out the invoice. Record it in the sales book.. Hand in the invoice. 19. Jesse Watson, City, has written you a letter ordering the follow- ing goods. Fill the order. Terms : on account. 200 bu. Wheat Enter in the sales book. 20. Withdraw $50 for personal use, in cash. Take the currency from the envelope marked Business Cash and place it in the one marked Personal Cash. Enter on the right side of the cash book (student's name). 22. Receive cash of Boyd & Co., to apply on account, $200. Enter in the cash book. Hand in the receipt and receive the currency. 23. Give Haynes & Co. your check, to apply on account, $500. Enter in the cash book. Hand in the check. 24. Write a letter to S. D. Welch, City, ordering the goods outlined in Form 9. Follow the preceding directions for similar transactions. Enter in the purchase book. 25. Write a letter to Henry Bruce, City, ordering the goods outlined in Form 10. Follow the preceding instructions. Enter in the purchase book. 26. John Wells, City, has written you a letter ordering the following goods. Fill the order. Terms : on account. 60 bu. Spring Eye 160 bu. Wheat Make out the invoice. Record it in the sales book. 56 ACCOUNTING AND BUSINESS PRACTICE 27. Give S. D. Welch your note at 10 days, to apply on account, 1100. Write the note and have the same corrected by your teacher. Get directions about the journal entry. Hand in the note,, 28. Boyd & Co., City, have written you a letter ordering the fol- lowing goods. Fill the order. Terms : on account. 100 bu. Wheat 10 bu. Clover Seed 5 bu. Dwarf Beans 10 bu. Garden Corn Make out the invoice. Record it- in the sales book. 29. Receive a note made by Jesse Watson, Form 11. Consult your teacher about the journal entry. Place the note in the Unpaid Bills envelope. 30. Receive cash of John Wells, to apply on account, $100. Write the receipt and get the currency. Enter in the cash book. 31. Oscar Wilson, City, has written you a letter ordering the fol- lowing goods. Fill the order. Terms : cash. 50 bu. Field Corn 100 bu. Oats 10 bu. Garden Corn 150 bu. Spring Eye Make the invoice, receipt it, and receive the currency. Enter in the cash book, Mdse. 31. Pay clerks' salaries for the month in cash, $80. Hand in the currency and get a receipt. Form 12. Enter in the cash book, Expense. Inventories, March 31, 19 — Merchandise ; 40 bu. Dwarf Beans 60 bu. Oats 200 bu. Field Corn 20 bu. Garden Corn 150 bu. Millet 50 bu. Spring Eye 40 bu. Timothy Seed 50 bu. Wheat Expense : Office Safe Office Books $75. 8. Office Supplies Coal 2.75 6.40 $92.16 SET III — MAECH 57 Closing the Work tor March Have all books corrected by your teacher before closing. After the cash-book manuscript has been corrected by your teacher, record in the regular cash book. Leave your pass book at the teacher's desk or business office. Space for ledger accounts : Student's account, one-half of a page. Merchandise account, one-half of a page. All other accounts, one-third of a page. The different books should be closed as follows : Cash Book. — Find the correct balance (consult your teacher); then rule and close in just the same form as the model cash hook, pages 40 and 41. Sales Book. — After the last item in the sales book rule a single red line, and one line below rule two red lines, parallel ; place the footing of the sales book between these rulings. On the same line upon which the footing has been written, at the left, write To Mdse. This closes the sales book. Purchase Book. — Rule in the same manner as the sales book, and at the left write Mdse. Br. The sales book should be ruled the same as the journal — a red line upon either side of the date. The different books should be posted in the following manner : Cash Book. — When a cash book is used it is not necessary to open a cash account ia the ledger — the cash book is the cash account. The left side of the cash book represents all cash received, and therefore is the debit of cash; hence credit each item that appears on the left side of the cash book. (Ask your teacher to explain fully.) The right side of the- cash book represents all cash paid out, and therefore is the credit of cash; hence, in posting, debit each item that appears on the right side of the cash book. Remem- ber the paging. (Teacher will explain fully.) In the explanatory column of the ledger write 0. B. for each item posted from the cash book. This is necessary, as we are now posting from several books to the ledger. Sales Book. — Debit each name for the amount of each sale in the sales book and credit merchandise for the footing. In the ledger write S. B. for explanation. (Ask your teacher to explain.) 58 ACCOUNTING AND BUSINESS PEACTICE Purchase Book. — Credit each name for the amount of each purchase in the purchase book and ■debit merchandise for the footing. In the ledger write P. B. for explanation. (Ask your teacher to explain.) Journal. — Post the journal as usual. Use J. for explanation. Inventories. — Enter the inventories in your journal, just below the last journal entry. Find the value of the merchandise at the cost price given in your list number. Balance Sheet. — First take a trial balance of your ledger. Your ledger will not balance without using the balance from the cash book. After Cash, on your trial balance, in the debit column, write the amount of the balance as it appears in your cash book. After making the trial balance proceed to make a balance sheet. The net gain will be verified by your teacher. Statements. — After your balance sheet has been accepted by your teacher make two statements of the business for the month, as follows : 1. Statement of resources and liabilities. 2. Statement of losses and gains. If necessary, consult the model forms for statements, page 10. Closing the Ledger. — Close only the following : 1. Merchandise. (Use inventory.) 2. Expense. (Use inventory.) 3. Loss and Gain. 4. Student's account. Bo not close any of the other accounts. Pass all your books to your teacher for inspection and approval. If he accepts your work, you are ready for the next exercise. REVIEW EXERCISES 1. Analyze each item and entry in the journal. 2. Analyze each entry in the cash book. 3. Analyze each entry in the sales book and the purchase book. 4. Analyze each account on the balance sheet. SET III — MAECH AND APRIL 59 SET III — MARCH AND APRIL work for april Business Forms foe April The following forms are to be made out by the student before begin- ning the work for April. Form 13 : April 1 Amos Graves gives you a receipt for $35 for rent of the store. Write the receipt in your favor. Form 14 : Invoice of Henry Bruce, City, April 6. Terms : on account. 50 bu. Clover Seed 300 bu. Oats 60 bu. Garden Corn 100 bu. Millet Fold, brief, and have corrected. Form 15: Invoice of S. D. Welch, City, April 9. Terms: on account. 200 bu. Field Corn 100 bu. Spring Eye 200 bu. Wheat Fold, brief, and have corrected. Form 16 : Invoice of C. V. Cronin, City, April 11. Terms : cash. 60 bu. Timothy Seed Form 17 : Write a note, in your favor, at 10 days, for flOO, dated April 14. Sign as follows : Boyd & Co. Form 18 : Invoice of Smith & Bowers, City, April 25. Terms : cash. 20 bu. Dwarf Beans 200 bu. Field Corn 60 bu. Garden Corn Make out the invoice and receipt it. Fold and brief. Form 19 : Write a receipt, in your favor, for $30, dated April 30. Sign the name of your teacher. Memoranda of Transactions for April Directions and Suggestions. — Set III comprises two months, March and April. The work following is a continuation of the work in March. Each student will use the same price list, etc., as in March. The memoranda for April are in just the same line as those given in March. As such full and explicit instructions were given in the March work much of the explanatory matter will be omitted in April. If anything is not understood, consult your teacher. 60 ACCOUNTING AND BUSINESS PRACTICE 1. Amos Graves receives of you $35 in cash for rent of the store. Hand in the currency and get a receipt, Form 13. 2. Give Henry Bruce your check, in full of account. All accounts are in the ledger; in full of account means that we pay the balance shown by the ledger account. 3. Howard Young pays you cash, in full of account. ' Make a receipt for the money and hand it in. Enter in the cash book. 4. Deposit cash, $500. All the business forms you now write should he very much bet- ter than the work you did last month. 4. Pay your note, in favor of S. D. Welch, in cash. The note was given March 25 and is due to-day. When you pay the money have the note marked Paid across the face. This cancels the note and it serves as a receipt. Enter in the cash book. Place the canceled note among the receipts. 5. Deposit cash, $300. Are you doing your best work all the time ? 6. Write a letter to Henry Bruce, City, ordering the goods outlined in Form 14. 7. Howard Young, City, has written you a letter ordering the fol-. lowing goods. Fill the order. Terms : on account. 100 bu. Pield Corn 50 bu. Millet 20 bu. Timothy Seed &. Give S. D. Welch your check, to apply on account, $200. 9. Write a letter to S. D. Welch, City, ordering the goods outlined in Form 15. 10. Boyd & Co., City, have written you a letter ordering the follow- ing goods. Fill the order. Terms : on account. 30 bu. Garden Corn 20 bu. Clover Seed 100 bu. Oats 11. Write a letter to C. V. Cronin, City, ordering the goods outlined in Form 16. Pay the bill in cash. 12. P. H. Morse, City, has written a letter ordering the following goods. Fill the order. Receive cash, $125. 20 bu. Timothy Seed 100 bu. Field Corn 100 bu. Wheat SET III — APKIL 61 Make out the invoice. Terms : cash and on account. Record the entire invoice in the sales book. Hand in the invoice and receive the cash and give a receipt. On the left side of the cash book write: P. H. Morse, on invoice, $125. 13. Give Henry Bruce your note at 30 days, to apply on account, $200. Write the note and have it corrected by your teacher. Enter in the journal. Hand in the note. 14. Receive a note from Boyd & Co., Form 17. Enter in the journal. Place the note in the Unpaid Bills envelope. 15. Jesse Watson, City, has written a letter ordering the following goods. Fill the order. Terms : on account. 20 bu. Dwarf Beans 50 bu. Spring Eye 50 bu. Millet 10 bu. Timothy Seed 16. Receive of Howard Young cash, in full of the invoice sold him on the 7th. Refer to the sales book for the amount of the invoice. Make out the receipt and receive the currency. Enter in the cash book. 17. Deposit cash, $200. 18. Give S. D. Welch your check for the amount of the invoice bought of him on the 9th. Refer to the purchase book for the amount of the invoice. Write the check. Hand in the check and have the invoice receipted. Place the receipted invoice in the Paid Bills envelope. 19. Howard Young, City, has written a letter ordering the following goods. Fill the order. Terms : on account. 100 bu. Wheat 20. F. G. Morgan, City, has written a letter ordering the following goods. Fill the order. Terms : cash. 10 bu. Clover Seed 10 bu. Timothy Seed Make out the invoice, receipt it, hand it in and receive the money. Enter in the cash book, Mdse. 21. Boyd & Co., City, have written you a letter ordering the follow- ing goods. Fill the order. Terms : on account. 30 bu. Timothy Seed 20 bu. Garden Corn 50 bu. Millet 40 bu. Spring Eye 62 ACCOUNTING AND BUSINESS PRACTICE 22. John Wells, City, has written a letter ordering the following goods. Fill the order. Terms : on account. 200 bu. Oats 50 bu. Millet 100 bu. Eield Corn 23. Receive cash of Boyd & Co., to apply on account, fT65. Make out the receipt and receive the currency. 24. Boyd & Co. pay their note, in your favor, due to-day. Present the note at the office and receive the money. Have the note canceled. Enter in the cash book. 25. Write a letter to Smith & Bowers, City, ordering the goods out- lined in Form 18. Hand in the letter, receive the invoice, and pay for the same in cash. Enter in the cash book. 26. Johnson & Pease, City, have written a letter ordering the follow- ing goods. Fill the order. Terms : cash. 10 bu. Dwarf Beans 100 bu. Field Corn 26 bu. Garden Corn Make out the invoice, receipt it, and get the money. Enter in the cash book, Mdse. 27. Deposit cash, |250. 27. Receive cash of Jesse Watson, on account, fl75. Make out the receipt and get the money. 28. Discount your note, in favor of Henry Bruce; face of the note, 1200. This note has yet 15 days to run, and he allows the discount for that time, 60/; amount of your check, $199.50. Hand in the check and receive the note can- celed. Enter in the cash book as follows : right side, Bills Payable, 1200;. left side. Discount, 50/. 28. Jesse Watson pays his note and interest in cash; face of note, $180 ; interest, 90/. You receive $180.90. Enter in the cash book as follows : left side. Bills Receivable, $180 ; Interest, 90/. 29. Receive cash of Howard Young for the invoice sold him on April 19. 30. Pay clerk hire in cash, $80, Form 19. 30. Deposit all the cash on hand. Leave your pass book at the bank. SET III — APEIL 63 Ikventobies, April 30, 19 — Merchandise : 30 bu. Dwarf Beans 60 bu. Millet 20 bu. Clover Seed 60 bu. Oats 200 bu. Keld Corn 60 bu. Spring Eye 45 bu. Garden Corn 60 bu. Wheat Eind the value of the above at the cost price of your list number. Expense : Office Safe $75. Office Books 7.50 $82.50 Closing the Woek por April Pass all work to your teacher for correction. If any work has been done on manuscript paper, copy it into the regular books after it has been corrected by the teacher. Close the following books the same as in March: cash book; sales book ; purchase book. Posting. — In posting observe the following : 1. Post all April work into the same accounts as in March. 2. If any new accounts are needed, give each one-third of a page. 3. Post all books the same as in March. Balance Sheet and Statements. — After posting proceed as follows : 1. Make a trial balance. 2. Make a balance sheet. 3. Have them corrected by your teacher. 4. Make a statement of resources and liabilities. 5. Make a statement of losses and gains. Closing the Ledger. — Proceed to close the ledger as follows : 1. Open a Loss and Gain account or use the same one as in March. 2. Close the following into the Loss and Gain account : Merchandise. (Use inventory.) Expense. (Use inventory.) Interest. Discount. 64 ACCOUNTING AND BUSINESS PRACTICE 3. If any help is needed, consult your teacher. 4. Close the Loss and Gain account. 5. Close the Proprietor's account. (Present worth.) 6. If any accounts balance, close according to previous directions. 7. All the remaining accounts should be closed by balance. Hand all books to your teacher for correction and criticism. Note. — Make a check in favor of your teacher for the amount of your bank balance. ORAL EXERCISES Journalize, orally, each item in March and April. Analyze each account on the balance sheet. REVIEW EXERCISES The following is an important exercise in the closing of accounts and should be studied under the direction of the teacher. The Trial Balance. — 1. If the trial balance shows the books in balance, does that prove the ledger correct ? Give reason. 2. If books are not in balance, what should be done? How are the following accounts closed, under the conditions named ? Merchandise Account. — 1. When the account shows a gain, using an inventory. 2. When the account shows a loss, using an inventory. 3. When the account shows a gain, not using, an inventory. 4. When the account shows a loss, not using an inventory. Discount Account. — 1. When the account shows a gain. 2. AVhen the account shows a loss. Interest Account. — 1. When the account shows a gain. 2. When the account shows a loss. Expense Account. — 1. When an inventory is used. 2. When an inventory is not used. The Balance Sheet. — 1. What do the first two columns show? the third column? the fourth column? the fifth column? the sixth column? 2. How is the net credit found ? 3. How is the present worth found ? 4. In what two ways is the present worth shown ? 5. Why are the inventories entered in red ink ? 6. What is the value of a balance sheet ? SET IV — MAY AND JUNE 65 SET IV— MAY AND JUNE WORK FOR MAY The work for May and June follows the same general plan of business , practice as that given in March and April. No new books are used, but the memoranda of transactions are varied, giving more extensive work in invoicing, etc. These sets in business practice are designed to give the student careful preparation for the more advanced work of the subsequent sets in the text-book. Note. — -In tte introductory business practice all invoices of purchases and sales are represented as being in the city, to avoid the use of so many new forms at one time. The plan of this book is to give a solid foundation in elementary business practice before undertaking the advanced work. Business Forms for May The following forms are to be written by the student before beginning the work of the set. Form I : 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, No. 4 3 doz. Handsaws Make out the invoice and receipt it. Fold and brief. Form 2 : Bill of H. L. Mills, City, May 4. Terms : cash. Set of Office Books $12 Office Stationery 3 115 Forms: Invoice of Wilder & Chase, City, May 7. Terms: one-half in 3 days, one-half in 10 days. 8 doz. Coal Hods 5 doz. Lanterns 12 doz. Door Knobs 10 kegs Nails 15 doz. Hammers 2 doz. Planes, No. 4 10 Ice-cream Freezers 5 doz. Carpenter's Chisels Make out the invoice but do not receipt it. Form 4 : Invoice of Dunn & Sanford, City, May 9. Terms : 10 days. 10 doz. Railroad Picks 12 doz. Axes 6 doz. Steelyards 20 doz. Try-squares 66 ACCOUNTING AND BUSINESS PEACTICE a a o o lO o o lO o lO lO lO o o in o O o r-i m CM o Ol CO t^ CO zo i> CO ot o CI CO in Cl [IjS to Oi cn 1— i lO nn Cl CO r-{ w CO '^ 1—1 ^ lO Cl CO lO ^ Ol CO 1— t 1-t 1-1 o to (-^ lO o lO lO lO lO 1-1 o <-> r^ o o o o t- oo b- o L^ a t^ (M CO CM tH Oi iH o in o Cl CO o CO t- CO m CO CO T— ( o iH CO ■^ CO in CI o rH CI C35 -* guj o r> lO o lO o n o o C-5 o o o O in lO o — o o o lO <-> lO lO o O o O o J " o o o 1-H o o lO CO I:- CO CI CI o o o O CO -1 q: a O) CO 1— i LO 00 CI CO .—1 t- CO ^ o CO in 1-1 CO 1—1 CO 1—1 CO CO o o o >o <-! o o o C-5 o o o <-> <-) r-i o lO s CO lO lO CO 00 lO lO CO CO o CO iH o o o lO t^ C3 CO tr- CO CO CO tH CI T~i CO ^ CO CO iH 1—1 CO 1-1 03 -* a o O o o o o o o o o o lO o O o n o — C3 o O lO (M o o lO CI lO o 00 CI o O m in o -I a: in O h- tH CO a> CI CO 1-( 00 CO ^ CI CI h- CI t- w °" €& T— 1 CI CO 1—1 1— ( 1— ( IM o O o o o o o o o lO o o o o o r> o o o >o 00 o o o '^ (M CI o CJ o o in o o o * oo >o ^ t- 03 1—1 CI 1— ( CO lO CO in CI C3i Cl o iH in a lO o o o o o o lO o o o C-5 o O o o o Ij " t~ o o o o o o CI CO o o o o o o o _j a: ^ OJ c« T-i iO oo ,-( CO rH f~ CO ^ o CO tH w ee^ cq CO 1-t iH 1—1 lO t-> c-1 lO >o o o o IC o o lined in Form 12. Record in the purchase book and give your check for one-half the amount of the invoice. 13. Give Wilder & Chase your check for the amount of the invoice of the 3d. 14. Withdraw 175 for personal use. Follow the preceding directions when a withdrawal was made by check. May 12. 14. L. P. Austin, City, has written a letter ordering the following goods. Fill the order. Terms : one-half cash, one-half in 30 days. 4 doz. Carpenter's Chisels 2 Grindstones 3 Copying Presses 3 doz. Hammers 3 doz. Door Knobs 3 doz. Handsaws Enter the whole amount in the sales book. Receive the cash for one-half, and give a receipt. 15. Write a letter to Wilder & Chase, City, ordering the goods outlined in Form 13. 16. P. D. Anson pays his note and interest, due to-day. Present the note and receive the money. Remember to make two entries in the cash book. 76 ACCOUNTING AND BUSINESS PRACTICE 17. Your note, in favor of Turner & Moss, is due to-day. Pay the same by check. Receive the note when you hand in the check. 18. Take from the business, for personal use, the following: 1 Ice-cream Freezer 1 set Knives and Forks 1 Copying Press Enter in the sales book, using cost prices. 18. Deposit aU the cash on hand except |50. 19. V. M. Furnham, City, has written a letter ordering the following goods. Fill the order. Terms : cash. 6 kegs Nails 2 doz. Railroad Picks Make out the invoice and receipt it. Receive the money. 20. Receive cash of Arnold & Davi^ for the balance of the invoice of the 6th. 21. Write a letter to Turner & Moss, City, ordering the goods out/ lined in Form 14. 22. Wilson & Barton, City, have written a letter ordering the follow- ing goods. Fill the order. Terms : one-half cash, balance in 10 days. 5 doz. Carpenter's Chisels 5 Grindstones 3 doz. Coal Hods 3 doz. Hammers 4 doz. Door Knobs 2 doz. Handsaws Follow directions for transaction, June 14. 22. Deposit all the cash on hand except |25. 23. Give Dunn & Sanford, City, your note at 10 days, with interest, for 1200 and your check for the balance of the invoice received of them on the 5th. Write the note and enter in the journal. Enter the amount of the check in the cash book. Consult your teacher. 24. John H. Sand, City, has written a letter ordering the following goods. Fill the order. Terms : one-half cash, one-half in 10 days. 6 Ice-cream Freezers 6 doz. Mortise Locks 8 sets Knives and Forks 10 kegs Nails 5 doz. Lanterns 3 doz. Planes, No. 4 Be careful to make the two entries. 25. P. D. Anson, City, has written a letter ordering the following goods. Fill the order. Terms : cash, $100, balance in 10 days. 5 doz. Railroad Picks 4 doz. Axes 6 doz. Steelyards 3 doz. Try-squares 26. Receive cash of Strong & Hunter for the invoice of the 11th. SET IV — JUNE 77 27. Strong & Hunter, City, have written a letter ordering the follow- ing goods. Fill the order. Terms : 10 days. 3 doz. Eailroad Picks 4 doz. Try-squares 10 kegs Nails 2 doz. Axes 28. Henry Zaner, City, has written a letter ordering the following goods. Fill the order. Terms : cash. 6 kegs Nails 29. Hall & Son, City, have written a letter ordering the following goods. Fill the order. Terms : on account. 2 Copying Presses 3 Ice-cream Freezers 3 Grindstones 2 doz. Handsaws 30. Pay clerks' salaries for the month, |60, by check. Make the check payable to your teacher. 30. Deposit all currency on hand and leave your pass book at the bank. Have all the work for the month corrected by your teacher. Inventories, June 30, 19 — Merchandise : 8 doz. Carpenter's Chisels 8 doz. Lanterns 6 doz. Coal Hods 12 doz. Mortise Locks 4 Copying Presses 5 kegs Nails 9 doz. Door Knobs 9 doz. Planes 3 Grindstones 7 doz. Eailroad Picks 3 doz. Hammers 6 doz. Steelyards 1 doz. Handsaws 8 doz. Axes 1 Ice-cream "Freezer 6 doz. Try-squares 9 sets Knives and Forks Expense : Office Books and Stationery $12.50 Closing the Work for June May and June constitute one set of books ; therefore the work for June will be posted to the same accounts as for May. For closing the books, posting, making a trial balance and a balance sheet, statements, etc., follow the directions given for April. After closing the Loss and Gain account and showing the student's present worth, all the remaining accounts should be closed. Note. — After closing all the work for June give your teacher a check for the amount of your bank balance, and hand in all your books. 78 ACCOUNTING AND BUSINESS PEACTICE A General Review Exercise To THE Teacher. — The work of the following exercise should be done by the student without any assistance whatever. If the result is not satisfactory, the student should be given drills until the work he does is satisfactory. Directions and Suggestions. — In this exercise observe the following directions : 1. Use manuscript cash book, sales book, purchase book. 2. As total amounts are given, the records in the sales book and purchase book w^ill be simply the names and the amounts. 3. Use the current month for dates. 4. After entering the transactions in the different books, post them to the ledger ; make a trial balance and balance sheet and the statements. 5. Close the ledger, and hand all work to your teacher. Memoranda op Transactions 1. Begin the Provision Business this day, investing cash, $2000. 2. Buy of Henry Wilson on account merchandise amounting to |310. 3. Sell to J. Mitchell for cash merchandise amounting to $36. 4. Sell David Bell on account merchandise amounting to fl27. 5. Buy of John Williams merchandise amounting to $865.45. Pay cash, $500, balance on account. 6. Pay cash for books and stationery, $8.75. 7. Pay Henry Wilson cash for one-half the invoice of the 2d. 8. Sell J. D. Sampson on account merchandise amounting to $450. 9. Receive cash of David Bell for invoice sold him on the 4th. 10. Sell J. Mitchell merchandise amounting to $235. Receive cash, $100, balance on account. 11. Buy of Amos Hines merchandise amounting to $675, on account. 12. Give Henry Wilson your check for balance on invoice of the 2d. 13. Sell Richard Esten on account merchandise amounting to $315. 14. Pay clerk's salary in cash, $25. 15. Receive cash of J. D. Sampson, on invoice of the 8th, $300. 16. Give Amos Hines your check for one-half the invoice of the 11th. To THE Teacher. — The merchandise inventory is to be given by you. Give each student a different amount. Use any number between |517 and $938. Observe the work of each student very carefully and give much drill upon the weak portions of work. PAET II— INTERMEDIATE WORK DRAFTS A Draft is a written order by which one party directs another to pay a certain sum, named therein, at a speciiied time, to the order of a third party or to the bearer. Purpose. — The main purpose of drafts is to aid in the collection and payment of debts and to provide a means to avoid the inconvenience, expense, risk, and delay necessarily incident to sending real money — gold, silver, etc. — from one place to another. Parties. — The original parties to a draft are : 1. Drawer. 2. Drawee. 3. Payee. The Drawer is the one who draws or writes the order. The Drawee is the one on whom the order is drawn. The Payee is the one to whom the order is made payable. Kinds. — The kinds of drafts with which the average business man has to do are : ^ _,. , i a. Personal. ^- ^'S^' \ h. Bank. (a. After date. ( h. After sight. Definition of Sight Draft. — A sight draft is an order payable upon presentation. Ordinary Check and Sight Draft Similar. — You have already become familiar with a class of orders which closely resembles sight drafts ; namely, checks. Your check is simply an order on a bank to pay a certain sum out of your deposit, usually to some person or order. You are the Drawer ; your bank, the Drawee ; and the person to whom the check is made payable, the Payee. Thus it will be seen that a check closely resembles a sight draft. Indeed it is so nearly like a sight draft in every particular that in some states when it is not paid the same steps must be taken to preserve the liability of the parties as are taken in the case of a bill of exchange or draft. 79 80 ACCOUNTING AND BUSINESS PEACTICE As will be shown in subsequent exercises, a bank draft is nothing more than a check of one banking house upon another banking house to pay a certain sum to some third person or to his order. QUESTIONS FOR DISCUSSION 1. (a) Who is the drawer of the model check, page 42 ? (b) the drawee ? (c) the payee ? 2. Give the drawer's entry when he gave the check to the payee to apply on account. 3. Give the payee's entry when he received the check on account. 4. Give the bank's entry when it pays the check. 5. Write a check : drawer, yourself; drawee. Alliance National Bank; payee, John O. Newman. Sight Draft /.^^^. " :?0'L'C^ ^tZ-OCy^ SiPff Sffff Analysis of Payee's Entry. — Since the draft is payable at sight, immediately upon its receipt C. W. Gray will take it to F. C. Gorham or place it in a bank as a deposit. In either case Gray will get 1500. Gray records all cash items in the cash book. 1. In the above transaction he has received cash. He should there- fore debit Cash. 2. The cash received has come from Mason & Young, through Gorham. If it were not for Mason & Young's order, Gray could not get the |500 from Gorham. Gray should therefore credit Mason & Young. 82 ACCOUNTING AND BUSINESS PRACTICE The entry would appear on the left side of the cash book as follows : Gray's Cash Book •< ^ayOty^ soa Analysis of Drawee's Entry. — When Gorham sees the draft he will pay it. He records all of his cash transactions in the cash book. 1. He has given Gray 1500, and in so doing has paid one of Mason & Young's debts. He has got out of Mason & Young's debt and should therefore debit them. 2. He has paid out money and should therefore credit Cash. The entry would appear on the right side of the cash book as follows : Gorbam's Cash Book // •'i.^,cr:^:U^a'A^i^^i'i:!^^ soo Another Use of the Sight Draft. — 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 Wilbert, Gloss & Co., Springfield, Mass., 1260.50. This account is over sixty days past due, and Wilbert, Gloss & Co. want the money. They write McMickle calling attention to the overdue balance and asking for per- mission to draw on him at sight. McMickle instructs them to draw on him as proposed. A sight draft is therefore drawn. The following is the usual form for such a draft : $ Z < i <7, ^ai^aa d ^/ : i 4 ^ . ^^^ \r^-.U/<^, r9 f/o.^=l^^ 7^ Uraders >JHational ^Jjank. S>aif to tke order of ^j;C c: €4^! ! zJ^f^^/J0,^^ ^//^C/. '" 88 ACCOUNTING AND BUSINESS PRACTICE Banks sometimes charge a small fee, called Exchange, for selling drafts. They are not uniform in these charges however. Many banks rarely make any charge to customers who do a regular business with them. In these exercises the principle of exchange is illustrated. For the foregoing check Traders National Bank would issue the following draft : Bank Draft SBoston, ^,7^^ yJU^^^//i^ 1Q f/n. ^^za. U radars >J\ational tJjanK ^ayto the order « / "1^ 1^ '^ -g^-^^-^-^Z-^^^g^ ^//i/9tp/"' . -SloUars z>r?-TC^,-o^^ t^-^-^- \Jo GAenUcai •National Soank ^etv Yor/c GctsAier Analysis of Entries. — For the goods bought,' C. C. Canan will prob- ably make an entry in his invoice book. This will debit Merchandise and credit Jordan, Marsh & Co. When the draft is sent, C. C. Canan will debit Expense for the 50/ exchange, and Jordan, Marsh & Co. for 1400.60, the amouut of the draft remitted. Note. — Some business houses prefer to open an account with Exchange, or Collection and Exchange, for the bank charges for the above draft and similar fees charged by banks for collecting out-of-town paper, etc. "When these items are of frequent occurrence the opening of this extra account is recommended. The above entries would appear on the right side of Canan's cash book as follows : 4^aa S4 When Jordan, Marsh & Co. fill C. C. Canan's order they will prob- ably enter the record in their sales book. For the draft received they will credit C. C. Canan on the left side of their cash book, as follows : 7 a.^T'Z'-si-'f'Z^ , '^Oa DRAFTS 89 These drafts are sometimes -written payable to the one to whom they are to be sent. The better way, however, is to have them written pay- able to the remitter, who will indorse them over in full to the one to whom they are to be sent. The advantages claimed for this last form are : 1. If the draft is drawn payable to the remitter, an indorsement in full will indicate by whom it was sent, and thus serve the purpose of a receipt. 2. It is more convenient for a bookkeeper to make proper credits if he receives drafts drawn payable to the remitter. 3. If a number of drafts were received in one mail and by some accident became mixed, the draft on its face indicates the name of the remitter, and there is less liability to error in making the proper entries. The following shows the foregoing draft properly indorsed: Jordan, Marsh & Co. will deposit the draft with their bank in Chicago as cash. This bank will forward the draft to its New York correspondent, it will be presented to the Chemical National Bank of that city, and that bank will pay it and charge it to the Traders National Bank of Boston, Mass. 90 ACCOUNTING AND BUSINESS PRACTICE When the Traders National Bank of Boston, Mass., receives C. C. Canan's check for f401.10 they will charge the amount to his account and credit the Chemical National Bank of New York for $400.60, the amount of the draft drawn, and Exchange for 50/, the amount charged for the draft. The last two entries would be on bank books with which the student is not now familiar, and it is thought best not to give any illustrations for these records. Bank drafts are usually taken from a bound book resembling the regular check book. When a draft is sold a stub similar to the check stub is filled out, and later posted to the proper register. EXAMPLES FOR WRITTEN PRACTICE 1. You wish to remit Curtice Bros. & Co., Rochester, N.Y., a New York draft for $48.92. You write your check on the First National Bank of your place for the amount, including 15/ exchange on the draft, and that bank gives you a draft payable to your order on the National Bank of Redemption, New York. a. Write your cheek. h. Write the New York draft. c. Show the indorsement for the draft before mailing. d. Make your cash-book entry. 2. You have received of John O. Marvin & Co. a draft for $164.38 drawn by the Keystone National Bank of Pittsburg, Pa., on the Ninth National Bank of Philadelphia, Pa. Draft is drawn in favor of John 0. Marvin & Co. and indorsed in full by them to you. a. Write the draft. h. Make your cash-book entry. c. Show the indorsement. EXAMPLES FOR ORAL DRILL 1. Received from Henry Belmont a bank draft drawn by the Com- mercial Bank of Rochester, N.Y., on the Fourth National Bank of New York for the amount, of the invoice of Jan. 25, $4892. a. Fully analyze your entry for the draft. b. Assuming that Belmont bought the draft by check, paying $2.26 exchange, analyze his entry at the time of sending you the draft. DKAPTS 91 2. Buy by check a bank draft and send it to L. L. Williams in full for your note of Jan. 2, |250. Exchange, 50/. a. Analyze your entry on remitting the draft. b. Analyze Williams's entry on receiving the draft. c. In whose favor should the draft be drawn ? Why ? 3. Buy a New York draft for $50 in favor of yourself, indorse it over to The Jones Mfg. Co., and mail it to them for a set of books, ordered to-day, to be used in your office. a. State your entry. I. Why was the draft drawn in your favor ? c. Would it be safe to mail the- draft with merely a blank indorse- ment on the back ? Why ? QUESTIONS ON BANK DRAFTS 1. What is a bank draft, and how does it differ from an ordinary check? 2. Clearly explain the use of bank drafts. 3. In whose favor is it best to order a bank draft drawn? Why? 4. How should a bank draft always be indorsed before mailing? Why? 5. Give an example where a blank indorsement would be as good as a full indorsement. 6. In whose favor should a check to buy a bank draft be drawn? Why? 7. Explain how a bank draft drawn in favor of yourself and indorsed in full to the party to whom you wish to remit it may serve the purpose of a receipt. 8. Are all bank drafts bought by check ? 9. If you were a stranger and went into a bank with sufficient money to purchase a bank draft, would the bank issue you the draft without identification? Why? 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 being presented for payment. Draft Payable after Date /O^^^ ^^/^^— g>/»y to the on{er of /.^^..',:fCy/2^:^?^>-^ 92 ACCOUNTING AND BUSINESS PRACTICE An Acceptance is a time draft which has been accepted. The foregoing form is an Acceptance, and it passes in business as a promissory note. Without tlie writing across the face the foregoing draft was simply an order to pay money, and was not binding upon the drawee. Method of Profedure in handling Time Drafts. — - The drawer writes the draft and mails it to payee, who should present it to the drawee for acceptance. In the foregoing draft the date of maturity was not deter- mined by the acceptance of E. W. Hasten, and it was not absolutely necessary for William M. McKay to present the bill until it was due, and then only for payment ; but since until the draft is accepted there is no promise on the part of Hasten to pay it, it would be unbusiness-like on the part of HcKay not to present the draft for acceptance within a reasonable time after it was received. When the foregoing draft is presented. Hasten is not bound to accept it. However, if he does accept it, he becomes the acceptor and is held for its payment in the same way that he would be held if he had written his promissory note for the amount. Manner of accepting. — If the drawee is willing to meet a draft on him according to the conditions named therein, he vn-ites 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 the same as time drafts payable after sight, unless they are paid upon presentation. Analysis of Entries of Parties to a Time Draft Compare the fore- going draft with the sight draft explained on page 80. The relation of the parties is identically the same. Osgood & Co. owe HcKay, and Hasten owes Osgood & Co. It is expected that Hasten will accept the draft when it is presented to him by HcKay. Drawers' entry: 1. F. V. Osgood & Co. have given William H. HcKay value in the form of what, when accepted by E. W. Hasten, is the same as bills receivable. Therefore they should debit HcKay. 2. When Hasten 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 will have got out of their debt to the amount of 1320.64. DRAFTS F. V. Osgood & Co.'s Journal Entry 93 ^^%^&t^ az^Y ^^^iyi.^'iit^i^i^J fc^aiei-., JZO /^ J 20 ■'.£Z-0£>^ Payee's entry: 1. The payee, William McKay, instead of receiving cash, as in the case of the sight draft, has simply received 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. Now, as in the case of the sight draft, F. V. Osgood & Co. are responsible for McKay's getting the draft, and he should credit them. William M. McKay's Journal Entry JZiP J2a d.«i 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 Bills Payable. 2. Now 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 ^ytrr -Jfi JZO u J zo (^«^ 94 ACCOUNTING AND BUSINESS PRACTICE Draft Payable after Sight >»^-<^^^:^gJ -f^^-^^^^g^ The above draft is the same in every particular as the draft drawn payable after date except as to the manner of acceptance. In an order payable after sight it is necessary to date the acceptance in order to fix the date of maturity. Another Use of Time Drafts. — The ordinary time draft is sometimes used in connection with sales of merchandise. For instance, Quincy, Bradley & Co. sell L. B. Wade & Co. a bill of merchandise amounting to $1305 on the following terms : 30-day draft for $500, balance in 60 days. A draft similar to the following would accompany the bill : ^r^^-^^^^ ^:pC^^-/-^ /^.^^Y!>.^i^^if. i:P''c^-7-2^. Ji't-Y^'y^Jn-alCei^^t^f^^^it^f^ ^^^>&'-iS<»Z-'- -.^■ 'Ccock^'C'-n^ SffiP sea Should Quincy, Bradley & Co. wish to offer the draft, when accepted, for discount, they may do so. If they offered the foregoing draft for discount July 20, the date it is assumed they received it from L. B. Wade & Co. accepted, they would make the following cash-book records : Left Side 2i) 2-5^ .,^M-^U.C<^yi!:^!j^l>tef soa 2ff Right Side ■i^ ^/ Note. — ■ Some business men might prefer to make two distinct entries for the above, as follows : 1. Bills Receivable to L. B. Wade §• Co. for the acceptance received. 2. Bills Receivable on the left-hand side of the cash book, $500, and Interest and Discount on the right-hand side for $2.08, 'when the acceptance was offered for discount. The first method is preferred as it is shorter and shows the full transaction. 96 ACCOUNTING AND BUSINESS PEACTIGE RULES FOR TIME DRAFTS 1. Drawer's Entry when a time draft with three distinct parties is drawn: Payee To Drawee 2. Drawer's Entry when he draws a time draft on a third party in favor of himself and leaves it with his bank for collection: Bills Eeceivable To Drawee 3. Drawer's Entry when he receives his draft, drawn in his own favor, accepted : Bills Eeceivable To Drawee 4. Payee's Entry when he receives a time draft properly accepted : Bills Eeceivable To Drawer 5. Drawee's Entry when he accepts a time draft : Drawer . To Bills Payable. EXAMPLES FOR WRITTEN PRACTICE 1. W. G. Gambee drew on you at 45 days' sight, in favor of F. R. Berriman, for $500, and you accepted the draft. a. Write the draft. h. Show your acceptance. c. Make the entries for each party. 2. You bought of R. H. Macey & Co., New York, 750 yds. Scotch ginghams at 15/, and accepted their 30-day draft in favor of themselves for the amount of the bill. a. Write the draft including your acceptance. h. Make your entry for the draft. c. Make E. H. Macey & Co.'s entry when they receive 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 receipt of your acceptance. Also that you entered the bill in your invoice book and made a journal entry for that draft accepted. DEAFTS 97 EXAMPLES FOR ORAL DRILL 1. You draw a draft payable 30 days after date on W. K. Darling, in favor of Isaac B. Langley. a. Analyze 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 accept J. E. Keating's draft at 10 days' sight, in favor of Wells & Warriner. a. State your entry. h. When does the time begin to run on a draft drawn payable after sight ? 3. You pay your acceptance of Jan. 20, in favor of Z. P. Zaner, due to-day, by a sight draft on Wm. J. Briggs. a. State your journal entry. h. Analyze the entry. c. State Z. P. Zaner's entry when he receives your draft on Briggs. d. State Briggs's entry when he pays your draft. 4. Your draft at 10 days' sight for |200, drawn on The Geo. B. Furman Co., in favor of yourself, for invoice of Jan. 15, has been received accepted. a. State your entry. b. Would the acceptance of The Geo. B. Furman Co. on the above draft need to be dated? Why? 5. The draft in Example 4 is taken to the bank and discounted 8 days before maturity. a. The draft is payable to "Myself." Shall you need to indorse it? Why? b. State your entry when you discount the acceptance. 0. State The Geo. B. Furman Co.'s entry when they pay their acceptance at maturity. QUESTIONS ON TIME DRAFTS 1. Explain the difference between drafts payable after date and drafts payable aft^r sight. 3. What is meant by the term acceptance ? 3. To what ledger account would the acceptances of other people be posted? 4. To what ledger account wotild our own acceptances be posted? 5. When does an acceptance need to be dated? Why? 6. Will banks take unaccepted drafts for collection? 98 ACCOUNTING AND BUSINESS PRACTICE 7. When a bill of goods is sold and a time draft drawn for all or a part of the sum, what two ways of handling the draft are there? 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 of 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 the date occurs on Saturday? R&ume. — The foregoing illustrations are intended to show how completely the absolute handling of money is avoided in btisiness. As will be seen from work previously given, real money — gold, silver, etc. — has very little to do in promoting exchanges and paying debts. The bills that we call money — bank notes, silver certificates, and greenbacks — are nothing more than promises to pay, and in that sense might properly be classed as commercial paper. The two sets following deal largely with notes, drafts, checks, etc., and it is deemed advisable to preface the work Avith transactions to be used as special drill exercises. These exercises, and in some cases many others added by the teacher, should be thoroughly mastered before the work of the sets is begun. Miscellaneous Ezamples for Practice. — Take some foolscap paper and cut it into slips the size of the ordinary draft. On these slips write the drafts called for in the following transactions. After a draft has been written, take mucilage and attach it to the top of a journal sheet. Immediately under this make the entries called for. ■ In case there are indorsements to be written, use two slips, one for the draft and one for the indorsement. Attach both slips to the journal sheet and make the reqiured entries immediately under them. Illustration. — Jas. M. Fernald drew a sight draft on H. P. Sutton & Co., in favor of David N. Salisbury, for $300. On receipt of the draft Salisbury deposited it in the First National Bank. a. Write the draft and show the indorsement. b. Make the entries for all three parties. DRAFTS The following shows the proper records : 99 f300 00 BosZan, TlioMy., futy /i, iq at cbv&cL dAyCfhX, - — . ; 101 19)5 / '/ I \, 19i5 , Feb. 5. On Feb. 1 you sold F. B. Norton, Buffalo, nTy., on his acceptance at 60 days, 150 doz. cotton half hose at #2.50. The draft drawn on the date of the sale, payable 60 days after date, has to-day been received accepted. a. Write the draft and show the acceptance. b. Make your entry for the draft. No entry was made for the draft at the time of the sale of the goods. Feb. 6. You bought of Mechanics 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, 25/. a. Write a check on Mechanics Bank to cover the draft and exchange. b. Write the New York draft. A. B. Turner, Cashier. 0. Make your entry. Feb. 8. You draw a sight draft on Howard A. Lane, in favor of A. W. McKinley, for $92.54, the balance due you on account from Lane. a. Write the draft. b. Make your entry. Feb. 10. You draw a sight draft on Frank W. Wilson, Worcester, Mass., in favor of yourself, for invoice of Jan. 25, $200.50. Leave the draft at Mechanics National Bank for collection. a. Write the draft. b. Show the proper indorsement. Feb. 20. You have remitted your draft at sight on Williams & King to Goodwin Bros, in payment of bill of the 18th less 5 % discount. Face of the draft, $190. a. Write the draft. b. Make your entry. TEST QUESTIONS ON DRAFTS 1. Are drafts ever interest-bearing ? Why? 2. Under what circumstances would you offer a bank sight paper (a) for collection? (b) for deposit? 3. Would the banks in your city readily accept for deposit or for collection any paper with your restrictive indorsement upon it? Why? 4. When will a draft drawn payable 10 days after date mature in your state if the date of draft is Feb. 19, 1904 ? 5. Are days of grace allowed on either sight or time drafts in your state ? 6. As a rule, do banks make any charge for cashing New York drafts? Why? 7. What negotiable paper considered up to this point in the work may, under any circumstances, be treated as cash ? 102 ACCOUNTING AND BUSINESS PEACTICE EXERCISES ON OPENING DOUBLE ENTRY BOOKS The following exercises will show the student how to open double entry books when the proprietor begins business with both resources and liabilities. 1. W. D. Fain begins the Furniture Business July 1, investing as follows: cash on hand, |2500 ; merchandise per inventory, $1600; Jas. R. Milem's note, |500 ; accrued interest on note, |12 ; real estate, — store and lot, $5000 ; rent due from tenants, $125 ; office furniture, — safe, books, etc., $460 ; Wm. K. Duffey owes him on account $1240 ; F. E. Bush, $400 ; and C. 0. Bond, $300. He owes Ralph Dewey $400 ; Arthur Lehan, $1600 ; he has a note outstanding in favor of Chas. B. Hawley, $1387, less discount to maturity $10.95. The following entry shows the above resources and liabilities properly recorded : Boston, Mass., July 1, 19 — C.B. I, W. D. Fain, have this day begun the Jobhing Furniture Business with .the following resources and liabilities : Resources Cash Mdse. Bills Eec. Interest Real Estate Office Fixtures "Wm. K. Duffey F. E. Bush Discount C. 0. Borid To W. D. Fain On hand Per inventory Per bill book Accrued on above Store and lot Due from tenants Safe, etc. Owes on account Owes on account On bills payable Owes on account Total resources Liabilities W. D. Fain Total liabilities To Ralph Dewey Due him Arthur Lehan Due him Bills Pay. Per bill book 2500 1600 500 12 5000 125 460 1240 400 10 300 3387 95 12147 400 IGOO 1387 95 EXERCISES ON OPENING DOUBLE ENTRY BOOKS 103 The cash item should also appear on the left side of the cash book as follows : Julyl J. W. D. Fain Cash invested 2500 The cash item is checked C. 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 cash book because this item has been counted in determining the total resources and liabilities in the journal. Take a sheet of journal paper and make the proper records for the following resources and liabilities. Hand the sheet, when completed, to your teacher for examination and approval. 2. Chas. R. Osgood begins the Furniture Business July 1, investing as follows: cash on hand, $1700; note of Chas. H. Dean, |500; accrued interest on the note, $10 ; merchandise per inventory, $2600 ; A. B. Knowlton owes him on account fl200; Geo. K. Brown, flSO. He owes Foster, Hillis & Co. $250; Traver, Bowe & Co. $300; M. B. Hanway also holds a note for $600 against him, and the accrued interest on this note amounts to $10. 3. C. B. Ellis begins business July 1, investing as follows : cash on hand, $2000 ; merchandise per inventory, $1300 ; note of F. M. Everitt, $1200 ; accrued interest on the note, $19.50 ; City Water Works stock, $4200 ; earned dividend on the stock, unpaid, $168 ; house and lot, 1625 127th Street, $4500 ; rent due and unpaid by tenants, $95 ; horse and wagon, $150. He owes Manning & Son $1750, C. O. Bond holds a note for $1200 against him, and there is $75 due Ellis B. Hanway on the horse and wagon purchased June 15. 104 ACCOUNTING AND BUSINESS PEACTICE Buying Price Lists for July and August ARTICLE AND DESCRIPTION No. 3116 Antique Card Table " 2546 Antique Library Rocker " 693 Antique Wardrobe . . Blue Chenille Curtain . " 16 B Brass Easel .... " 635 Brass Bedstead . . . " 15 Cane-seat Dining Chair " 59 a Cheval Glass .... " 71a Child's Crib .... " 10 China Closet .... " 20 Corner Chair .... " 245 Cedar Chest .... " 16 A Complete Dining-room Set " 572 Drawing-room Suit " 170 English Clothes Pole . ■• 5932 Empire Toilet Table . " 3016 Fancy Rocker . . . " 36 B Gentlemen's ChifEonier " 6387 Hall Settle " 16 K Leather-seat Dining Chair " 169 c Library Table . . . " 91 Lace Curtain .... " 16 Ladies' Dressing Cabinet " 835 Music Cabinet . . . " 50 Mahogany Parlor Table « 626 Mahogany Office Chair " 396 Mahogany Hall Stand . " 89 Mahogany Chamber Set " 1008 Oak Sideboard . . " 2229 Oak Dining Table . " 73 Oak Writing Desk . " 68 Oak Bookcase . . " 76 A Oak Chamber Set . " 687 Ornamental Table . " 20 D Parlor Cabinet . . " 821 Parlor Lamp . . . " 176 c Piano Chair . . . " 57 Reclining Couch . . " 17 A Roman Chair . . . « 73 Sofa Bed .... " 5926 Secretary Book Cabinet " 65 Turkish Rocker . . " 27 c Woven Wire Mattress " 16 Wool Mattress . . " 495 White Iron Bedstead $14.50 9.00 21.75 4.00 12.50 15.75 1.50 15.25 11.50 17.25 20.00 8.50 78.00 75.00 3.50 89.00 7.50 7.50 16.50 6.50 20.00 4.50 30.00 4.00 15.25 12.50 43.00 60.00 150.00 9.75 7.50 7.50 11.00 4.00 25.00 13.00 12.50 21.00 15.00 30.00 65.00 18.00 1.75 2.25 3.75 $11.75 17.25 21.75 3.75 12.75 16.90 1.45 15.00 7.20 18.00 21.50 17.25 73.50 129.50 3.75 37.00 7.50 6.50 16.50 7.00 21.00 5.00 20.00 7.50 15.00 14.00 42.50 65.00 125.00 10.00 11.00 7.50 10.50 9.50 41.90 8.00 7.00 18.00 14.00 12.50 115.00 19.00 2.00 2.00 3.00 112.00 9.00 21.75 4.00 9.00 15.00 1.47J 15.25 14.90 27.50 22.75 7.50 72.00 125.00 3.15 31.50 7.50 15.75 17.00 6.00 20.00 4.25 31.00 7.20 16.00 14.50 50.00 87.50 120.00 7.50 16.90 7.75 12.50 8.00 37.50 7.50 4.50 17.50 16.00 17.00 125.00 17.50 2.10 2.25 4.00 $14.00 19..50 21.75 4.10 10.75 16.50 1.55 16.00 12.00 15.00 19.25 7.40 84.00 100.00 3.00 32.00 7.50 18.50 18.00 7.00 12.75 5.50 82.00 4.50 12.00 12.00 49.75 50.00 90.00 12.50 12.00 7.00 9.75 7.50 50.00 6.00 7.50 15.00 17.00 15.00 60.00 12.00 3.00 1.90 4.50 $20.00 11.00 21.75 3.95 9.50 15.95 1.51 14.50 13.50 12.90 19.25 4.60 80.00 70.00 3.10 21.92 8.00 15.00 17.50 7.75 37.50 4.75 30.00 2.75 12.00 11.00 48.50 140.00 95.00 9.75 10.00 8.00 13.75 3.75 27.50 9.50 11.00 12.00 18.00 16.00 50.00 15.00 3.75 2.15 6.00 SET V — JOBBING FUENITUEE BUSINESS 105 Selling Price Lists for July and August ARTICLE AND DESCRIPTIOK No. 3116 Antique Card Table . " 2546 Antique Library Rocker " 693 Antique Wardrobe . . Blue Chenille Curtain . " 16 B Brass Easel .... " 635 Brass Bedstead . . . " 15 Cane-seat Dining Chair ". 59 A Cheval Glass .... " 71a Child's Crib .... " 10 China Closet .... " 20 Corner Chair .... " 245 Cedar Chest .... " 16 A Complete Dining-room Set " 572 Drawing-room Suit " 170 English Clothes Pole " 5932 Empire Toilet Table « 8016 Fancy Rocker . . " 36 B Gentlemen's ChifEonier " 6387 Hall Settle " 16 K Leather-seat Dining Chair " 169 c Library Table . . . " 91 Lace Curtain .... " 16 Ladies' Dressing Cabinet " 835 Music Cabinet . . . " 50 Mahogany Parlor Table " 626 Mahogany Office Chair " 396 Mahogany Hall Stand . " 89 Mahogany Chamber Set " 1008 Oak Sideboard . . " 2229 Oak Dining Table . " 73 Oak Writing Desk . « 68 Oak Bookcase . . . " 76 A Oak Chamber Set . " 687 Ornamental Table . '' 20 D Parlor Cabinet . . " 821 Parlor Lamp . . . " 176 c Piano Chair . . . " 57 Reclining Couch . . " 17 A Roman Chair . . . " 73 Sofa Bed .... " 5926 Secretary Book Cabinet " 65 Turkish Rocker . . " 27 c Woven Wire Mattress " 16 Wool Mattress . . " 495 White Iron Bedstead $19 12 25 5 15 22 2 21 15, 25 26 11 110 100 5 50 10 10 23 9 25, 6 40 5 21 16 65 80, 195, 12 10, 9, 14, 5 37 16 17 28, 18, 38, 92 24, 3, 4, 5, .75 00 .75 .00 .00 .50 .25 .25 .75 .00 .00 .00 .00 .00 .50 00 00 .00 25 .50 .00 00 .00 .00 25 50 .00 .00 00 .25 00 .75 .25 .25 .00 .00 .00 .00 .75 .00 .00 ,75 ,25 ,00 ,00 113.50 29.25 27.50 5.00 15.00 24.00 1.85 21.99 9.50 24.50 26.00 19.00 98.00 152.25 4.10 39.75 10.00 9.00 19.25 9.00 23.75 6.00 23.50 9.00 20.00 17.25 65.00 75.00 145.00 12.00 14.75 9.75 14.25 12.00 43.50 10.00 9.00 21.00 18.75 15.50 137.50 22.00 3.00 3.00 4.00 $15.00 11.75 29.50 5.00 11.75 21.50 1.75 22.00 16.79 39.00 26.00 9.50 90.50 175.00 3.60 33.75 10.00 17.25 21.00 7.50 21.50 6.00 35.00 10.00 19.25 19.00 65.00 112.50 135.00 10.00 18.59 9.75 14.25 10.00 50.00 9.50 6.00 21.50 18.75 19.75 139.50 25.00 2.50 3.00 5.00 117.50 22.00 28.75 5.00 13.00 23.00 2.22 20.50 15.65 19.90 26.00 9.65 110.00 125.00 3.15 39.75 8.50 22.50 22.00 9.50 15.00 6.00 39.50 6.00 15.00 13.50 65.00 60.00 120.00 15.00 15.00 9.75 14.25 9.50 65.00 7.50 9.50 17.50 18.75 20.00 75.00 15.00 4.00 2.75 5.50 $24.00 13.50 22.90 5.00 12.00 21.69 2.69 19.75 18.50 14.50 26.00 6.25 95.00 92.50 3.15 27.00 9.75 15.90 17.75 8.00 39.00 6.00 38.50 3.00 12.50 11.75 65.00 149.50 117.50 12.75 11.50 9.75 14.25 4.50 35.00 11.50 13.00 14.50 18.75 21.00 65.00 18.00 5.00 2.90 6.50 106 ACCOUNTING AND BUSINESS PRACTICE 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 employed. The transac- tions 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. — The books used are the bill book and invoice book, in addition to the books with which the student is already familiar. Model Bills DRAWEE OR MAKER DRAWER OR INDORSER HOW 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 FOR WHOSE ACCOUNT FOR WHAT ISSUED WHERE PAYABLE Allen & Bailey Turn. Co. C. 0. Boswell Derby Mfg. Co. C. 0. Boswell Derby Mfg.Co InfuUofaoot Infullofacct, Inv. July 2 Union Bank Union Bank Union Bank June July June July SET V — JOBBING FURNITURE BUSINESS 107 Bill Book. — This book is used for recording all notes or acceptances which come into the business, or which are issued by the business. The book 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 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 biU book are for price list No. 1. Bill Book Receivable TIME 30 da. 30 da. .30 da. DATE DUE July Aug. INT. 500 450 DATE DIS- COUNTED DATE SENT TO COLLECT July DATE PAID July Aug. HOW PAID Paid at bank Paid at bank Paid at bank Payable 1 mo. 30 da. sight 10 da. sight July INT. 2500 1000 1376 90 July Charged at bank Charged at bank Charged at bank 108 ACCOUNTING AND BUSINESS PEACTICE Model Invoice Book W^- ORIGINAL INVOICES. ^Quykf of£>er6y ^fy. Co. /fO ^ •^eat jork,. !g/W^< li, T 79 ■r- Uo i^rau, ^alisouru Or Co./ kOr, -7^-^ ei^p-T^^ -.-^e-iLt^ -? ^ "I r 6<^z jtf ■11 J^ ^.^^j.-/fv ^^W^^ ?''/'„^.}/^^^^^^^J&hr^^^.,YM%y^^ 2/'^ //'ii^iisa !/^^i^/^ SET V — JOBBING PUENITUEE BUSINESS 109 W'T- ORIGINAL INVOICES. <)\ # J^ ^^^r^rT/r-^^^^JiC Buffalo. J^y, J^^XyT-^. /O , oSouyht of Uhe ^.Alills iTurrUture Go. (^^^' r/j'^^z (:S~,^^M?^^^M^Jfiyi^^^^^^ /'- ,*^.^- ^^^ IT /^ ^/^nftJ'^^^.y.^.^^^^-^r-^y)^^^ '2ai> ' •^/li ^::^^^^^iy .^ 'ifC^r^-^'-^-^-^'^^^ ^^^ ^!7 ^^X r^^ . -^ i.i'O ■/^fr /f3'/JiP jrff'i'Ja Invoice Book. — This book illustrates another form for recording the amounts of all merchandise bought by the business, and is to take the place of the purchase book with which the student is already familiar. It is generally made up of original bills. In regular work these bills are received and audited and then pasted in the invoice book. The net amount of each bill is carried to the money column ruled on the right of each page. In entering items in the invoice book observe the following: 1. Do not allow the edges of the bills to extend into the money col- umn. Invoices coming from different houses will not be of uniform size, and where necessary the edges of some of these bills should be trimmed. 2. Use but little mucilage. Paste the upper and lower corners of the first bill on each page, but paste only the lower corners of all the other bills, and let them lap over each other as shown in the model invoice book. 3. Place the amount of each bill in the money column directly oppo- site the name of the firm of whom the goods have been purchased. How to post the Invoice Book. — This book is posted in practically the same way as the purchase book. In posting observe the following : 1. Be sure to forward the total of the money column from page to page. 110 ACCOUNTING AND BUSINESS PRACTICE 2. At the end of the month, or at such other periods as may seem advisable, post the aggregate of the jnoney column to the debit side of the Merchandise account. 3. Post the amount of each bill directly from the invoice book to the credit of the firm of whom the merchandise was purchased. Cash Book. — The cash book used in this set differs slightly from that used in the preceding sets. A special column is provided on each side for merchandise discounts. A careful study of the accompanying illustration will enable the student to use this book intelligently. Cash Receipts, July, 19 — J. H. J. E. Bender C. W. Gray Bills Rec. Int. and Disc. C.O.D. Accounts J. 0. Brown & Co. Mdse. Disc. Investment Inv. oftlieTth, lessS' Inv. of tlie 5th Moran's note On above C. B. Moore Inv. June 12, less 1% Total for month MDSE. . DISC. OR. 36 12 48 16 60 6000 1169 1240 560 5 50 1247 10272 10272 19 19 BusiKESS Forms for July Before taking up the memoranda for Set V the student should pre- pare the following incoming vouchers. Be satisfied with nothing short of rapid, accurate work. See if you can prepare all of the following vouchers without an error. Note. — The teacher should assign the student a price list and give him the neces- sary blank forms, etc., for this set. SET V — JOBBING FUKNITURE BUSINESS 111 In all the following invoices ' the student is represented as the purchaser. Form I : Note of J. B. Maxwell, dated City, June 15, drawn in your favor, payable at Union Bank 30 days after date, for |600, with interest at 6%. Form 2 : J. B. Topham's draft in his own favor, on W. D. Rimbach, City, transferred to you by full indorsement. Draft is for $450 and is dated City, June 3, payable at Union Bank 30 days after date. Cash Payments, July, 19 MDSE. DATE F DISC. CR. GENERAL TOTALS 1 10 Expense Rent 150 1 10 Expense OfBce safe 250 1 10 Expense Insurance 120 3 13 J. 0. Moran Sight draft paid 200 6 16 Cobb, Bates & Co Inv. of the 6th, less 2% 24 1176 9 18 C. W. Allen & Co Inv. of the 6th, less 2% 17 40 852 60 16 10 Expense Telegram 1 16 10 Expense Stationery, etc. 4 50 18 15 Bills Pay. Accept, favor King 900 20 8 J. K. Levy & Co. Draft favor Brown & Co. 1100 21 20 Stoddard & Co. Inv. of the 10th, less 2% 24 1176 23 15 Bills Pay. Note favor Ellis Mfg. Co. 500 25 20 Int. and Disc. On above note 5 26 10 Expense Salaries to date 120 27 31 21 14 Mdse. Mdse. Disc. Freight and cartage Total for month 50 6605 10 65 40 31 Balance In safe, 67.09; lank, 3600 3667 09 1 10272 1 19 1 \ Form 3: Bill of Thorp, Martin & Thorp, 798 Franklin St., City, dated July 1. Terms: cash, less 2%. Items as follows : 4 M Letter Heads at $2 2 M Envelopes at $1.50 1 M Billheads at $2 2 gro. Steel Pens at 75/ 1 qt. Writing Eluid at 75/ 1 doz. Pencils at 30/ 1 Ledger at $6 1 Journal at $3 1 Cash Book at $3.60 1 Sales Book at $3 1 Bill Book at $1.50 1 Invoice Book at $1 Deduct the discount on the bill and receipt it, per J. O. N. 112 ACCOUNTING AND BUSINESS PEACTICE Form 4 : Invoice of Cobb, Bates & Co., 62 Portland St., City, dated July 3. Terms: 3/10, net 30 days. Items as follows: 9 #5932 Empire Toilet Tables 10 #76 a Oak Chamber Sets 12 #36 B Gentlemen's Chiffoniers 5 #1008 Oak Sideboards 5 #16 Ladies' Dressing Cabinets 6 #693 Antique Wardrobes Note The space allowed for recording the terms of sale on a bill is generally limited and accountants find it necessary to use symbols and abbreyiations to indi- cate them. The following list explains the meanings of the abbreviations for terms used in this work. 1. Net 30 days, meaning that the bill is to be paid in thirty days without discount. 2. 1/30, meaning that 1% discount will be allowed i£ the bill is paid within thirty days. 3. 3/10, net 30 days, meaning that 3% discount will be allowed if the bill is paid within ten days, or the amount of the bill will be due in thirty days without discount. Form 5 : Invoice of Derby Mfg. Co., 17 Portland St., City, dated July 3. Terms : draft at 10 days for the amount of the bill, less 2%. Items as follows : 4 #20 D Parlor Cabinets 10 #3116 Antique Card Tables 4 #169 Library Tables 5 #89 Mahogany Chamber Sets 10 #16 A Complete Dining-room Sets Deduct the discount on the bill, as a draft will accompany it when it comes into your possession. Form 6 : Draft of Derby Mfg. Co., dated City, July 3, payable at 10 days' sight, on you, in favor of themselves, for the net amount of the above bill. Form 7 : J. O. Moran's sight draft, dated City, July 5, on you, in his own favor, $200. Form 8 : Check of J. E. Bender, dated Troy, your state, July 8, on Traders National Bank, in your favor, $1169.09. Form 9 : Invoice of W. H. Stearns & Co., Chicago, 111., dated July 9. Terms : 30-day draft for one-half of the bill ; balance in 60 days. Items as follows : 100 #15 C. Dining Chairs 20 #626 M. O&ce Cliairs 100 #16 K L. Dining Chairs 20 #3016 Fancy Eockers 10 #2229 0. Dining Tables 5 #2546 Ant. Lib. Eockers Form 10 : W. H. Stearns & Co.'s draft, dated Chicago, 111., July 9, payable 30 days after date, on you, in favor of themselves, for one-half the amount of the above invoice. SET V — JOBBING FURNITURE BUSINESS 113 Form II : Your draft at 30 days from July 5 on Samuel W. Bradley, Bedford, in favor of yourself, accepted, for (No. 1, $840.25 ; No. 2, 1693.25; No. 3, 1647.50; No. 4, $579.60; No. 5, $694.50)'. Acceptance is dated July 5. Note. — The numbers in the above form refer to the different price lists. Form 12 : Samuel W. Bradley's draft, dated Bedford, July 12, at 30 days from date, on J. E. Farley, City, in favor of himself, for $179. Transferred to you by full indorsement. Form 13 : A bank draft drawn by Traders National Bank, Spring- field, on Chemical National Bank, New York, July 10 ; drawn payable to G. H. Ingalls & Co., by A. B. Tur- ner, Cashier, for $1085.19. Transferred to you by full indorsement. Form 14 : Invoice of C. W. Allen & Co., Trenton, N.J., dated July 9. Terms: 2/30, net 60 days. Items as foUows: 24 #27 c W. Wire Mattresses 10 #71 a Child's Cribs 24 #16 Wool Mattresses 24 #496 White Iron Bedsteads 50 #636 Brass Bedsteads Form 15 : Invoice of William Leavens & Co., 32 Canal St., New York City, dated July 11. Terms : sight draft in 10 days for the amount of the bill, less 2%. Items as follows : 12 #73 Oak Writing Desks 3 #6926 Sec. Book Cabinets 15 #68 Oak Bookcases 6 #396 Mahogany Hall Stands Deduct the discount. Form 16 : Stoddard & Co.'s draft, dated City, July 14, on you, in favor of themselves, at 15 days from date, for $400. Form 17 : E. F. Green & Co.'s draft, dated Bangor, July 14, on H. B. Claflin & Co., City, in your favor, at 30 days from date, for Form 18 : Invoice of Randall Mfg. Co., 126 East 123d St., New York City, dated July 8. Terms: 3/10, 1/30, net 60 days. Items as follows : 10 #57 Reclining Couches 50 #65 Turkish Rockers 6 #73 Sofa Beds Form 19 : Invoice of S. T. Udell & Co., Chicago, 111., dated July 16. Terms : sight draft in 20 days. Items as follows : 19 #50 M. Parlor Tables 11 #10 China Closets 114 ACCOUNTING AND BUSINESS PEACTICE Form 20 : William Leavens & Co.'s sight draft, dated New York City, July 20, on you, in favor of themselves, for the net amount of Form 15. Fonn 21 : 0.0. B. envelope. Get |50 of your teacher and place it in the envelope. Data for the envelope as follows : Amount of invoice, $60 ; amount to be returned, $50 ; from (your name) ; on Chas. B. Lyman, Springfield ; dated July 17. Form 22 : Check of David E. Teeter, dated City, July 23, on Traders National Bank, in your favor, for (No. 1, $1291.95 ; No. 2, 11064.74; No. 3, $1089.49; No. 4, $982.57; No. 5, $1102.36). Form 23 : M. N. Overman's draft on Rogers, Peet & Co., Buffalo, in favor of himself, dated Albany, July 13, payable at 30 days' sight, for $469.39. Accepted July 15. Transferred to you by full indorsement. Form 24 : New York draft, dated City, July 24, drawn by Union Bank on Chemical National Bank, in your favor, Chas. H. Palmer, Cashier, for $319.72. Form 25 : Invoice of C. W. Allen & Co., Trenton, N.J., dated July 23. Terms : 2/30, net 60 days. Items as follows: 17 #672 B Drawing-room Suits 6 #59 a Cheval Glasses Form 26 : Stoddard & Co.'s sight draft, dated City, July 27, on you, in favor of themselves, for $150. Form 27 : Bill of the Metropolitan Carting Co., dated City, July 28. Items as follows : July 3, Cartage, $12.26 " 10, Cartage, 9.50 ; Freight, $126.50 " 13, Cartage, 7.50 ; Freight, 64.20 " 26, Cartage, 3.75 Receipt the bill ; sign Metropolitan Carting Co., per J. H. M. Form 28 : Receipted bill of the Consolidated Gas and Electric Light Co., City, dated July 29. Terms: cash, less 5%. Items as follows : Meter at current date, 8200 cu. ft. Meter at last settlement, 2000 cu. ft. Gas consumed, 6200 cu. ft., at $1.20 per 1000 cu. ft. Deduct the discount before receipting the bill. In receipting, sign the name of the gas company, per M. E. F. SET V — JOBBING FURNITURE BUSINESS 115 After finishing the foregoing forms, hand them to your teacher for correction and criticism. If accepted by him, place them in the envelope marked Incoming Papers. You are now ready to take up the work of Set V. Memoranda of Transactions for July July 1 You this day begin a Jobbing Furniture Business at 269 Cause- way St., with the following resources and liabilities. Resources J. B. Maxwell's note, dated June 15, in your favor, payable at Union Bank 30 days after date, with interest at 6%, $500; interest accrued on the above note to date, $1.33. Discount on bills payable, $4. Accepted draft for |450, dated June 3, payable at Union Bank 30 days after date. Draft is drawn by J. B. Topham, in his own favor, on W. D. Rimbach and transferred to you by full indorsement. All of the stock of furniture of the late Allen & Bailey Furniture Co., as per schedule on file, $7150. Cash on hand, |6200. Store and lot, 269 Causeway St., as per warranty deed on file, $7000. Office fixtures, etc., as per schedule on file, $450. Two horses, harness, delivery wagon, etc., valued at 1450. The following persons owe you: J. E. Bender, Troy, $1350 ; Samuel W. Bradley, Bedford, $750 ; E. F. Green & Co., Bangor, $400. Liabilities Your note at one month from June 25, payable at Union Bank, in favor of Allen & Bailey Furniture Co., for $2500, with interest at 6%. Interest accrued, $2.50. Discount on bills receivable, 15/. C. O. Boswell's draft at 80 days' sight, dated New York City, June 20, on you, in his own favor, for $1000. You accepted it June 25, payable at Union Bank. You owe the following persons on account: J. O. Moran, City, $2100; Paine Mfg. Co., Bedford, $350 ; Stoddard & Co., City, $4750. 116 ACCOUNTING AND BUSINESS PRACTICE Enter in the journal, cash book, and bill book. Open accounts with Horse and Wagon and Office Fixtures. Enter all interest and discount items under Interest and Discount. The item of $4 under interest and discount on the list of resources is for 24 days' discount on the acceptance in favor of C. O. Boswell. The draft is not interest bearing, and so will not be worth its face value until maturity. Computing the dis- count for 24 days we find that a cash payment of $4 less than the face would cancel the acceptance July 1. Since Bills Payable must be credited for the face of the draft, we treat the discount as an available resource. In like manner we find that W. D. Rimbach's acceptance is worth 15/* less than its face value on July 1 . Bills Receivable must be debited for the face of the accept- ance, and we credit Discount 15)* to offset the overcharge of resources. In opening a set of books it is always necessary to find the present value of the notes on hand and outstanding in order to determine the actual net investment. Take J. B. Maxwell's note (Form 1) and W. D. Rimbach's acceptance (Form 2) and place them in the Unpaid Bills envelope. The warranty deed, schedule of property on hand, etc., are assumed to be on file, and you will make no reference to them at this time. Apply to your teacher for the cash investment. Deposit all the cash on hand, except $100, in Union Bank. In this set and in all the work following, the student will make a slight change in the form for check book illustrated in preceding sets. This is done not to multiply special features needlessly, but to place before the learner the two general forms for keeping a check book employed by the average business man. Both forms have their advantages. (Teacher should explain.) In the form on page 117 note particularly the following changes: 1. The amounts of the checks are not carried to the left stub at aU. 2. The aggregate of all deposits, and the checks separately, are added and subtracted, respectively, on the right stub. 3. All deposits are fully itemized on the left stub. 4. All notes, drafts, etc., charged or credited to a depositor's account are fully explained on the left stub. Pay the bill of Thorp, Martin & Thorp (Form 3) for books, stationery, etc., by check. Put the bill in your Paid Bills envelope. Write the check and hand it in. Debit Expense in the cash book. Secure an open policy of insurance from the Prudential Insurance Co. for $12,000 on store, goods, and fixtures at 1^^ premium. Pay SET V — JOBBING FURNITURE BUSINESS 117 Form of Check Book "f jutoj' j.utu 60 50 ^e/^aaAt&d, ^utvj, 1 6260 50 6200 No. / 6260 60 Date, futif /, /^ To l/lhyv, 2ite,fuU^/0,/'/^ 1268 76 To /. 10: &BvieA^ • For Imaj-. of piti/ 2 Amount, $ ifOO 336] '76 Smyw-cvuC 118 ACCOUNTING AND BUSINESS PRACTICE the premium by check in favor of Chas. M. Shaw, general agent for your place. Charge Expense. The policy, it is assumed, was received and filed yesterday. Note. A policy of insurance is simply an insurance company's contract with the insured. Such a contract usually covers the following : 1. Premium paid by the insured. 2. Term of insurance. 3. Amount of insurance. 4. Description of the property insured. 5. Extent of the company's liability, etc. This agreement is usually signed by the president and secretary of the company as well as by the local agent of whom you obtain it. Engage Harry K. Sutton at $60 and Harvey L. Grant at $50 per month as salesmen ; Michael Donovan at $30 per month as delivery man ; Daniel L. Coon and Geo. W. Ainsley at $48 and |40 per month, respectively, as upholsterers and finishers. (Journal memorandum only.) THINGS TO OBSERVE IN WRITING LETTERS ORDERING GOODS 1. Arrange the items one on a line. 2. Give shipping directions in out-of-town orders. 3. In case of a first order : a. Give satisfactory references. h. State how you intend to pay. 4. When you name prices state at what point you expect the goods F.O.B. 5. Always be definite with regard to the quality and quantity of the things ordered. 6. State the purpose for which the goods are intended, (The teacher should explain under what circumstances this is necessary.) 7. State, if necessary, when the goods must reach you. Write letters ordering the following goods : 1. Of Cobb, Bates & Co., 62 Portland St., City, the goods outlined in Form 4. Give references and ask for their best cash discount. Hand in the letter after you have inclosed it in an envelope properly addressed. Note. — In this set no entry will be made at the time of ordering goods. Almost all of the orders are to out-of-town firms, and suflicient time is allowed to elapse for the student to receive the invoice and goods before making any entry. 2. Of William Leavens & Co., 32 Canal St., New York City, the goods outlined in Form 15. Offer to honor their sight draft in 10 days for the amount of the bill less the regular discount for payments within 10 days. SET V — JOBBING FUENITUKE BUSINESS 119 Give New York City references, as you are a stranger to this firm. 3. Of C. W. Allen & Co., 46 Merrimac St., Trenton, N.J., the goods outlined in Form 14. You have had dealings with this firm before and expect their regular terms. 4. Of Derby Mfg. Co., 17 Portland St., City, the goods outlined in Form 5. Ask them to allow you their usual discount, and draw on you for the amount of the bill at 10 days from the date of same. 5. Of W. H. Stearns & Co., Chicago, 111., the goods outlined in Form 9. Tell them that you will honor their 30-day draft for one-half the bill, and will pay the balance in 60 days. Cancel your indebtedness to the Paine Mfg. Co., Bedford, by a sight draft on Samuel W. Bradley of the same place. Write a letter of remittance and inclose it with the above draft in an envelope properly addressed to the Paine Mfg. Co. Also write a letter to Samuel W. Bradley, notifying him that you have drawn upon him at sight. The two following forms are suggestive of what the above letters should contain : 1 Boston, Mass., May 25. 19 0. M. Behrns & Co . , Syracuse, N.Y. Gentlemen: Inclosed find a sight draft on K. P. Shedd of your city, drawn in your favor, for Three Hun- dred Fifty (350) Dollars, in full settlement of account to date. Kindly acknowledge its receipt, and oblige Very truly yours, E. R. Gaylord & Co . , per Tfl. 120 ACCOUNTING AND BUSINESS PEACTICE 2 Boston, Mass., May 25, 19 — Mr. K. P. Shedd, Syracuse, N.Y. Dear Sir: We have this day drawn upon you at sight, in favor of 0. M. Behrns & Co., of your city, for Three Hundred Fifty (350) Dollars. Kindly honor the draft upon presentation and oblige Very truly yours, E. R. Gaylord & Co. , per m. Hand in tlie letters. Make an entry in the journal. July 2 David E. Teeter, 360 Main St., City, writes ordering as follows : 10 #5932 Empire Toilet Tables 3 #89 M. Chamber Sets 1 #16 A Comp. Dining-room Set 2 #1008 Oak Sideboards 1 #396 Mahogany Hall Stand Fill the order. Terms : 3/5, 1/30, net 60 days. Make out the bill, copy it in the sales book, and hand it in. Benj. P. Freeman & Co., 924 East St., City, write ordering the fol- lowing goods : 12 #170 Eng. Clothes Poles 12 #496 W. Iron Bedsteads 5 #245 Cedar Chests 25 #821 Parlor Lamps Fill the order. Terms : sight draft in 10 days, less 3^. Make out the bill, have it approved by your teacher, and copy it in the sales book. Be sure to deduct the discount on the bill as well as in the sales book. Draw a sight draft in favor of yourself and date it ahead 10 days. Have the draft approved by your teacher and place it in your Business Oash envelope. Make no entry for the draft. Hand in the bill. Note Some accountants prefer to wait until the 10 days are up before drawing the draft. It is considered better, however, to draw the draft at the time of billing the goods, since the matter may be overlooked if it is deferred 10 .days. SET V — JOBBING FUENITUEE BUSINESS 121 Walker, Brown & Co., Albany, write ordering as follows : 5 #20 D Parlor Cabinets 10 #835 Music Cabinets 24 #176 Piano Chairs 15 #821 Parlor Lamps Fill tbe order. Terms : draft at 30 days from date. The goods called for in the above order will be sent by freight, and it will be necessary for you to prepare a shipping order and shipping receipt similar in form to the model which follows : Shipping Receipt Boston, Mass., JuIa^ 5, ig Received from (^. //. li^wUaMw. ^ ^a. By THE COMMERCIAL TRANSPORTATION CO. The property described "below, in apparent good order, except as noted (contents and condition of contents of packages unknown), marked, consigned, and destined as indicated below, wbicb said Company agrees to carry to the said destination, if on its road, otherwise to deliver to another carrier on the route to said destination. It is mutually agreed, in consideration of the rate of freight charged for this service, 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 interested in all or any of said property, that every service to be performed here- under shall be subject to all the conditions, whether printed or written, herein contained, and which are hereby agreed to by the shipper and by him accepted for himself and assigns as just and reasonable. Consignee j. W-. Tncualem, V &. Destination d'pAA/yuf^L&tcL, iTiaQy^. MAEKS Quantity ABTICLBS Weight Subject to Correction /OO RcyvyuLfW ^koL-i^ /OO c^cj/w.&y fxaeJc&iA' ■ For the corporation. -Freight Agent ]22 ACCOUNTING AND BUSINESS PRACTICE THINGS TO BE OBSERVED IN PREPARING BILLS OF LADING 1. In actual business a freight agent must be in possession of the goods to be shipped before he will sign a freight receipt. 2. These receipts, commonly called bills of lading, are sometimes drawn up in sets of three, but more generally in sets of two. The first is generally stamped Shipping Order and is signed by the shippers and filed by the freight agent for reference should a- question arise with regard to the shipment at any time ; the second is generally stamped Shipping Receipt and is signed by the freight agent, returned to the shippers, and mailed by them to the person to whom the goods are shipped. When these receipts are drawn up in sets of three the third is generally stamped Duplicate, is the same as the shipping receipt in every way, and is retained by the shippers for reference in case the goods shipped are miscarried, or anything of that sort. 3. Parties to whom goods are shipped are generally required to present the ship- ping receipt before the goods are delivered. Should any transportation company deliver the goods without first obtaining a shipping receipt drawn payable to order, it renders itself liable to the shippers for the full value of the goods so delivered. 4. These receipts are sometimes drawn payable to the order of a third party, in which case they pass hands by indorsement, the same as any negotiable instrument. This point will be more fully illustrated later on. 5. A shipping receipt drawn up in the regular way is not negotiable. Sign the shipping order just made and take the shipping receipt to your freight agent or teacher for signature. Place the shipping receipt with the invoice, inclose both in an envelope addressed to Walker, Brown & Co., and hand them in. The shipping order is left with the freight agent. These bills of lading should be made out as above for all merchandise sold to out-of-town customers. Draw a draft payable 30 days from the date of the bill, in favor of yourself, and record it in your bill book. Indorse the draft properly and leave it with your bank for collection. See explanation in connec- tion with the draft illustrated on page 94. " It should be borne in mind that Walker, Brown & Co. have agreed to accept the draft, and that you do not doubt its being honored in due course. Make no entry in the check book. Some banks would enter paper left for collection in "short" in the pass book; i e., enter a record of the paper but not extend the amount into the money column, as follows : . cyyt' ita^u Bhoo^., cJ'uyu, fo'JS.- SET V — JOBBING FUEMTUEE BUSINESS 123 In this work no entry will be made in the pass book except for paper accepted for deposit or placed to your credit. Make an entry in the journal the same as if the draft were in your possession accepted. Leave W. D. Rimbach's acceptance at the bank for collection. Indorse it properly, and make the proper entry in the Bate Sent to Collect column of the bill book. July 3 J. E. Bender, City, has agreed to honor your sight draft, in favor of Stoddard & Co., for |300. Write the draft and the letters and hand them in. Make the proper entry in the journal. The Metropolitan Carting Co. has just delivered to you the goods ordered of Cobb, Bates & Co. on the 1st. Look up the invoice (Form 4). Enter in the invoice book. (See illustration, page 108.) THINGS TO BE OBSERVED WHEN ENTERING PURCHASES IN THE INVOICE BOOK 1 . In actual business never enter a bill in the invoice book until the goods have been received. Sometimes it may happen that more than one bill is sent for the same lot of goods, or perhaps a bill is sent and the goods not delivered. 2. When the goods have been received the invoice for the same should be looked up and compared with the articles delivered. 3 . If everything called for on the invoice has been received, the bill should next be compared with the order to find out whether or not you have received the goods you wrote for. 4. If the items on the bill tally with the order, next see if the prices and terms are what you bargained for. 5. Examine the extensions of the invoice carefully and, if everything is found correct, paste the bill in the invoice book. 6. If your checking shows any irregularities on the bill or in the goods received, do not paste the invoice in the invoice book, but hold it, and immediately notify the parties of whom you are purchasing the goods of any errors. The goods ordered of Derby Mfg. Co. have been delivered. Look up the invoice (Form 5) and the accompanying draft (Form 6). Handle the invoice the same as the one just entered. Accept the draft payable at Union Bank, and enter in the journal and bill book. Put the draft in an envelope properly addressed and hand it in. 124 ACCOUNTING AND BUSINESS PRACTICE W. D. Rimbach's acceptance has been collected. Go to the bank and have the amount placed to your credit in your pass book. Make the following record on the left stub of your check book. ^utu 14)^. it, Rvmly-oM Q^ ¥-S0 Add the amount to the balance in the bank, and credit Bills Receiv- able on the left-hand side of the cash book. Make the proper record in the biU book. July 5 Pay by check J. O. Moran's sight draft (Form 7) on you, in favor of himself, for |200. Enter in the check book and cash book. Be sure to hand in all out- going papers. Samuel W. Bradley, 126 James St., Bedford, writes ordering the fol- lowing goods : 6 #3116 Antique Card Tables 3 #1008 Oak Sideboards 6 #687 Ornamental Tables 5 #169 c Library Tables Fill the order. Terms : draft at 30 days, in favor of yourself, for the amount of the bill. Make out a shipping order and receipt. Write the draft and have it approved. Fold properly the bill, freight receipt, and draft, place them in an addressed envelope, and hand them in. Sales-book record only. No entry for the draft until it has been returned accepted. Telegraph Randall Mfg. Co., 126 East 126th St., New York, ordering : 50 #65 Turkish Eockers 10 #57 Eeclining Couches 5 #73 Sofa Beds Do not use more than twenty words for the message. Write the telegram and hand it to your teacher for approval. Pay 75/ charges in currency. Debit Expense in the cash book. Telegrams now play a very important part in the daily routine of nearly all large business establishments, and the ability to write clearly and in a few words the ordinary message is a very desirable qualification for a business man. SET V — JOBBING PUENITURE BUSINESS 125 The . following is suggestive of the general wording and form of telegrams : THE UNION TELEGRAPH CO. INCORPORATED 15,000 OFFICES IN AMERICA. CABLE SERVICE TO ALL THE WORLD. W. H. ARMISTEAD, President and General Manager. Receiver's No. Time Filed Check ^'LI^BF the following meSBage sul^ect to the J -Q . ». T T 1 terroB on back hereof, which are hereby agreed to. } DOS VOTl y hASiSB • j JUly 1 j 1Q the! 1 Tq Wm. M. Brown & Co . , New York City. Ship fast freight twenty number sixty library tables Manning, Ball & Co. J!^=READ THE NOTICE AND AGREEMENT ON BACK.^,^ THINGS TO BE OBSERVED IN WRITING TELEGRAMS 1. Omit salutation, complimentary, closing, and all superfluous words. Avoid such expressions as " Ship immediately by American Express," etc. Here, and in all similar expressions, such words as immediately, at once, etc., are entirely unnecessary. A telegram in itself implies urgency. 2. Make all messages as short as possible, but clear and definite. A fixed charge is made for all messages, except cable messages, not exceeding ten words, and for every word in excess of that number there is an additional charge. All charges are regulated somewhat by distance. 3. No charge is made for th name and address of the person who is to receive the message, or for the name f the sender. 4. In writing his address, the sender of a message should never include a street number, or anything of that kind. A charge is made for everything in the address 126 ACCOUNTING AND BUSINESS PRACTICE except the name of the city or town, state, and date. If you are not generally known in a large city or town, give the sending operator your street address, and answers will be promptly delivered, and no additional charge made for street number, etc. 5. Numbers should be written out in full since the charge.is the same for a figure as for a word. For example, "Send by fast freight 20 ^1000 mahogany library tables " would be counted as fourteen words, while " Send fast freight twenty num- ber one thousand mahogany library tables " would be counted as ten words. 6. Except in a cable message, each part of a hyphenated compound word is counted as an entire word. For instance, twenty-five would be counted as two words. 7. Each initial of a name is charged as a separate word ; but a few abbreviations are counted as one word; as, F.O.B., C.O.D., a.m., p.m., etc. 8. In cable messages a charge is made for the name and address of the 'one to whom the message is sent as well as for the message. 9 . Many kinds of cipher language are used to guard the secrecy and reduce the expense of messages. This plan is found very serviceable when the cost of transmis- sion is great, or when very important matters are to be telegraphed without giving information except to those entitled to it. Almost all cable messages are in cipher. To telegraph or cable in cipher, business men employ what is called a code, — a system of abbreviations in which a single word stands for a whole phrase or sentence; as, Autumn might stand for " Knowlton, Beach & Co., Butleigh, Glaston- bury, England," or " We arrived here this morning," or any other thing understood by both the sender and receiver of a telegram or cable message. 10. All messages of importance should be repeated. For one-half the original cost of a telegram the sender of any message can have the receiving operator repeat it to the operator who first sent it. Errors in important telegrams are in this way avoided. 11. Night messages are taken at reduced rates. These are sent at any time after 6 P.M., and are not delivered until the next morning. July 7 J. E. Bender, 127 Main St., Troy, writes ordering the following goods : 16 #396 Mahogany Hall Stands 9 #68 Oak Bookcases 10 #76 A Oak Chamber Sets Fill the order. Terms : 3/5, 2/10, net 30 days. (See similar trans- action, July 5.) July 8 Receive a check (Form 8) from J. E. Bender for the amount of invoice of the 7th, less 3%. Take the check and from it make an entry on the left side of the cash book. Except in amounts, your entry will be as follows : (o. B&n-cCe- •Jnv-, oi 7tk, t&iA- 3 "Jo 30 f70 SET V — JOBBING FURNITUEE BUSINESS 127 July 10 The Metropolitan Carting Co. has just delivered the goods shipped to you by W. H. Stearns & Co., Chicago, 111. Look up the invoice (Form 9) and paste it in the invoice book. Accept the draft (Form 10), place it in an envelope addressed to W. H. Stearns & Co., and hand it to your teacher. Make the proper records in the bill book and journal. Samuel W. Bradley, Bedford, writes inclosing your draft of the 5th (Form 11), on him, accepted, together with an acceptance (Form 12) payable 30 days from July 12, drawn on J. E. Farley, City, in favor of himself, for $179. Form 12 is transferred to you by full indorsement. Take the drafts and make -the proper entries in the bill book and journal, after which place them in the Unpaid Bills envelope. Telegraph S. T. Udell & Co., Chicago, 111., asking them to ship you by fast freight : 11 #10 China Closets 19 #50 Mah. Parlor Tables Write the telegram and hand it in. Limit the message to fourteen words. Pay 75/ charges in currency. Charge Expense in the cash book. July 11 G. H. Ingalls & Co., Springfield, write ordering: 25 #20 Corner Chairs 25 #17a Eoman Chairs They inclose you a New York draft (Form 13) to cover the cost of the order. Fill the order. Terms: cash, less 3%. Make out the bill deducting the 3 % allowed for cash. Fill out the usual shipping order and receipt. Enter in the sales book. Enter the draft in the cash book. Make no record of the discount in the cash book for this transaction, as the parties have been charged with only the proceeds of the bill in the sales book. July 12 Deposit in the bank the check on hand; also the New York draft and the sight draft. Collection J-jj-% on Bender's check. Note. — Banks usually charge their depositors a small fee for collecting out-of-town checks. This fee is rarely over tV%. There is no uniform custom in the matter of charging for checks, sight drafts, and the various other negotiable instruments 128 ACCOUNTING AND BUSINESS PEACTICE offered for collection. Nearly always a small charge is made for collecting any paper payable out of town. These charges range from ^-^% to \%. As a rule no charge is made to a regidar depositor for collecting paper payable in the city. Frequently, when a customer keeps a large bank account, no charge whatever is made for collecting checks. The student will be instructed when the bank makes any charges. Make out a deposit ticket, deducting the collection. Indorse the check, etc., properly and make the proper entry in the check book. Be sure to give Benj. P. Freeman & Co. credit for the sight draft, for no entry was made at the time of drawing the draft. Debit Collection and Exchange for the bank's charges. July 12 Leave J. B. Maxwell's note at the bank for collection ; also discount Samuel W. Bradley's acceptance for invoice of the 6th, and receive credit for the proceeds. Take J. B. Maxwell's note, which you will find in the Unpaid Bills envelope, and indorse it properly. Take Bradley's acceptance, also in the Unpaid Bills envelope, and indorse it properly. Make out a discount memorandum for the acceptance. Form of Discount Memorandum DISCOUNT MEMORANDUM Date jul^ IS, 19 Discounted for Vhrb. fC. MvyveA, Maker Ro-i^eA. lAMtiami^ Indorser. Face, ^■500.°° Interest, $ Total, ^ffOO.°° Discount 60 da,. %6.°° Coll., $ , Total, %S.'^ Net Proceeds, %f^6.°° Pin the discount memorandum and the acceptance together, place them and Maxwell's note in your pass book, and hand them to your SET V — JOBBING FURNITUEE BUSINESS 129 bank teller or teacher, who will place the proceeds of the acceptance to your credit if you have computed the discount correctly. No record of Maxwell's note is made in the pass book. Make a record of the acceptance on the left stub of your check book similar to the following : jlutu /£ ^a/yyiAO&t I/O-, BicuiC&u'ay aeye.&'Bta/)'Ls,& rC&Q^ cLt-QM-O-^t^'JtV 500 if-qs Add the proceeds to your bank balance on the right stub of your check book. Make the proper records in the cash book and bill book. Remember that Bills Receivable and Bills Payable must always be debited and credited for their face value. Give Cobb, Bates & Co. a check for invoice of the 3d, less the discount allowed for prompt payment. Write the check, hand it in, and make the proper entry in the cash book. The entry in the cash book will be the same as the following except in amounts. /^ (loU-, Bate^ V €o: c^nv-. at tA,& 3cl, t&a^ djo 37 26 21/. Receive the goods ordered of C. W. Allen & Co. (Form 14) on the 1st. Make the proper entry in the invoice book. July 13 The Metropolitan Carting Co. has delivered the goods ordered of William Leavens & Co. Look up the invoice (Form 15) and record it in the invoice book. Note that W. L. & Co. have deducted their regular cash discount on the invoice. You will receive their sight draft on you in about 10 days. 130 ACCOUNTING AND BUSINESS PKACTICE Remit C. W. Allen & Co. a check for invoice of the 9th, less the discount allowed for prompt payment. Also order the following: 5 #59 A Cheval Glasses 17 #572 Drawing-room Suits Write the check, and have it approved. Enter in the cash book. Write a letter, inclosing the check and ordering the goods named above. Hand in the letter. Your acceptance in favor of Derby Mfg. Co., made payable at your bank, is due to-day. Bank charges the amount to your account. UNDER WHAT CIRCUMSTANCES A BANK WILL CHARGE A DEPOSITOR WITH A NOTE OR DRAFT 1. Banks are not uniform in theii' practice of charging notes, accepted drafts, etc. In some places, notably in Chicago and several other large western cities, they require their patrons to meet all such paper by check. 2. The practice most generally followed is for a bank to pay notes, acceptances, etc., out of a firm's deposit, and charge the depositor the same as they would had he drawn a check. Court decisions and special laws in force in a number of states hold that notes, acceptances, etc., made payable at a bank are orders upon that bank and may be charged to a depositor's account at maturity the same as a regular check. 3. These special laws and decisions are in operation in New York, Massachusetts, Connecticut, and a few other states. In these states nearly all banks charge notes, etc., to their patrons' accounts at maturity. This is the practice followed in this text. Make a record of the draft on the left stub of the check book similar to the following : /d a^ aAte,& iyn^ ISOO On the right check stub subtract the amount of the acceptance from the balance you have in the bank. Make an entry on the right side of your cash book. Make the proper record in the bill book. July 15 Your bank has received cash for J. B. Maxwell's note and interest due to-day. SET V — JOBBING FURNITUEE BUSINESS 131 Go to the bank and have the amount placed in your pass book. Make a record of note on the left stub of the check book as follows : /5 f. 18. ma,?M^M'i. nat& 500 cPnteA^Bot 2 50 502 60 Add the amount of the note and interest to your bank balance. Make the proper cash-book entry. Accept, payable at your bank, Stoddard & Co.'s draft (Form 16) in favor of themselves, at 15 days from July 14, for $400. Do not date the acceptance. Why ? Make the proper journal and bill-book entries and hand in the draft. Receive of E. F. Green & Co. a draft (Form 17) drawn in your favor, payable 30 days from July 14, on 11. B. Claflin & Co., City, for $400. Present the draft to your teacher, who will accept it for H. B. Claflin ■ & Co. Enter in the bill book and journal. Receive the goods ordered of Randall Mfg. Co. on the 5th. Look up the invoice (Form 18) and paste it in the invoice book. July 1G Give Randall Mfg. Co. your check for the amount of their invoice of the 8th, less 3%. Write the check and hand it in. Enter in the cash book. July 17 M. N. Overman, 493 King St., Albany, writes ordering : 3 #693 Antique Wardrobes 30 #65 Turkish Hookers 3 #73 Sofa Beds References are satisfactory and you fill the order. Terms: 3/10, 1/30, net 60 days. Make out the bill and Have it approved. If correct, copy it in the sales book. Make out a shipping order and receipt. Place the receipt and the bill in an envelope and hand them in. Receive a telegraphic order from Chas. B. Lyman, Springfield, for: 4 pr. Blue Chenille Curtains 5 pr. #91 Lace Curtains The goods are to be shipped by express C.O.D. 132 ACCOUNTING AND BUSINESS PRACTICE Make out a receipted bill, place it in a G. O.B. envelope properly filled out, and hand it to your teacher for approval. Enter in the sales book as follows: (wiOA. la. LyynM/yv, d: 6: 30 50 ' When you post the above to your ledger, debit Chas. B. Lyman under C.O.D. Accounts as follows: /7 '.Jilt 50 July 18 Receive the goods ordered of S. T. Udell & Co., Chicago, on the 10th. Look up the invoice (Form 19) and paste it in the invoice book. July 19 P. R. Brown, Rochester, writes ordering : 25 #635 Brass Bedsteads 25 #6387 Hall Settles Fill the order C.O.D., subject to the order of your bank. DRAFT WITH BILL OF LADING ATTACHED For the convenience of shippers in sending goods to parties when the responsibility or. credit of the buyer is limited or Tivhere 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 analogous to C.O.D. shipments in the express business, as explained in the trans- action for July 17. SET V — JOBBING FUENITUEE BUSINESS 133 Make out a bill in the regular way, writing for terms subject to order of hank. Make out a shipping order and receipt. See that they are properly signed. In the column for consignee's name and destination write : lAyyutan- BcM^k, <-?. /^. B'uyuyyv, Write a draft for the amount of the shipment, indorse it properly, and attach it to the bill of lading. Take them to your bank for collection. Send the invoice to your customer in the regular way. Enter the sale in the sales book the same as explained for the C.O.D. shipment of July 17. No entry for the draft until the bank has collected it. HOW YOUR BANK WILL MAKE COLLECTION 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 the draft, 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 a 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 (Form 20) in favor of them- selves, for the amount of the invoice of the 11th. Take the draft and find if the amount is correct. If it is, write a check to cover the same, and make the proper entry in the cash book. Receive returns for the C.O.D. shipment of the 17th. Take the money out of the G. O.D. envelope (Form 21) and place it in the Business Cash envelope. Enter in the cash book as follows : .3. CCe/uyK/yTZo' Left Side Ihaa,. 15. JLui-tuM^ July 23 Receive a check (Form 22) of David E. Teeter, in full for invoice of the 2d, less 1%. 134 ACCOUNTING AND BUSINESS PRACTICE Examine the check. If the amount is correct, make the proper entry in the cash book. Receive of M. N. Overman, Roger, Peet & Co.'s acceptance at 30 days from July 15, to apply on account, $469.39. Take the draft (Form 23). It has 22 days yet to run and so is not worth its face value. The discount for 22 days at 6% should be deducted. Make the proper records in the journal and bill book. July 24 Write a letter to J. K. Levy & Co., 27 East 126th St., New York, orderins; : 15 #693 Antique Wardrobes Inclose a New York draft to cover the amount, less 2%. Buy the draft by check. Exchange, 50/. Write a check to cover the draft and exchange. (See form, page 87.) Take the New York draft (Form 24) and, if the amount is correct, indorse it (see form, page 89) and debit J. K. Levy & Co. in your cash book for the amount; also debit Collection and Exchange for the exchange. Inclose the draft in the letter and hand it in. July 25 Your acceptance in favor of C. 0. 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 proper entries in the cash book, bill book, and check book. Chas. B. Sherman, 23 West Ave., Rochester, writes ordering : 50 # 15 Cane-seat Dining Chairs 3 # 2229 Oak Dining Tables 25 #16k Leather-seat Dining Chairs 16 #3016 Fancy Eockers References are satisfactory and you fill the order. Terms: sight draft in 30 days for the amount of the bill, less 1%. Make out the bill, shipping order, and receipt. Copy the bill in the sales book. Place the bill and receipt in an envelope and hand them in. Draw a sight draft, dated ahead 30 days, in favor of yourself, for the amount of the bill, less 1%. Have the draft approved and place it in the Business Cash envelope. The Metropolitan Carting Co. has delivered to you the goods ordered of C. W. Allen & Co. on the 13th. Look up the invoice (Form 25) and paste it in the invoice book. Draw cash, 175, for private use. SET V — JOBBING FUENITUKE BUSINESS 135 Take $75 out of the Business Cash envelope and place it in the. Personal Cash envelope. Enter in the cash book. July 27 Pay by check Stoddard & Co.'s sight draft (Form 26) in favor of themselves, for |150. Write the check and place the draft in the Paid Bills envelope. Enter in the cash book. Deposit the check and all the cash on hand. Be sure to make the proper indorsements before offering any paper for deposit. David E. Teeter, City, placed the following order with you over telephone this morning : 15 #16 B Brass Easels 19 #68 Oak Bookcases 6 #20 D Parlor Cabinets Fill the order. Terms: 3/5, 1/30, net 60 days. Pay by check Metropolitan Carting Co.'s bill for freight and drayage to date, 1213.70. Examine the bill (Form 27). Write the check. Debit Merchandise for the amount. July 29 Pay gas bill for the month by check, 17.07. Examine the bill (Form 28). Write the check and make the proper entry. 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 Write the checks and have them approved. Charge Expense in the cash book. July 30 Your acceptance of the 15th in favor of Stoddard & Co., made payable at the bank, has been charged to your account. Make the proper entries in the cash book, check book, and bill book. Closing the Work for July The student should now proceed to close the month's work as follows : 1. Have your pass book written up. 136 ACCOUNTING AND BUSINESS PEACTICE 2. Prove the cash, balance and post the cash book. (See model, pages 110 and 111.) In posting from the cash book, observe the follovring : a. In debiting or crediting personal accounts when a discount has been allov^ed, be guided by the following form : Williams, Dowd & Co. 19— July 1 Discount N.Y. draft 42 2058 2100 19_ Juue July 28 30 15 I. B. I. B. I. B. 6 9 16 2100 592 1241 60 60 b. Post only the totals of the Merchandise Discounts columns. The total of the column on the left side should be posted to the debit of Merchandise Discounts 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 contains a record of all discounts allowed to you for prepaying your bills during July. 3. In posting give your account one page ; all property accounts one- half page each ; all accounts receivable and payable one^third page each. Write the property accounts on pages 1 to 7 inclusive ; accounts receiv- able, on pages 8 to 11 inclusive; accounts payable, on pages 12 to 15 inclusive. 4. Rule, foot, and post the sales book and the invoice book. 6. Post the journal. 6. Prove the bill book. Note. — To prove bill book, find the total of the uncanceled Bills Receivable. This sum should agree with the balance of the Bills Receivable account in the ledger. In like manner find the total of the unredeemed Bills Payable, and the sum should agree with the balance of the Bills Payable account in the ledger. 7. Make out monthly statements of customers' accounts. Place them in envelopes properly addressed and hand them in for approval. (See form for statement, page 139.) SET V— JOBBING FURNITURE BUSINESS 137 8. Take a trial balance of the differences of your ledger accounts and hand it to your teacher 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 buying prices for the mer- chandise. Inventories, July 31, 19- Merchandise : 5 #3116 A. Card Tables 17 #2646 A. Library Eockers 4 #693 Antique Wardrobes 25 #635 Brass Bedsteads 10 #16 B Brass Easels 150 #16 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 I 17 #572 Drawing-room Suits 12 #3016 Fancy Rockers 12 #36 B Gentlemen's Chiffoniers 10 #6387 Hall Settles 260 #16 K L. Dining Chairs 5 #169 c Library Tables 10 pr. #91 Lace Curtains 5 #16 L. Dressing Cabinets 19 #60 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 6 #68 Oak Bookcases 6#20d Parlor Cabinets 10 #57 Reclining Couches 12 #73 Sofa Beds 6 #6926 S. Book Cabinets 20 #65 Turkish Rockers 24 #27 W. W. Mattresses 24 #16 Wool Mattresses 12 #496 W. I. Bedsteads Office Fixtures : Estimated cost Depreciation Horse and Wagon : Estimated cost Depreciation Real Estate Expense : Unexpired insurance $450. 4.50 $446.50- $450. ■ 45. $406. $7000. $146. 10. Make the usual statements of losses and gains and resources and liabilities. 138 ACCOUNTING AND BUSINESS PRACTICE The statement of losses and gains for this set is a little more com- plicated than any of those previously made. The following is sug- gestive of the form to be used. statement of Losses and Gains, July 31, 19 — Mdse. On hand July 1 7500 Mdse. Bought during July 9200 Freight and Drayago Bill for July 400 Mdse. Sales for July 9650 50 Mdse. On hand July .31, per inv. 8690 50 Gain on Mdse. Gain on Mdse. Carried bdow From above lUi 18341 18341 1241 Mdse. Disc. On purchases 150 20 Mdse. Disc. On sales 90 20 Int. and Disc. Allowed to us 25 50 Int. and Disc. Allowed hy us 9 50 Expense Cost 490 Expense Unearned insurance 100 390 Coll. and Exch. Paid during July 2 Depreciation as under (a) Office Fixtures On account of use 5 (6) Horse and Wagon On account of use 25 50 (StudenVs) Net Gain For July 894 50 1416 70 1416 70 11. Make out a statement proof. From this point of the work on to the end of the text the student will omit the usual balance sheet. When this sheet is omitted the statements oi the business should be proved. statement Proof, July 31, 19 (StudEht's) investment (Student's) withdrawals (Student's) net gain per statement (StudenVs) present worth per statement 6000 250 894 50 6644 SO 6894 50 6894 50 12. Hand your statements of losses and gains and resources and liabilities and your proof to your teacher for approval. SET V — JOBBING FUENITUKE BUSINESS 139 13. If your statements and proof are correct, close the property accounts, the Loss and Gain account, and the Proprietor's account. 14. Compare your pass book with your check book. HOW TO COMPARE THE PASS BOOK WITH THE CHECK BOOK 1. Arrange the canceled checks in the order of their numbers. 2. Beginning with No. 1, compare eacli canceled check and the corresponding stub. , Where there are no discrepancies write O.K. on the stub in red ink. 3. If all the stubs are O.K.'d, the balance shown by the check book should agree with the balance shown by the pass book. 4. If the balances do not agree, find the total of the stubs not O.K.'d. This sum should equal the difference between the check-book and pass-book balances. 15. Place the canceled checks in the Paid Bills envelope. 16. Pass all your books to your teacher for approval. "v^^ STATEMENT OF ACCOUNT -^^^^^^^'V^^^.^^ tJa account iiilf/t~yi^J^^i^^ ^^\^^Ar7^^£.y!^ , ...^ J^^- ^J^ ^^^^^V'-^ /..ri' OA ^^ JLH ^^^ Jfeto York,. (Cr^^^ y.r. 10 ^^^ •^ ^ g^j gC: rf?^,< ^ MA,, r r.^y ^. -^n f^^,^^ _^i2_ ^^. 'fZi sv (^ZJ ¥s6z f£ ijs^ ^^ '/.fli^. I .xi^/^^vty^ -/S^^ 'rsC z SET VI — WHOLESALE GKOCEEY BUSINESS 163 Invoice Book. — This book is the same as previously explained. The separate bills are credited to the various accounts in the purchase ledger, and the totals are 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 creditors. The main items of credit in this ledger come from the invoice book, and the main items of charge from the cash book ; but both debits and credits for creditors' accounts may come from the journal. Sales Ledger. — The sales ledger contains a record of transactions with customers. The main items of charge come from the sales book, and the main items of credit from the cash book ; but both debits and credits for 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 or sales ledgers. The Accounts Payable 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 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 advantages resulting from the use of auxiliary ledgers may be stated as follows : 1. By glancing at the balance of the Accounts Receivable account in the general ledger a merchant may know at once the aggregate of accounts due him. This would not be possible if a sales ledger were not employed. 2. By glancing at the balance of the Accounts Payable account a merchant may know the aggregate of accounts owed by him. This account would not -be in the books if a purchase ledger were not employed. 3. The Accounts Receivable and Accounts Payable accounts aid in proving the correctness of the personal accounts of a business. 4. Auxiliary ledgers make a distinctive classification of accounts, which is very necessary in the accounting of large concerns ; they also give a business man more and better classified information concerning many important details. The Journal used in this set is provided with special columns. (See model journal, page 164.) This book is sometimes provided with a large number of columns to meet the requirements of some lines of business. The columns used 164 ACCOUNTING AND BUSINESS PRACTICE here, however, are sufficient to give the student an idea of how special columns may be employed in the journal to advantage. The Purchase Ledger Debits column may be used to advantage in houses where a separate ledger is kept for accounts with those from Boston, Mass., Sept. 25, 19 — ACCOUNT AND EXPLANATION M. O. Barry, E. O. Cook, and D. W. Baker have entered into a copartnership agreement as per con- ditions in the articles executed on the 15th. Tlie ahove 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 hooks. Resmirces Mdse. Per inventory Bills Eec. Per bill book Office Fixtures Per inventory Good Will Established trade Accts. Rec. Per the following list Morgan & Co., Troy 1250 Osborn, IVey & Co. , Westfield 750 L. O. Sweetland, Lynn 1900 Insurance Unexpired premium To 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 C. O, Bond & Co. To Bills Pay. Check given A. J. Weaver & Co. 26 Accepted their 10-day draft Williams & Co. Drew a sight draft on S. W. B. and To S. W. Brown remitted it to W. & Co. on acot. Forward PURCHASE LEDGER DEBITS GENERAL LEDGER DEBITS 12000 13000 1200 3000 3900 33226 75 SALES LEDGER CREDITS GENERAL LEDGER CREDITS 1900 6801 Boston, Mass., Sept. SO, 19 s 18 5 Forward Bills Eec. Reod. their note as per To Eaton & Co. hill book Accts. Pay. General Ledger Debits To Accts. Eec. General Ledger Credits 1801 35 33226 BOO 75 300 500 60 34727 50 1801 1801 33726 35 35 75 33726 75 800 60 34727 800 34727 50 00 BO = 36528 10 = 35528 10 SET VI — WHOLESALE GEQCEEY BUSINESS 165 whom we buy. 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 totals are carried regularly to the debit of Accounts Payable in the general ledger. The General Ledger Debits column contains all the items of charge in the journal outside of the purchase ledger debits. The total of this column 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 we sell. 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 totals are 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 outside of the sales ledger credits. The total of this column is not posted. 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. To-day it has been decided to enter into a partnership for the purpose of conducting a wholesale grocery business under the following con- ditions : 1. The name of the copartnership shall be (Student), Black & Co. , 2. Investments shall be as follows : a. Arthur M. Black shall make a cash investment of $14,000. h. Geo. H. Dobbin shall make a cash investment of $10,000. c. Student shall invest cash, $7000, and a note made by Frey & Brown in his favor, dated Sept. 1, at three months, for $8000. 3. The partnership shall continue for two years, unless the parties mutually consent to a dissolution at an earlier date. 4. Gains shall be shared equally and losses borne equally. 5. Student and Black shall each receive $200 per month for their services, and Dobbin, $150. 166 ACCOUNTING AND BUSINESS PEACTICB 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 I in the Appendix.) Fold and brief the articles properly (see page 140) and then hand them in. Business Forms for September Before taking up the regular memoranda for this set prepare the following forms : Form 1 : Check drawn by Student on Traders National Bank, City, Sept. 15, in favor of your firm, for f 7000. Form 2 : Note of Frey & Brown, City, dated Sept. 1, at three months, for $8000. Note is drawn in Student's favor and is trans- ferred 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 f 10,000. Form 4 : Check of Arthur M. Black, dated Sept. 15, drawn on Traders National Bank, City, in favor of your firm, for f 14,000. Form 5 : Note of F. Moore, dated Rome, Sept. 1, payable at Union Bank, two months after date. Note is drawn for fl750, 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 Union Bank, 30 days after date. Note is drawn for $700, in favor of A. J. Weaver & Co., and is transferred to your firm by full indorsement. Form 7 : Note of Benton Bros. & Co., dated City, Aug. 26, payable at Union Bank, 60 days 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 tons coal at $4.50. Terms : cash. Bill is dated City, Sept. 18, and is receipted per L. I. S. Form 9 : Bill of Geo. E. Roe & Co., for 1 one-horse delivery wagon, f 66 ; 1 heavy truck wagon, $90 ; 1 set single harness, $35 ; 1 set double harness, $85. Terms: cash. Bill is dated City, Sept. 19, and is receipted per H. O. W. SET VI — WHOLESALE GROCERY BUSINESS 167 Form 10 : Bill of the Daily Transcript Co. for advertising to date, 149.23. Terms: cash. Bill is dated City, Sept. 19, and is receipted per W. E. Form II : Bill of R. H. Myers & Co., for 1 sales ledger, |1.50 ; 1 pur- chase ledger, fl.50 ; 1 general ledger, $3 ; 1 journal, 75/; 1 cash book, $2.75; 1 bill book, 75/; 5 M No. 6 envelopes and printing, $6.50 ; 5 M sheets letter paper and printing, 19.60. Terms: cash, less 1%. Bill is dated City, Sept. 20, and is receipted per F. O. G. Form 12 : Bill of the Eureka Coal Co. to Geo. H. Dobbin for 3 tons coal at $4.50. Terms : cash. Bill is dated Sept. 20, and is receipted per G. W. M. Form 13 : Letter of application to your firm from Albert B. Curtis, dated City, Sept. 19. Applicant has seen 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 a properly addressed envelope. THINGS TO AVOID IN LETTERS OF APPLICATION 1. Faulty mechanical construction. 2. Blots, erasures, and interlineations. 3. Errors in spelling, capitalization, grammar, punctuation, etc. 4. Poor penmanship. 5. Boastfulness. 6. Showing over-anxiety for the position. 7. Exaggerations. 8. The use of printed testimonials. 9. The use of letters addressed, To tohom it may concern, etc. 10. Typewritten applications (generally). 11. Referring to matters of no importance to those who will receive the letters. 12. Poor paper, perfumed sheets, foolscap, etc. 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. 168 ACCOUNTING AND BUSINESS PEACTICE 2. Good mechanical and grammatical construction. 3. Full, yet brief and concise, expressions. 4. Good tone : a. Frank, sincere expressions. 1). Sufficient self-confidence and self-respect. (State your qualifications modestly, but with sufficient firmness.) c. Truthfulness. 5. Necessary information with regard to yourself : a. Qualifications, general and special. J. References. c. Salary expected (sometimes ; teacher should explain). d. Age (sometimes ; teacher should explain). 6. Courteous introduction and closing. Form 14 : Draft of Union Bank, City, dated Sept. 21, drawn on Chemical National Bank, New York, in favor of your firm, for $841.47, W. B. Frey, Cashier. Form 15 : Sight draft, dated City, Sept. 21, drawn by David R. Warri- ner, in favor of himself, on Arthur M. Black, for f 50. Form 16: Draft drawn by 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. 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 days. Items as follows : 500 1-lb. cans B. Cocoa 500 bxs., 6000 lbs., B. Chocolate 5000 lbs. P. Tapioca Form 20 : Draft drawn by Traders National Bank, AUston, Sept. 24, on Chemical National Bank, New York, in favor of Clinton, Jones & Co., for $292.04, W. F. Pratt, Cashier. 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 days. Items as follows: 50 bags, 6250 lbs., P. E. Coffee 100 half chests, 7600 lbs., C. J: Tea 50 bales, 7500 lbs., G. M. Coffee 100 half chests, 6000 lbs., P. 0. Tea 100 mats, 7500 lbs., P. J. Coffee SET VI — WHOLESALE GEOCERY BUSINESS 169 Form 22-: Note of Frank Moore & Son, City, dated Sept. 25, drawn in favor of your firm, for $745.69, payable 10 days from date, at 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. 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/ Bill is receipted by O. W. Form 26 : Invoice of Geo. H. Buell & Co., City, dated Sept. 26. Terms : 30-day note in 10 days, with interest at 6%, less 1%, Items as follows : 240 bu. N. Y. Medium Beans 200 lbs. E. Raspberries 26 bxs., 1260 lbs., E. Apples Form 27 : Invoice of J. E. Seel & Co., City, dated September 26. Terms: 2/10, net 30 days. Items as follows : 25 pails M. C. Candy 500 lbs. S. M. Candy 60 bbls. L. L. Salt Check of T. B. Welch & Co., Medford, dated Sept. 25, on Traders National Bank, in favor of your firm, for $296.94. Draft drawn by Union Bank, City, dated Sept. 25, on Chemi- cal National Bank, New York, in favor of your firm, for $1949.70, W. B. Frey, Cashier. C.O.J), envelope. Data as follows: Cash inclosed, $18.60. Goods were shipped by your firm to W. D. Greene, Dans- ville, Sept. 25. Note. — Get the cash of your teacher. Form 31 : Draft drawn by Traders National Bank, Troy, on Chemical National Bank, New York, in favor of Williams, Har- mon & 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 28 ; Form 29 ; Form 30 ; 170 ACCOUNTING AND BUSINESS PRACTICE Form 33 : Invoice of Stickney, Poor & Co., New York, dated Sept. 26. Terms : 3/10, net 60 days. Items as follows : 100 bxs., 2500 lbs., E. Apricots 250 bxs. Insect Powder 50 bxs. Butter Color 50 bxs., 2500 lbs., E. Apples 100 bxs. Mucilage 100 bbls. E. 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. Form 35: Invoice of Gray, Dunkle & Co., Chicago, dated Sept. 26. Terms : 3/10, net 30 days. Items as follows : 25 bbls., 7500 lbs., Br. C Sugar 10 bbls., 3300 lbs., Wh. C Sugar 200 half chests, 14,000 lbs., 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 days. Items as follows : 100 1-lb. cans Huyler's Cocoa 100 pails M. C. Candy 50 bbls. S. P. Flour 20 bbls., 6500 lbs., St. A Sugar 20 bbls., 6500 lbs., F. G. Sugar Form 38 : Invoice of D. W. Simpson & Co., Chicago, dated Sept. 27. Terms: 3/10, net 30 days. Items as follows: 50 bxs. S. Soap 125 bxs. W. Soap 50 cases, 1000 sacks, C. P. Flour 50 bxs. W. L. Soap 20 bbls., 1200 lbs., 0. Crackers 5 cases, 100 sacksj P. P. Flour 20 bbls., 1200 lbs., C. S. Crackers Form 39 : Draft drawn by Union Bank, City, dated Sept. 28, on Chemi- cal 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 Union Bank, 10 days 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, $1.50 " 27, Freight, 49.25 ; Cartage, 6.50 " 28, Cartage, 4.75 Bill is receipted by W. M. 0. SET VI — WHOLESALE GROCERY BUSINESS 171 Place the foregoing forms in your envelope entitled Incoming Papers and hand them to your teacher for approval. Memorakda of Teansactions for September (Continued) Sattjeday, Sept. 15 Each partner pays in his investment as per agreement. Receive the three checks and make the proper entries. Dobbin's and Black's checks are Forms 3 and 4. Your check and note are Forms 1 and 2. Enter the note on a new page of the bill book and place it in the proper envelope. Credit (Student), Black & Co. for the total investment on the left-hand page of the cash book, extending the amount into the General column. Debit Bills Receivable on the right-hand side of the cash book for the amount of your note and carry the amount into the General column. The difference between the two amounts entered will show the amount of cash received by the business. Open an account with Union Bank and deposit the three checks on hand. When writing the firm name to indorsements, notes, checks, etc., sign (Student), Black ^ Co., per your initials. 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 : 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 accounts and the quality and quantity of the merchandise on hand to be covered by their written guarantee. 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 proceeds of their business, cash, $14,000, and the balance in two notes payable in three months and six months respectively. GOOD WILL EXPLAINED The term good will can hardly be said to have any precise signification. It ia generally understood to stand for the advantages which may inure to the purchaser of any business in consequence of his holding himself out to the public as suc- ceeding to an enterprise which has been identified in the past with the good name 172 ACCOUNTING AND BUSINESS PRACTICE and repute of his predecessor. Its value is dependent upon the ability of the pur- chaser to maintain and improve past celebrity, reputation for skill, punctuality, etc. The Good Will account, as it is generally employed, may show either a resource, a gain, or a loss. a. It shows a resource on the books of the purchaser of any business until its value has been inoi-eased or diminished. h. When the value of the benefits of an established trade has been increased, the Good Will account shows a gain. c. When the value of the benefits of an established trade has not been main- tained, the Good Will account shows a loss. The account is seldom created except in connection with the purchase and sale of an established business. When a business of recognized reputation is offered for sale the good wiU 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 gradually drop it from their records, even though it may have been legitimately created. This is done by regularly carrying a definite portion of the account to some loss and gain account, as advertising, expense, etc. You accept the proposition of A. J. Weaver & Co. and ask them to make oiit 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. The same 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 the other important papers in the firm's safe. Note. — Form IV in the Appendix 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 teacher may require the student to prepare the contract for the preceding transaction. Resources Mdse., per schedule on file $14609.50 Bills Eeceivable, per the- following list 2750. 1. Note of F. Moore, at two months from Sept. 1 $1760. 2. Note of Walter L. Parker, at 30 days from Sept. 1 700. 3. Note of Benton Bros. & Co., at 60 days from Aug. 26 300. Office Fixtures, per schedule on file 1920. Kent, due from tenants for subrentals 50. Insurance, unused premium 240. Good Will, estimated' value 6000. SET VI — WHOLESALE GEOCEKY BUSINESS 173 Accounts Eeceivable, per the following list Williams, Harmon & Co., Troy- Fred W. Hill & Co., Rome W. L. Anderson, Perth Amboy Erank Moore & Son, City James K. Lusk, City J. D. Manning, Albany D. L. Hinman & Co., City E. W. Earl & Co., Weedsport Salisbury, G-ray & C9,, Eoohester $6252.60 1642.40 1400. 2145.69 592.50 1600. 420.40 1500. 1260.51 $16814.10 I/iabilities Bills Payable, per the following list 1. Kote at 30 days from Aug. 26, in favor of King & Co., payable at Union Bank $1600. 2. Note at 30 days from Sept. 3, in favor of Boyd, Evans & Co., payable at Union Bank 800. Accounts Payable, per the following list Walter L. Mann & Co., Boston 2160. D. W. Smith & Co., New York . 2100. Smith, Perkins & Co., New York 1450. Bates, Aldrioh & Co., Boston 1365.45 D. W. Simpson & Co., Chicago 7100.55 Gray, Dunkle & Co., Chicago 4000. $2300. 18166. Note. — In actual business the two bills payable would be in the possession of the payees or the bant 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 there- fore need to draw up both notes and hand them in at the bank or to his teacher. Indorse them as they should be indorsed by the payees when left at the bank for collection. Write the check and notes in payment for the purchase from A. J. Weaver & Co., as per agreement. Make the proper journal and cash-book entries for the purchase. Study the model jouinal, page 164. If in doubt as to the entries, consult your teacher. 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 cash-book and journal entries just made to the proper ledgers. Consult your teacher. 174 ACCOUNTING AND BUSINESS PRACTICE 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 give the accounts in the general ledger one-third of a page each and the accounts in the sales and purchase ledgers one-fourth of a page each. Write the addresses of all personal accounts in the sales and purchase ledgers. 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. Hand in the advertisement. Write checks in payment for 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 ; biU of the Daily Transcript Co. (Form 10) for advertising to date, $49.23. Charge advertising and coal to Expense, and the other items to Horse and Wagon account. Note. — Remember to hand in all outgoing papers unless otherwise instructed. When in doubt as to what should be done with any incoming forms consult your teacher. Write letters ordering the following goods : 1. Of Walter Baker & Co., New York, the articles outlined in Form 19, page 168. Give references and shipping directions and ask for the best cash discounts. 2. Of Smith, Perkins & Co., New York, the articles outlined in Form 21, page 168. 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 articles ordered. Consult your teacher. 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 Q-eo. H. Dobbin, Private. SET VI — WHOLESALE GEOCEEY BUSINESS 175 WHY PRIVATE ACCOUNTS WITH THE INDIVIDUAL MEMBERS OF A FIRM SHOULD BE OPENED Strictly speaking, these accounts are not a part of the investment of any business, but rather accounts showing the dealings of the business with the individual mem- bers of the firm, and it is therefore desirable that they be kept separate from the account or accounts representing the capital stock of the concern. The failure to keep such accounts badly confuses business and private affairs, fosters carelessness and extravagance, and sometimes results in financial disaster. 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 part of the capital stock 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 the 19th, for a competent ship- ping clerk, there were received twenty-three letters; one from Albert B. Curtis, 270 Tremont St., impressed you all 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 and make a memorandum in the journal. Engage Edward McDorman as driver at |10 per week. Make a memorandum in the journal. Write letters ordering the following goods : 1. Of Stickney, Poor & Co., New York, the following items : 250 bxs. Insect Powder 2500 lbs. E. Apples 50 bxs. Butter Color 2500 lbs. E. Apricots 100 bxs. Mucilage 100 bbls. E. P. Flour Inclose a New York draft in payment for the bill, less 3/o. Buy the draft (Form 14) by check ; exchange, 25/. 176 ACCOUNTING AND BUSINESS PRACTICE Make entries in the cash book and check hook and hand in the letter. 2. Of Gray, Dunkle & Co., Chicago, the goods outlined in Form 35, page 170. Remember that this firm was one of the creditors of the late house of A. J. Weaver & Co., and word your letter accordingly. 3. Of Bates, Aldrich & Co., Boston, the goods outlined in Form 37, page 170. 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 teacher and have it certified. UNDER WHAT CIRCUMSTANCES CHECKS ARE CERTIFIED IN BUSINESS Checks are certified whea it is desirable that they be transferred from one person to another like money. The ordinary check cannot always be safely accepted as money, especially when it comes from a stranger, for there is nothing to prevent any person from drawing a check on a bank in which he has no funds on deposit. Business men frequently have incoming checks certified so that they may deposit them in their bank and immediately draw against them. Generally a bank would not allow a customer to draw immediately upon ah uncertified check deposited, because it would first want to ascertain whether the check was good or not. Checks may be certified whenever it is desirable to give to those receiving them a guarantee that the paper is good. SIGNIFICANCE OF CERTIFICATION 1. By certifying a check a bank declares in effect the following: a. That the signature is genuine. h. 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 : u. That the indorsements, if any, are genuine. b. That the check was drawn up in good form. If a check is so carelessly drawn up that it can be easily raised, and is afterwards certified, a bank can be held for only the amount for which the check was origi- nally drawn. Write a letter to D. W. Simpson & Co. inclosing the above check and ordering : 50 bxs. Sunlight Soap 5 cases, 100 sacks, P. P. Elour 125 bxs. Wool Soap 60 cases, 1000 sacks, C. P. Plour 50 bxs. Water Lily Soap 20 bbls., 1200 lbs., 0. Crackers 20 bbls., 1200 lbs., C. S. Crackers SET VI — WHOLESALE GEOCERY BUSINESS 177 Saturday, Sept. 22 Pay by check David R. Warriner's sight draft on Arthur M. Black (Form 15), $50. 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 bxs., 150 lbs., E. Apples Make out 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, an order for : 10 bbls. L. L. Salt 10 bbls. S. P. Flour 10 half chests, 760 lbs., C. J. Tea 5 bbls., 800 lbs., L. Starch 6 bbls., 1500 lbs., Br. C Sugar Fill the order. Terms : 2/5, net 30 days. Make out the shipping order and receipt. Place the bill and receipt in a properly addressed envelope and hand them in. Do this with all similar orders. 2. From T. B. Welch & Co., Medford, an order for : 6 bbls., 300 gals., K 0. Molasses 5 bbls., 1625 lbs., E. G. Sugar 6 bbls., 300 gals., P. R. Molasses 10 bags Ice-cream Salt Fill the order. Terms : 2/5, net 30 days. The account of Fred W. Hill & Co., Rome, is 23 days past due. Draw a sight draft on them in favor of your firm for $1,200 and leave it at the bank for collection. Indorse the draft properly and hand it in. No entry is required. Write a letter to Fred W. Hill & Co. informing them of your draft and hand it in. Take the note of F. Moore (Form 5) from the Unpaid Bills enve- lope and have it discounted at your bank. Receive credit for the proceeds. Indorse the note, make out a discount memorandum, and pin the same to the note. Place the note in your pass book, and take it to the bank. Pay the balance due Bates, Aldrich & Co., less 5%, by New York draft (Form 16). Buy the draft by check. Exchange, 50/. Write a letter inclosing the draft properly indorsed and hand it in. 178 ACCOUNTING AND BUSINESS PKACTICE THINGS 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 ^^^^ Dollars ($24.25)." 4. State how the amount inclosed is to be applied. 5. Ask that the receipt of the remittance be acknowledged. 6. Fold the inclosure within the letter properly. (For letter of remittance, see Form I in the Appendix.) Receive of F. W. Earl & Co., Weedsport, a New York draft (Form 17) for $950, in full for invoice of Aug. 24. Receive of D. L. Kinman & Co. their check (Form 18), in full of account, less 2%. The Enterprise Carting Co. has delivered to you the goods ordered of Walter Baker & Co. (Form 19) on the 19th. A telegraphic order has just been received from W. L. Anderson, Perth Amboy, for: 10 bbls. R. P. Flour 1500 lbs. P. Tapioca 25 cases C. Baking Powder 10 bbls., 1600 lbs., G. G. Starch Fill the order. Terms : 2/5, net 30 days. Deposit the check and New York draft on hand. Draw a cash check for office expenses, f 25 ; ask for $5 in change. Draw the check but make no entry in the cash book. Prove the cash and make out a daily statement. Take all of your books to your teacher for criticism. If he approves of your work, pro- ceed to post as follows : 1. Post the items in the accounts receivable section of the cash book 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 iu the general ledger. 3. Post items in the accounts payable section of the cash book 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. 5. Post the sales from the sales book to the debit of the various accounts in the sales ledger. 6. Post the purchases from the invoice book to the credit of the various accounts in the purchase ledger. SET VI — WHOLESALE GROCERY BUSINESS 179 7. Hand in all your books 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, an order for. 12 bbls., 3900 lbs., St. A Sugar 25 half chests, 1750 lbs., M. Y. H. Tea 15 bbls., 4875 lbs., E. G. Sugar 10 pkgs. S. Yeast Cakes You are not familiar with the financial standing of this firm and ship the goods C.O.D. to the order of Union Bank, less 2%. Enter in the sales book under C.O.D. Accounts. Draw a sight draft in favor of your firm, attach it to the bill of lading, indorse properly, and leave them with your bank for collection. Deduct the discount in the sales book and on the bill. 2. From Clinton, Jones & Co., AUston, an order for : 10 bbls., 3300 lbs., Wh. C Sugar 15 pails No. 1 Mackerel 5 bbls., 800 lbs., L. Starch 26 pkgs. G. Matches 10 pkgs. S. Yeast Cakes 5 bbls. C. R. Oatmeal 15 cases Horse-radish A New York draft (Form 20) is inclosed in settlement of the bill, less 2%. Make out the invoice and prepare a shipping order and receipt in the regular way. Receipt the bill, first deducting the discount. Only the proceeds of the bill are entered in the cash book. 3. From James K. Lusk, City, an order for : 25 eases D. Salad Dressing 50 cans B. Cocoa 6 cases, 120 sacks, C. P. Flour 250 lbs. E. Chocolate Drops 15 bbls., 750 gals., N. 0. Molasses Fill the order. Terms : 2/5, net 30 days. 4. From F. E. Rogers, City, an order for: 16 bxs., 300 lbs., L. L. Raisins 10 bxs. P. Matches 5 bbls., 250 gals., P. R. Molasses 10 bu. N. Y. Medium Beans Fill the order. Terms : sight draft in 5 days for the amount of the bill, less 2%. Draw a draft dated Oct. 1 (Sept. 30 will be Sunday) and place it in the Business Cash envelope. Deduct the discount on the bill and in the sales book. No entry for the draft at this time. 180 ACCOUNTING AND BUSINESS PEACTICE The old account of Williams, Harmon & Co., Troy, is several days past due. Draw a sight draft on them for f 3126.30, and leave it at Union Bank for collection. Write a letter to Williams, Harmon & Co., informing them of your draft. No entry at this time. The goods ordered of Smith, Perkins & Co. (Form 21) on the 19th have been received. Place the following orders over telephone. 1. With Geo. H. Buell & Co., City, an order for: 240 bu. N. Y. Medium Beans 25 bxs., 1250 lbs., E. Apples 200 lbs. E. Raspberries 2. With J. E. Seel & Co., City, an order for : 50 bbls. L. L. Salt 25 pails M. C. Candy 500 lbs. S. M. Candy Note of A. J. Weaver & Co., the payment of which was assumed by your, firm, is to-day charged to the firm account, as per your instruc- tions, at Union Bank. Receive of Frank Moore & Son, City, their note at 10 days (Form 22) for $745.69, to apply on account. Receive a check of Salisbury, Gray & Co. (Form 28), in full for the invoice of Sept. 2, $260.51. Receive check of J. D. Manning (Form 24) in fuU payment for the invoice of Aug. 25, $600. Pay by check bill of R. 0. Merrill & Co. (Form 25) for packing boxes, etc., $9.50. Pay James Burrill for shoeing horses cash, $2.60. Deposit the checks and New York draft on hand. The bank charges ■^^% collection on the checks. Make out a daily statement. If correct, post the different books as instructed on Sept. 24. Post the journal entry. After posting hand in all books to your teacher for examination and approval. Wednesday, Sept. 26 Goods ordered of Geo. PI. Buell & Co. (Form 26) over telephone yesterday have been delivered. Goods ordered of J. E. Seel & Co. (Form 27) have also been delivered. SET VI — WHOLESALE GROCEEY BUSINESS 181 Receive of T. B. Welch & Co. check (Form 28), in full for invoice of the 24th, less 2%. In the letter inclosing the check they order the following : 25 bxs. Wool Soap 5 bbls., 1650 lbs., Wh. C Sugar 25 bxs. Water Lily Soap 6 bbls., 1626 lbs., E. G. Sugar 5 bbls., 1600 lbs., Br. C Sugar 10 half chests, 600 lbs., E. 0. Tea Fill the order. Terms : 2/5, net 30 days. Telegraph Walter L. Mann & Co., Boston, ordering the following to be shipped by fast freight : 50 bxs. Mucilage 50 cases C. Baking Powder Limit the message to eleven words. Pay 50/ charges in cash. Leave the note of Walter L. Parker (Form 6) at Union Bank for collection. Find the note in the Unpaid Bills envelope. Indorse it properly and take it to the bank. Make the proper memorandum in the bill book. Pay Walter Baker & Co.'s invoice of Sept. 22, less 3%, by a New York draft (Form 29), which you buy by check at Union Bank; no exchange charged. Write a letter inclosing the draft. Receive returns (Form 30) for the C.O.D. shipment to W. D. Greene, Dansville, on the 24th. Receive of Williams, Harmon & Co., a New York draft (Form 31) for invoice of the 24th, less 2%. W. D. Packard & Co., City, write ordering: 10 pails No. 1 Mackerel 20 1-lb. cans H. Cocoa 3 cases C. Bating Powder 10 bags, 1260 lbs., P. R. Coffee 10 mats, 760 lbs., E. J. Coffee This is a good, reliable firm, and you expect large orders from the house frequently. Bill the above 3/5, net 60 days. The firm pays Geo. N. Cooper |125 by check for one carriage horse, to be charged to Student's private account. Write the check. Receive of Salisbury, Gray & Co. a sight draft (Form 32), on J. E. Seel & Co., City, for |50. Remit the draft by letter to J. E. Seel & Co., and make an entry in the journal. J. D. Manning, Albany, writes ordering : 10 bags, 1260 lbs., P. R. Coffee 10 bales, 1500 lbs., G. M. Coffee 20 mats, 1500 lbs., E. J. Coffee Fill the order. Terms : 2/5, net 30 days. 182 ACCOUNTING AND BUSINESS PRACTICE 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 your books to your teacher for examination. Thtjbsday, Sept. 27 The Enterprise Carting Co. has delivered to you the goods ordered of Stickney, Poor & Co. (Form 33) on the 21st. Remit Gray, Dunkle & Co., Chicago, your note at 15 days, to apply on account, f 1000. Write a letter inclosing the note and hand it in. Enter in the journal and bill book. Receive of W. L. Anderson his check (Form 34) for $400, to apply on account. The following orders were received by mail to-day. 1. From Fred W. Hill & Co., Rome, an order for : 75 1-lb. cans H. Cocoa 50 lbs. E. Raspberries 3 bxs., 120 lbs., C. Codfish 10 bxs., 240 lbs., H. L. Chocolate Fill the order. Terms : 2/5, net 30 days. 2. From D. L. Hinman & Co., City, an order for : 10 half chests, 760 lbs., C. J. Tea 3 bags Ice-cream Salt 5 half chests, 300 lbs., F. 0. Tea 3 bbls., 480 lbs., H. W. Starch 10 half chests, 700 lbs., M. Y. H. Tea Fill the order. Terms : 2/5, net 80 days. Discount at Union Bank Frank Moore & Son's note received on the 25th. Proceeds placed to your credit. Make out a discount memorandum and pin it to the note; place both in the pass book and take them to the bank. Make the proper records in the check book, cash book, and bill book. Your bank informs you that the sight draft drawn on Fred W. Hill & Co., Rome, on the 24th, has been collected. Collection, fl. Have the amount entered in your pass book and make the proper records in the check book and cash book. 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. (Form 35) on the 21st have been delivered. SET VI — WHOLESALE GROCERY BUSINESS 183 Deposit the check on hand. No collection charged. Make out a daily statement and have it examined, after which post the different books in the regular way. Hand in all books for approval. Friday, Sept. 28 James K. Liisk, City, writes inclosing check (Form 36) in payment for the invoice of the 25th, less 2%. He also orders the following items : 10 bxs. Sunlight Soap 60 lbs. Pearl Tapioca 3 bbls., 480 lbs., G. G. Starch Fill the order. Terms : 2/5, net 30 days. Salisbury, Gray & Co., Rochester, write ordering : 15 bbls. R. P. Flour 4 bbls., 200 gals., K 0. Molasses 10 bbls. L. L. Salt 20 bxs. Wool Soap 10 bbls., 3250 lbs., St. A Sugar 5 bbls., 1500 lbs., Br. C Sugar 25 bxs. P. Matches 10 bxs. Butter Color 5 pails No. 1 Mackerel 15 doz. pint cans Olives 5 bxs., 250 lbs., C. Raisins 5 bbls. C. R. Oatmeal Fill the order. Terms : 8/5, net 30 days. The Enterprise Carting Co. has just delivered to you the goods ordered of Bates, Aldrich & Co. (Form 37) on the 21st. Give Geo. H. Buell & Co. your note at 30 days with interest at 6%, for the invoice of the 26th, less 1%. A telegraphic order has just been received from W. M. Beach, Pittsfield, for: 3 half chests, 225 lbs., C. J. Tea 50 lbs. Flake Tapioca He proposes that the goods be shipped by express, C.O.D. Fill the order. Terms: cash, less 1%. Handle in the usual way. Deduct the discount on the bill and in the sales book. Goods ordered of D. W. Simpson & Co., Chicago (Form 38), on the 21st have been delivered. Remit Bates, Aldrich & Co. a New York draft (Form 39) in full for goods received to-day, less 3%._ Buy the New York draft by check, li^xchange, 76/. Write a letter inclosing the draft properly indorsed and hand it in. Deposit the check on hand. Your bank informs you that the draft drawn on Williams, Harmon & Co. on the 25th has been collected. Collection, j'^%. Have the 184 ACCOUNTING AND BUSINESS PEACTICE amount entered in your pass book and make the proper entries in the check book and cash book. Make out a daily statement. Post. Hand in all books for criticism. Satuedat, Sept. 29 Draw from the bank by a cash check |50 for office expenses. Ask for ten five-dollar bills. The following orders have been received by mail to-day. 1. From W. D. Packard & Co., City, an order for : 10 half chests, 750 lbs., C. J. Tea 10 half chests, 600 lbs., F. 0. Tea 6 bbls., 800 lbs., L. Starch They inclose check (Form 40) in payment for the invoice of the 26th, less 3%. Fill the order. Terms : 2/10, net 60 days. 2. From D. L. Hinman & Co., City, an order for: 20 bags Ice-cream Salt 50 bbls. L. L. Salt 10 bbls., 3250 lbs., St. A Sugar 10 bbls., 3250 lbs., ¥. G. Sugar 10 bbls., 600 lbs., 0. Crackers 10 bbls., 600 lbs., C. S. Crackers They inclose their note (Form 41) at 10 days for |500, to apply on account. Fill the order. Terms : 2/5, net 30 days. 3. From Frank Moore & Son, City, an order for : 6 bxs., 300 lbs., E. Apples 5 bxs., 125 lbs., E. Apricots 15 bbls., 4875 lbs., St. A Sugar 10 pails M. C. Candy 500 lbs. S. M. Candy Fill the order. Terms : 2/5, net 30 days. Pay John Harvey $5 in cash for cleaning the store, etc. Also pay salaries for the week in cash, |35. Charge Expense in the cash book. Hand in the money. Your bank informs you that the sight draft attached to bill of lading and left for collection Sept. 25 has been paid. Collection, ^%. Enter in the check book and the cash book. Have the amount entered in your pass book. Pay by check Enterprise Carting Co.'s bill (Form 42) for freight and drayage to date, 177.75. Charge Merchandise. Pay William Jennings fl5 by check for keeping and feeding horses to date. SET VI — WHOLESALE GEOCEEY BUSINESS 185 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 $65 for subrental of a part of the store. Get the cash at the office or of the teacher and credit Rent account. Make out a daily statement and hand it m. Closing the Woek for September 1. Post as instructed for previous days. 2. Study the explanation of the cash book on pages 159 and 162. 3. Cldse the cash book, studying very carefully the model given on pages 160 and 161. 4. Post the summary of the cash book to the general ledger. 5. Study the explartation of 'he sales 1 ook, page 158. Make the proper entry to close it. Post the entry to the general ledger. 6. Study the explanation of the invoice book, page 163. Make the proper entry to close it. Post the entry to the general ledger. 7. Study the explanation of the journal, page 164. Make the proper entry to close it. Post the entry to the general ledger. 8. Prove the sales ledger by ah abstract similar to the following : Abstract of Sales Ledger, Sept. 30, 19 — 12 Wm. B. Tenny & Co. 920 14 D. M. McCarthy 1291 50 15 J. A. Merrill & Son 9120 16 R. W. White & Son 492 20 Baker, Hillis & Co. 162 50 21 J. E. Bender 1250 22 Win. A. Conway 1120 24 Morgan, Wright & Co. 962 50' 25 Kendall Mfg. Co. 162 90 26 F. E. Moore 865 2& C. W. Gray 120 31 G. H. Dunkle 66 25 u Balance per Accts. Bee. in G. L. 16SSS 65 16532 65 16532 65 186 ACCOUNTING AND BUSINESS PRACTICE Prove the purchase ledger by an abstract similar to the following : Abstract of Purchase Ledger, Sept. 30, 19 18 Jordan, Marsh & Co. 6142 50 19 Morgan, Traver & Co. 3150 21 Gray, Salisbury & Co. 12.50 24 Williams & Rogers 925 26 C. H. Lyman & Son 2100 27 M. A. Weaver & Co. 1650 29 J. E. Ifing, Son & Co. 1122 10 30 M. F. Raymond 4698 20 31 E. E. Barnard & Co. 162 90 46 Balance per Accts. Pay. in G. L. 21200 76 21200 76 21200 70 9. Have the abstracts approved by your teacher. If they are cor- rect, make a trial balance from your general ledger in the usual way. 10. Have the trial balance approved. 11. Prove the bill book. 12. Hand in all your books to your teacher for examination. Business Forms for October Before taking up the memoranda for October prepare the following forms. Do better work than you have ever done before. Form 43: Note of Frank Moore & Son, City, dated Oct. 1, drawn in favor of your firm, for $500, with interest at 6%, payable in 60 days at Union Bank. Form 44 : Invoice of Walter L. Mann & Co., Boston, dated Sept. 29. Terms: 10-day draft, less 1%. Items as follows : 60 bxs. Mucilage 60 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 1750. SET VI — WHOLESALE GKOCEKY BUSINESS 187 Form 47: Check of Salisbury, Gray & Co., Rochester, dated Oct. 1, drawn on Traders National Bank, in favor of your firm, for 1602.37. Form 48 : Check of D. L. Hinman & Co., City, dated Oct. 2, drawn on Traders National Bank, in favor of your firm, for f 632.05. Form 49 : Invoice of Geo. H. Buell & Co., City, dated Oct. 3. Terms : a 30-day note in 10 days, with interest at 6%. Items as follows : 100 bu. N. Y. Medium Beans 160 bxs. E. Apples 500 lbs. 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 Union Bank, City, on Chemical National Bank, New York, dated Oct. 3, drawn in favor of your firm, for 1500, 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, on D. O. Mosher, City, dated Medford, Oct. 2, drawn in favor of your firm, for $79.60. Form 54 : Q. O.B. envelope. Data as follows : cash inclosed, $80.32. Goods were shipped by your firm to W. M. Beach, Pittsfield, Sept. 28. 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 days. Items as follows : 200 1-lb. cans Huyler's Cocoa 100 bbls. S. P. Elour Form 57 : Draft of Union Bank, City, dated Oct. 4, drawn on Chemical National Bank, New York, in favor of your firm, for $500, W. B. Prey, 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. 188 ACCOUNTING AND BUSINESS PRACTICE Form 59 : Invoice of Smith, Perkins & Co., New York, dated Oct. 3. Terms: 6/10, net 30 days. Items as follows: 100 bags P. E. Coffee 100 half chests F. 0. Tea 60 half chests C. J. Tea Form 6o : 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 6i : Check of F. W. Earl & Co., Weedsport, dated Oct. 4, drawn on Traders National Bank, in favor of your firm, for il605.48. Form 62 : Invoice of Walter Baker & Co., New York, dated Oct. 4. Terms : 3/5, net 30 days. Items as follows : 500 1-lb. cans Baker's Cocoa 100 bxs. Baker's Chocolate Form 63 : Invoice of Gray, Dunkle & Co., Chicago, dated Oct. 4. Terms : 3/10, net 30 days. Items as follows: 60 bbls. Br. C Sugar 100 bbls. Wh. C Sugar 26 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 fuU indorse- ment, for 1262.15, 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 1586.53. Form 66 : Sight draft of Salisbury, Gray & Co., Rochester, dated Oct. 5, drawn on J. E. Seel & Co., in favor of your firm, for 176.42. Place the foregoing forms in your envelope for Incoming Papers and hand them to your teacher for approval. Memoranda of Transactioks for October MoKDAY, Oct. 1 The following orders were received in this morning's mail. 1. From F. W. Earl & Co., Weedsport, an order for: 25 half chests E. 0. Tea 10 bxs. W. L. Soap 25 half chests C. J. Tea 10 bbls. P. G. Sugar Fill the order. Terms : 2/5, net 30 days. SET VI — WHOLESALE GEOCEEY BUSINESS 189 2. Prom' J. D. Manning, Albany, an order for: 10 bbls. St. A Sugar 10 bu. N. Y. Medium Beans 6 bbls. E. G. Sugar 10 bxs. H. 0. Oatmeal 25 doz. bottles M. Pickles 25 bxs. H. L. Chocolate 50 bxs. L. L. Eaisins 25 bxs. E. Chocolate Drops 5 bales G. M. Coffee 5 pails No. 1 Mackerel 10 bxs. E. Apples 10 bxs. Butter Color Fill the order. Terms : 2/5, net 30 days. 3. From R. D. Fowler & Co., City, an order for : 5 bbls. S. P. Elour 3 bxs. Butter Color 5 bbls. E. P. Flour 3 bbls. C. E. Oatmeal 20 bxs. C. Codfish Fill the order. Terms : sight draft in 5 days for the amount of the bill, less 2%. Draw a sight draft dated ahead 5 days and place it in the Business Cash envelope. . Deduct the discount in the sales book and on the invoice. Your 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. Have the amount placed in your pass book. Make entries in the check book, cash book, and bill book. Discount at Union Bank Benton Bros. & Co.'s note (Form 7) bought ' of A. J. Weaver & Co., and receive credit for the proceeds. Make out a discount memorandum, pin it to the note, place them in the pass book, and receive credit for the proper amount. Make entries in the check book, cash book, and bill book. Receive of Prank Moore & Son their note (Form 43) at 60 days, with interest at 6%, $500. The Enterprise Carting Co. has just delivered to you the goods ordered of Walter L. Mann & Co. on the 26th ult. Look up the invoice (Form 44) and handle it in the regular way. Take the accompanying draft (Form 45) and accept it. Place the draft in an envelope properly addressed and hand it in. An order has just been received from Clinton, Jones & Co., AUston, for the following: 10 bxs. Mucilage 10 half chests M. Y. H. Tea 10 cases C. Baking Powder 10 bales G. M. Coffee 10 bbls. St. A Sugar 10 bags P. E. Coffee Fill the order. Terms : 2/5, net 30 days. 190 ACCOUNTING AND BUSINESS PRACTICE "Write letters ordering the following goods. 1. Of Walter Baker & Co., New York: 600 1-lb. cans Baker's Cocoa 100 bxs. Baker's Ckocolate 2. Of Smith, Perkins & Co., New York: 100 bags P. R. Coffee 100 half chests E. 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. Write a letter to Gray, Dunkle & Co., Chicago, ordering : 60 bbls. Br. C Sugar 100 bbls. Wh. C Sugar 2,5 half chests M. Y. H. Tea Inclose your check in payment for the invoice of Sept. 26, less 3%, and tlie proceeds of your note, in their favor, due Oct. 12. Deduct the discount from the face of note, add the proceeds of the note to the proceeds of the bill, and write a check to cover the total amount. Ilave the letter approved before inclosing the check. Write Bates, Aldrich & Co., Boston, ordering: 200 1-lb. cans Huyler's Cocoa 100 bbls. S. P. Elour Telephone Geo. H. Buell & Co., City, ordering: 100 bu. N. Y. Medium Beans 150 bxs. E. Apples 600 lbs. E. Raspberries An order has just been received from Williams, Harmon & Co., Troy, for: 200 1-lb. cans Baker's Cocoa 25 bxs. Baker's Chocolate 25 half chests E. 0. Tea 25 half chests C. J. Tea 10 bbls. S. P. Flour Fill the order. Terms: 2/10, net 60 days. Give Smith, Perkins & Co. a check for invoice of Sept. 10, less 3%. The amount of the invoice is 1947.60. Take the draft drawn on F. E. Rogers on Sept. 25 from your Busi- ness 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 the day's business in the regular way. Hand in all books for examination. SET VI — WHOLESALE GROCEEY BUSINESS 191 Tuesday, Oct. 2 The following orders were received in this morning's mail. Fill each in the regular way. Terms : 2/5, net 30 days. 1. From W. L. Anderson, Perth Amboy, an order for : 25 half chests M. Y. H. Tea 10 bbls. Br. C Sugar 10 bbls. Wh. Sugar 10 bales G. M. Coffee 10 bbls. S. P. Flour 2. From W. D. Greene, Dansville, an order for : 25 bxs. E. Apples 50 bu. K Y. Medium Beans 250 lbs. E. Easpberries Draw $125 from the bank for office expenses, by a cash check. Ask for $5 in change. Pay cash for repairing the wagons, |9. Pay D. W. Simpson & Co., by check, for invoice of Sept. 27, less 3%. Write the letter inclosing the check and hand it in. Receive a check (Form 47) of Salisbury, Gray & Co., Rochester, in payment for the invoice of the 28th ult., less 3%. A telegraphic order has just been received from W. C. Holbrook & Co., Resort, for: 10 bags T. E. Coffee 10 bales G. M. Coffee 20 half chests C. J. Tea Ship the above order C.O.D. to the order of the Union Bank, less 2%. Deduct the discount on the bill and in the sales book. Draw a sight draft in favor of yourself. Attach the draft to the bill of lading, indorse properly, and leave with your bank for collection. Put the bill in a properly addressed envelope in the regular way. Receive of D. L. Hinman & Co. their check (Form 48) in payment for the invoice of the 27th ult., less 2%. Engage W. 0. 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 several adjoining counties. 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, services to date from the 1st. Pay him for services to date in cash, $4. Pay by cheek S. E. Waldorph for cooperage, $16.50. Deposit the checks on hnnd. Collection, J^% on the check of Salisbury, Gray & Co. 192 ACCOUNTING AND BUSINESS PKACTICE Make out a daily statement. Post the day's business in the regular way. Hand in all books for approval. Wednesday, Oct. 3 Goods ordered of Geo. H. Buell & Co. (Form 49) on the 1st have been delivered. Pay a sight draft (Form 50) of D. W. Smith & Co., in favor of them- selves, by check, 1900. Draft is presented to you by Union Bank, and you make your check payable to that institution. Remit Walter L. Mann & Co., Boston, a New York draft (Form 51) for $500, to apply on account. Buy the draft by check. Exchange, 25/. Be sure to indorse the draft. Note in favor of Boyd, Evans & Co., due to-day, has by your instructions been charged to the firm account. Make records in the check book, cash book, and bill book. Receive of Frank Moore & Son, City, Iheir check (Form 52) in pay- ment for invoice of the 29th ult., less 2%. The letter inclosing the above check contained the following order : 100 1-lb. cans Hiiyler's Cocoa 15 bbls. S. P. Flour 20 bxs. E. Apples 250 lbs. E. Raspberries 26 bu. N. Y. Medium Beans 10 bbls. Wh. C Sugar Fill the order. Terms: 2/5, net 30 days. Draw a sight draft on Fred W. Hill & Co., Rome, in favor of your firm, for $800. Place the draft in the Business Cash envelope and write a letter to Fred W. Hill & Co., informing them that you have drawn upon them at sight through your bank. You know the draft will be paid upon presentation, and credit Fred W. Hill & Co. in the cash book. Fill an order just received from Williams, Harmon & Co., Troy, for : 15 bbls. L. L. Salt 15 bbls. S. P. Elour 25 half chests C. J. Tea 10 bbls. Br. C Sugar Terms: 2/10, net 60 days. T. B. Welch & Co., Medford, write ordering: 20 bbls. N. 0. Molasses 20 bbls. P. R. Molasses 10 bbls. P. G. Sugar 6 bbls. L. Starch Fill the order. Terms : 2/10, net 60 days. Inclosed in the above letter was a sight draft on D. O. Mosher, City (Form 53), in your favor, for 179.60, to apply on account. SET VI — WHOLESALE GEOCEEY BUSINESS 193 You know the draft to be good and credit T. B. Welcli & Co. at once in the cash book. Place the draft in the Business Cash envelope. Receive returns (Form 54) from C.O.D. shipment to W. M. Beach, Pittsfield. 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 C.O.D. shipment to W. M. Beach. Jj% collection on the draft on Fred W. Hill & Co. Make out a daily statement. Post the day's business. Hand in all books for approval. Thursday, Oct. 4 The following oiders were received in this morning's mail. 1. From John P. Kennedy & Co., Canton, an order for: 2 half chests C. J. Tea 10 pails No. 1 Mackerel 5 cases E. Baking Powder 6 bbls. C. E. Oatmeal 5 bxs. H. L. Chocolate 10 bxs. C. Eaisins 5 bu. N. Y. Medium Beans 6 bbls. N. 0. Molasses 20 bxs. C. Codfish 10 bxs. Wool Soap References quoted you are very satisfactory and you fill the above order, quoting your regular terms: 2/5, net 30 days. 2. From W. W. Williams, Auburn, an order for : 6 half chests F. 0. Tea 2 bbls. H. W. Starch 10 bags Ice-cream Salt 25 pkgs. N. Yeast Cakes 6 bxs. W. L. Soap References quoted are satisfactory and you fill the order. Terms: 2/5, net 30 days. Receive from J. D. Manning, Albany, New York draft (Form 55) in settlement for invoice of the 1st, less 2%. The Enterprise Carting Co. has delivered to you the goods ordered of Bates, Aldrich & Co. (Form 56) on the 1st. Buy of Union Bank a New York draft (Form 57), by check, and remit it to D. W. Smith & Co., New York, to apply on account, |500. Exchange, 25/. Remit Smith, Perkins & Co., New York, a certified check for the invoice of Sept. 24, less 5%. (See similar transaction, Sept. 21.) Deposit the New York draft received from J. D. Manning. Make out a daily statement. Post the books, and hand them in for. approval. 194 ACCOUNTING AND BUSINESS PEACTICE Friday, Oct. 5 Pay D. W. Smith & Co.'s sight draft (Form 58) on you, in favor of C. W. Mobray, by check, |300. Hand in the check. The Enterprise Carting Co. has just delivered to you the goods ordered of Smith, Perkins & Co. (Form 59) on the 1st. The follov^ing orders were received this morning, and are to be filled in the regular w^ay. Terms : 2/5, net 30 days. 1. From Frank Moore & Son, City, an order for: 10 bbls. 0. Crackers 10 bbls. C. S. Crackers 5 bxs. C. Codfish 10 bbls. E. P. Mour 2 bbls. P. R. Molasses 2. From F. E. Rogers, City, an order for : 10 bbls. 0. Crackers 5 bbls. C. S. Crackers 2 bags P. E. Coffee 2 bales G. M. Coffee 10 bxs. E. Chocolate Drops Accept, payable at Union Bank, for the private account of Arthur M. Black, Olney P. Davis & Co.'s draft '(Form 60), in favor of themselves, at 1 day's sight, for 175.96. This draft is the outcome of some private matter of Arthur M. Black, and the sum is charged directly to his account. Enter in the journal and bill book. Consult your teacher if in doubt as to the entry. A call has just come in over the telephone from L. H. Pierson, City, for : 3 bbls. 0. Crackers 10 bags Ice-cream Salt 5 bbls. C. S. Crackers 5 bxs. Wool Soap 3 bbls. E. P. Plour 3 bbls. P. G. Sugar 5 bxs. Butter Color 3 mats P. J. Coffee He offers to accept your draft at 20 days from date of the bill for the amount. Fill the order. Make out the bill and enter in the sales book in the regular way. Draw draft at 20 days from date, in favor of your firm, indorse it properly, and give it to your bank for collection. Make the proper records in the bill book and journal. Pay John Sampson cash, $7.50, for carpenter work about the store. Pay Roby Real Estate Co. rent of store for October by check, $800. Charge Rent account in the cash book. Pay Wm. Jennings |29, by check, for keeping and feeding horses. Receive check (Form 61) from F. W. Earl & Co., Weedsport, in pay- ment for the invoice of the 1st, less 2%. SET VI — WHOLESALE GEOCERY BUSINESS 195 Deposit the check just received. Collection, is7o- Make out a daily statement. Post the day's business, and hand in all your books to your teacher for examination. Satueday, Oct. 6 Your team has delivered the goods ordered of Walter Baker & Co. (Form 62) on the 1st. The Enterprise Carting Co. has delivered to you the goods ordered of Gray, Dunlde & Co., Chicago (Form 63), on the 1st. Fred. O. Wolven, City, telephones for the following goods : 1 bbl. 0. Crackers 1 bbl. F. G. Sugar 1 half chest E. 0. Tea Mr. Wolven is a personal friend of the members of your firm, and the above goods are furnished him at cost prices. Terms : on accoxmt. Receive a New York draft (Form 64) from W. D. Greene, Dansville, in payment for the bill of the 2d, less 2^. Pay salaries for the week in cash as follows : Albert B. Curtis $25. Edward McDorman 10. F. E. Eamsey 10.50 Receive a check (Form 65) from W. D. Packard & Co., City, in pay- ment for invoice of the 29th ult., less 2%. The following orders, which were received in this morning's mail, are to be filled in the regular way. Terms : 2/5, net 30 days. 1. From D. L. Hinman & Co., City, an order for : 2 bags P. E. Coffee 5 bbls. S. Pastry Flour 2 bales G. M. Coffee 5 bxs. C. Codfish 5 bbls. 0. Crackers 5 bbls. N. 0. Molasses 5 bbls. C. S. Crackers 5 bbls. P. E. Molasses 2. From James K. Lusk, City, an order for : 16 bbls. 0. Crackers 6 bbls. C. S. Crackers 3 bbls. St. A Sugar 6 bu. N. Y. Medium Beans 1 bbl. H. W. Starch 5 pkgs. S. Yeast Cakes 3 half chests M. Y. H. Tea 3. From Salisbury, Gray & Co., Rochester, an order for: 8 bbls. St. A Sugar 15 bbls. C. Soda Crackers 10 bbls. Br. C Sugar 196 ACCOUNTING AND BUSINESS PRACTICE Salisbury, Gray & Co. inclose a sight draft (Form 66), in your favor, . on J. E. Seel & Co., City, for $76.42, to apply on account. Write a letter to J. E. Seel & Co. inclosing the above draft to apply on account. Pay for postage, etc., in cash, f 7.50. Acceptance in favor of Olney P. Davis & Co., due to-day, has been charged to your account at the bank. Enter in the check book, cash book, and bill book. 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 recommendation 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 only do injury to 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, it is not well to write a general letter of recommendation ; that is to say, a letter addressed To whom it may concern. 6. Be original in every way. The expressions that count are those that come from the heart and mind of the writer. 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 the character and ability of the one recommended. Paragraph No. 3 : Brief summary and courteous closing. Give Geo. H. Dobbin a check for $25 for private use. Hand in the check. Student takes $50 from the business by check for private use. Deposit the check, the New York draft, the sight draft on R. D. Fowler & Co., and all the currency on hand. Be sure to make a cash-book entry for the sight draft. Make out a daily statement and have it examined. If it is correct, post all the books in the regular way. You will now proceed to adjust the interest on the proprietors' accounts, preparatory to making financial statements and closing the general ledger. SET VI — WHOLESALE GROCERY BUSINESS 197 HOW TO ADJUST INTEREST BETWEEN PARTNERS 1. The investments were all paid in on Sept. 15. Determine the exact number of days from that date to Oct. 6. Find the interest on each man's 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 inter- est due the partners from the busin.ess. 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 get 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 to be $60. Of this sum there is due A |17, B $21, and C |22. The entry might be : Interest $60 To A $17 B 21 C 22 But this umreoessarily enlarges the Interest account. Since from the above entry each partner's gain will be decreased $20 or loss increased $20, we may reason as follows : 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. The following entry would then adjust the interest between partners. A $3 To B $1 C 2 On the above basis of reasoning make the proper entry to adjust the interest on the proprietors' accounts in your business. Have the entry approved before posting it to the ledger. - 198 ACCOUNTING AND BUSINESS PRACTICE Closing the Work foe October 1. Close the cash bdok. Proceed carefully and study the model cash book. Post the summary of the cash book. 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 185.) 6. Prove the purchase ledger. (See model, page 186.) 7. Have your abstracts approved by your teacher. 8. Make a trial balance from the general ledger and have it approved. 9. Copy the inventories in the journal in the usual way. The follow- ing is a statement of the inventories. Inventories, Oct. 6, 19- Merchandise (Resource) : Per schedule on file Merchandise (Liability) : Due Enterprise Carting Co. for freight and cartage to date Horse and Wagon : Estimated cost Depreciation $24057.59 $525. 5.25 $339.45 Rent : $519.' Due for subrentals $15. Unearned rent Insurance : 225. $240. Unearned premium $195. Office Fixtures : Estimated cost $1920. Depreciation Expense (Resource) : 2 tons Coal 192. 19. $1728. Stationery, etc. 6.50 $15.50 SET VI — WHOLESALE GEOCEEY BUSINESS 199 Expense (Liability) : Unpaid gas bill Due proprietors on salary- Due traveling salesman on salary Due Bell Telephone Co. $15.69 68.75 31.50 9.50 $126.44 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, Oct. 6, 19 — Mdse. bought of A. J. "Weaver & Co. 14500 Mdse., regular purchases to Oct. 6, 21500 90 Freight and drayage paid to date 120 Freight and drayage due to date, per inv. 390 510 Mdse. sales to date 24170 90 Mdse. on hand, per Inv. 17200 10 Gain on Mdse. carried down Gain on Mdse. brought down 4S60 10 41371 41371 4860 To Expense, total per ledger 790 Expense, unpaid items, per inv. 340 Expense, total outlay 1130 Expense, less items on hand per inv. 120 1010 Mdse. Disc, on purchases 120 Mdse. Disc, on sales 390 Int. and Disc, allowed to us 10 Int. and Disc, allowed by us 20 50 Insurance, paid premium 340 Insurance, unearned premium 290 50 Coll. and Exch., total outlay 17 50 Rent paid to date 420 Eent unearned 250 Rent due for subrentals 50 300 120 Depreciation as under (a) Horse and Wagon, on account of use 15 (6) Office Fixtures, on account of use 160 C. E. Rear don'' s net gain 1069 OS W. D. Lyman's net gain 1069 OS M, W. Winney's net gain 1069 04 4990 10 4990 10 11. Make a statement of resources and liabilities and have it approved. 200 ACCOUNTING AND BUSINESS PKACTICE The following is suggestive of the form for the statement of resources and liabilities in this set. Statement of Resources and Liabilities, Oct. 6, 19 Cash in bank 4057 Properties classified as follows : Good Will, estimated value 2000 Mdse. on hand, per inv. 17200.10 Mdse., unpaid freight and cartage 390. 16810 10 Horse and Wagon, cost 555. Horse and Wagon, depreciation 15. 540 Office Fixtures, cost 1960. Office Fixtures, depreciation 160. 1800 Expense, unpaid items, per inv. 340. Expense, coal, stationery, etc., per inv. 120. 220 Insurance, unearned premium 290 Rent, unearned 250. Rent due for subrentals 50. 300 Acots. Rec. , per sales ledger 7200 Bills Rec. , unpaid 200 Accts. Pay., per purchase ledger 9020 Bills Pay., unredeemed 750 G. E. Beardon, due on private acct. 1069 OS W. D. Lyman, due on private acct. 1069 OS M. W. Winney, due on private acct. 1069 04 Capital Stock of the business 20000 33197 To 33197 M 12. Make a statement proof and have it approved. 13. Close the general ledger. Close the net gain or net loss belong- ing to each partner into the proprietors' private accounts. The firm account does not need to be closed. 14. Prove the bill book. 15. Close all accounts on the sales and purchase ledgers which balance. 16. Hand in all your books for examination and approval. This set will now be discontinued in order to afford the student practice along a little different line of work. In Set VIT the main features of this set will be emphasized again, and some additional prin- ciples explained and illustrated. Di'aw a check in favor of your teacher for the amount to the credit of your firm at Union Bank, and hand it in. Also hand in everything' which is in the Personal Cash envelope. SET VI — WHOLESALE GROCEEY BUSINESS 201 REVIEW EXERCISES Take a sheet of joiu-nal paper and make entries for the following : 1. A, B, and C enter into a partnership agreement Jan. 1, under the firm name of A, B, C & Co. A invests |25,000 ; B, $17,500; C, $21,500. Jan. 15 A drew out $250 ; B, $300 ; C, $400. Gains and losses are to be shared equally and interest is to be allowed on all investments and charged on all withdrawals. A statement of the condition of the business is made Jan. 81. Make the proper entry to adjust the interest between the partners. 2. D, E, and F enter into a partnership agreement Dec. 1, under the firm name of D, E, F & Co. D invests $3500; E, $2000; P, $1500. Gains and losses are to be shared equally, and interest is to be allowed on all investments and charged on all withdrawals. A statement of the condition of the business is made Dec. 31. There have been no withdrawals. Make the proper entry to adjust the interest between the partners. 3. Fully analyze entries 1 and 2. GENERAL REVIEW QUESTIONS 1. What advantages are derived from the use of auxiliary ledgers? 2. What account in the general ledger should agree with an abstract of the sales ledger ? Why? 3. What account in the general ledger should agree with an abstract of the purchase ledger ? Why? 4. State the argument in favor of running cash sales through the sales book and posting them to the ledger the same as regular time sales. 5. When auxiliary ledgers for sales and purchases are used how must tlie invoice book be posted? the sales book? 6. What special columns are employed in the cash book of this set? 7. What general advantages are derived from the employment of special columns? 8. Explain in detail how to post the various columns on the left side of the cash book in this set. 9. Explain in detail how to post the various columns on the right side of the cash book. 10. To which of the two general classes of accounts does the good will account usually belong? . May it ever belong to the other class? Explain. 11. Name some of the things that contribute to a faulty letter of application. 12. Name some of the things that contribute to a good letter of application. 13. Give some reasons why private accounts with the individual members of a firm should be opened. 14. State the nature of the items that are usually charged to a partner's private account ; credited. 15. Under what circumstances are checks certified in business? 16. In what respects is a check stronger after certification than before ? In what respects is it the same? 17. State the details of making a shipment by express C.O.D. ; by freight C.O.D. 18. Explain how to prove the sales ledger; the pm-chase ledger. 19. Are abstracts of auxiliary ledgers absolute proof of the correctness of such ledgers? Explain. 20. Name the principal things that contribute to a good letter of recommendation. 21. Explain in detail the method outlined for adjust- ing the interest on partners' private accounts. 22. Give an example of a liability inventory on expense account ; on merchandise account ; on interest and discount account. 202 ACCOUNTING AND BUSINESS PRACTICE Price List for November and December aooDS QUANTITY COST SELLINQ PRICE American Black Dress Silk . . yd. 11.00 11.25 Amazon Cloth a .98 1.25 Barjeon Cashmere .... a 1.12i 1.371 Black English Camel's Hair . (I 1.50 1.87^ Black Wool Lansdowne . . (I .52 .68 Black Wool Cr^pon .... a 1.50 2.00 Bengaline Silk H .85 1.10 Bone Buttons gro. .11 .14 Boys' Heavy Cotton Hose . . doz. 1.00 1.25 Black Chantilly Lace . . . pc. .66| .90 Cortioelli Silk doz. spools .87i 1.05 Cotton Surah Lining . . yd. .50 .62 Duchesse Lace pc. 2.25 3.00 Feather Ticking yd. •05J .08 Fancy Wool Cheviot . . . (( 1.12J 1.35 Fine English Serge ... ce 1.37^ 1.55 Fancy Plaids, all wool . (( .32 .41 Fancy Boucle Stripe ... (( .121 .15 Fancy Black Ribbon . ... pc. 2.75 3.60 Fancy Gingham yd. .06^ .08 Gilt Buttons gro. 1.87J 2.25 Gunner's Duck yd. .14 ■m Grosgrain Kibbon pc. 1.12^ 1.50 ■ Jet Buttons gro. 2.40 3.00 Ladies' Cashmere Hose doz. 2.75 3.50 Linen Torchon Lace .... doz. pes. .86 1.10 Ladies' Kid Gloves .... doz. 7.50 9.50 Men's Kid Gloves u 7.00 9.00 Marquise Lace pc. 1.75 2.20 Men's Balbriggan Half Hose . doz. 5.50 6.874 Percale Shirting .... yd." .07^ .09^ Scotch Cheviot .... (( .37^ .50 Striped Denim a .08 .09^ Simpson Mourning Print . . it •05J .07 Taffeta Silk a .87J 1.00 Thompson Thread .... doz. spools .43 .50 Venetian Crape Cloth . . yd. .87J 1.00 Velvet Ribbon pc. 2.12^ 2.87J Wash Silk yd. .31 .39 Wamsutta Cotton .... it .31 .39 Whalebones doz. .95 1.27 SET VII — DRY GOODS BUSINESS 203 SET VII — DEY GOODS BUSINESS The object of this set is to afford a brief drill in some of the technicali- ties of the dry goods business and to illustrate, as concisely as possible, a system of accounting which, with slight modifications, would be well adapted to the general routine of a wholesale or jobbing dry goods house. No attempt is made to enter into an explanation of the minor details of accounting, which are different in nearly all large dry goods establishments; but a clear, definite, and suggestive plan for a general wholesale or jobbing dry goods house is fully explained and illustrated. Special Features. — Among some of the special features of the set are : 1. Some helpful suggestions bearing upon general business corre- spondence. 2. Introduction and use of the Suspense account, significance of Protest as applied to commercial paper, etc. 3. General use of special columns more fully explained. 4. Especially helpful invoicing. 5. Use of Power of Attorney. 6. A personal account closing into Loss and Gain account illustrated. The books employed are : cash book, sales book, invoice book, journal, general ledger, sales ledger, purchase ledger, bill book, and check book. With the exception of the cash book, these books are the same as in Set VI. The cash book used in this set is essentially the same as explained and illustrated for Set VI, the only difference being in the introduction of several new special columns. Special columns on either side of the cash book may be used profits ably whenever there are sufficient entries to justify it. The Bills Receivable column on the left side is for cash received for notes and acceptances paid or discounted. Only the totals of this col- umn are posted. Such a column would be justifiable when there are a large number of notes received on account. The Bills Payable column on the right is for cash paid out for our notes and acceptances. Only the totals of this column are posted. Such a column would be justifiable when there are frequent payments by notes and acceptances. The illustration of the cash book on pages 204 and 205 is self- explanatory and should be studied carefully. 204 ACCOUNTING AND BUSINESS PRACTICE Cash Receipts, November, 19 — DATE F ACCOUNT CREDITED ACCTS, RECEIVABLE BILLS DISC. RECEIVABLE DR. NET CASH Nov. 19 Balance In bank 5O0O 20 21 F. Cole In fall, 3% 100 90 3262 57 24 16 J. H. Miner On account 900 26 V Bills Eeo. J. Miner's note 900 26 6 Interest On above 50 27 17 C. B. Gray Inv. 16tb, 2% 20 980 28 • Bills Eeo. Daniel's note 500 28 • Bills Eeo. Osborn's note 250 29 18 Green & Co. On account 1210 29 19 D. M. Snow Inv. Wtb, 2% 10 490 30 • Bills Eeo. M. D. Cobb's note 600 30 4 Mdse. Disc. Total discount on sales 130 fill 30 30 30 8 8 6 To Accts. Eec. Accts. Eeo. Bills Eec. Receipts Total paid 57 6842 2250 6842 til 2250 / 14142 ~si Special Columns in Sales Books and Invoice Books. — 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 would be indispensable where a special Merchandise account is employed for each department, instead of one account for aU departments. Where these departmental accounts are kept, the invoice book should also 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 con- cern. This, in most cases, would mean an additional number of special columns in the cash book. The inventories belonging to each department would then be SET VII — DRY GOODS BUSINESS 205 Cash Payments, November, 19^ F ACCOUNT DEBITED EXPLANATION ACCTS. PAYABLE COLL. BILLS GENERAL DISC. CR. NET CASH EXOH. PAYABLE Nov. 18 19 20 21 22 23 23 24 24 24 25 25 28 28 29 29 30 30 30 30 30 30 30 31 30 5 2 6tock 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 the stock is preferred stock, and the remaining 800 shares common stock. The preferred stock has been subscribed for and fully paid in. 60% of the common stock has been subscribed for at par. Of this latter sum 40% has been paid in in cash, and the balance is to be settled for in five equal monthly install- ments. The balance of the capital stock is to be held in reserve as treasury stock. Make the entries necessary 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. 75% of the capital stock has been subscribed for at par, and full payment therefor made in cash ; the remainder is to be held in reserve as treasury stock by the company. Make the necessary opening entries. OPENING- BNTEIES FOE COEPORATIONS 265 6. C. W. Williams is the sole owner of a manufacturing plant. He has resources and liabilities as follows : Resources Cash $6000 Plant 6000 Eeal Estate 5000 Ea-w Material 6000 Accounts Eeceivable 2000 Liabilities Accounts Payable $2000 Mortgage Payable 6000 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 f 70,000, divided into 700 shares at f 100 each, of which each of the incorporators is to have 170 shares. The balance, 20 shares, is to be disposed of as treasury stock. 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 the books 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 Good Will account. 7. Sell to A. B. Miller, on his note at 30 days, 5 shares of the treasury stock referred to in Exercise 6, at par value. 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 f60,000, consisting of 600 shares at flOO per share, is decided upon. The partners are to receive paid up stock for their respective interests 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 for 50 shares; Fred Everitt, 30 shares ; Charles Baker, 10 shares. The balance of the capital 266 ACCOUNTING AND BUSINESS PRACTICE stock, 60 shares, is to be held in reserve as treasury stock. 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 Bills Receivable $8000 Operating Products 6000 Plant 3000 Eeal Estate 15000 Cash 5400 Finished Products 6800 Liabilities Mortgage Payable $4200 It is thought best not to go to the expense of purchasuig a new set of books. Make the necessary entry to change the partnership accounts so that they will serve the purposes of the corporation. 9. A corporation is organized with a capital stock of $400,000 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. George Aldrich, a promoter, is to receive $25,000 in paid up stock for interesting capitalists in the com- pany. Ninety per cent of the remainder of the stock has been subscribed for and fully paid in. The balance is to be held in reserve by the company as treasury stock. Make the necessary opening entries. 10. Ten shares of the above treasury stock has been sold for cash at $100 per share. Make the necessary entry. THE VOUCHER SYSTEM OF ACCOUNTING 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 syslem are so susceptible of modifications that they have been found quite well adapted to all 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 THE VOUCHEE SYSTEM OF ACCOUNTING 267 and other expenditures of the business. Where the system is found in its highest stage of development it is characterized by its approved methods for filing paid and unpaid bills and recording firm and corporate disbursements. The method of filing vouchers, the classification and distribution of amounts paid, etc., vary greatly in different lines of business. In the accounting of large railroad concerns and kindred organiza- tions, vouchers are usually issued for absolutely everything in the way of expenditures connected with the biisiness, the fundamental idea being to have every recorded transaction, so far as possible and practi- cable, 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 on 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 invoice with the necessary 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 signs the receipt printed at the bottom of the voucher and returns it. The voucher, when returned, is filed away for reference. For time purchases a voucher is made out at the time the goods are redeived and the bill 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 269 is self-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, amount- ing to 11269.40, for which a cash payment was made on Feb. 6, less 2%. The receipt at. the .bottom of the voucher shows that 268 ACCOUNTING- AND BUSINESS PEACTICE Form of Combined Voucher and Check Voucher w'Vo. 1 6^ Boston, -^t^ss., S'e^. 10, J9 — Kjssueel bif k/ /le Ctnioti yy/iip (^ompanif /S6 S^e/lp. 7 DESCRIPTJON OF PURCHASE /q6 3 60 93 67 Account verified by Approved for payment President ^olurniMAMy, €.,, S'eM: 16, 79^— c/\.eceiveei of Uhe CLnion n/iip Sompany ^ /^S.^'' &-yb& /i-'u/KcOoect cAl/yisXA^-t/iv-o- —^ S)oUa.ps Un full for the above account ^ i - ? ^ >1 hj Q o o Pi CD P ^. o' P P p. P o B Ch o < CD P ^ ^^ O9 ^ >> Co -I* 1* ■^s ;s 270 ACCOUNTING AND BUSINESS PRACTICE 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. SBoston, ^Mass.. S^eM-. 6, 79— J^o. IS<^ ^ay to the order' of BvaJleA^, m* , «^ ^ MaTiager REVIEW QUESTIONS 1. Define and differentiate: (a) ordinary partnership and joint-stock company; (ft) joint-stock company and corporation. 2. Name some of the advantages of corporations. 3. Briefly give the necessary steps in the organization of a corpora- tion. 4. What are the requirements in your state for incorporation ? 5. Define : (a) articles of association; (ft) certificate of incorporation. 6. With what officials must certificates of incorporation be filed? 7. How is the business of a corpora- tion transacted ? 8. By whom is the board of directors of a corporation elected ? 9. Name the officers usually elected. 10. What is the minimum capital required to form a corporation in your state ? 11. Name the principal classes of corporation stock. 12. Define each class named. 13. Why has the common stock of some corporations a greater value than the preferred stock ? 14. State the voting rights of stockholders. 15. What is a charter? 16. Briefiy outline the powers and responsibilities of corporations. 17. What is a trust? 18. What is an install- ment ? 19. Name the principal auxiliary books used by corporations. 20. Briefly state the purpose of each auxiliary book named. 21. What accounts are opened in the stock ledger ? 22. Describe the process of transferring a .stock certificate. 23. What is the extent of a stockholder's liability under an ordinary corporation? 24. What does the subscription account show and when vrill it balance? 25. A private partnership is incorporated. The books of the old partnership are to be used. State in abstract form the entry necessary to change the partnership records so that they will meet the requirements of an ordinary corporation. 26. A private partnership is incorporated. New books are to be opened. State in abstract form : (a) the entry necessary to close the records on the partnership books ; (ft) the entry necessary to open new books. SET IX — MANUFACTUEING 271 SET IX — MANUFACTURING Selling Price List NO. LENGTH QUALITY PRICE PER DOZ. 30 6 ft. 6 ft. 6 ft. 6 ft. 6 ft. . 6 ft. 6ift. 8 ft. 6 ft. 6ift. 6ift. 7 ft. 7 ft. Si ft. 5 ft. 12 ft. Java ... 11.10 1.40 1.60 2.00 2.25 3.00 7.50 9.00 4.75 6.50 30.00 35.00 37 60 102 200 279 287 312 428 455 530 617 Java . . Extra Java Extra Java Extra Java Ravfhide Rawhide Eawhide Whalebone Whalebone Whalebone 688 874 1017 Knotted Bor English Cro] Rawhide Ex Horsehide L 8-plat Buck le . . . . DS . . tra Team . ... 160.00 18.00 5.75 1.50 1079 Lash . . ... 18.00 The total amount of each invoice purchased will be given, and there- fore no huying price list is required. The object of this set is to illustrate corporation accounting, as applied to manufacturing interests, including the organization of a corporation, the opening, conducting, and closing of a set of corporation books. The special features of this set are the classification of the Merchan- dise and Expense accounts, indicating the methods employed by manu- facturers whereby they are able to analyze each element of cost in production. As the student has been given extensive work in business prac- tice in the preceding sets and is now familiar with the various forms used in business, this set presents only the theory of corporation accounting. The voucher system is extensively used in corporation bookkeeping. As this set illustrates only theory, all business forms are omitted. The 272 ACCOUNTING AND BUSINESS PRACTICE Manufacturing DATE ACCOUNT EXPLANATION SALES LEDGER MDSE. TO BE CREDITED DISC. DR. NET GASH ACCTS. REC. Feb. 1 5 ^ Capital Stock Mdse. Investment C.W.Allen, 30 sh. 3000 A.B.Curtis, 25" 2500 B. E. Frey, 35 " 3500 Per petty cash book 9 50 9000 8 E. W. Blaser Inv. 3d, less 2% 5 60 274 40 280 12 V' Mdse. Per petty cash book 7 20 IG F. E. Simpson Inv. lOth, less 2% 3 52 172 38 175 90 24 ■W. W. Merrill Inv. 15th, less 2% 5 50 269 50 275 25 Bills Eeo. W. W. Snow's note 500 25 •J Mdse. Per petty cash book 8 50 28 Accts. Rec. Total for month U 62 716 28 730 90 25 20 730 90 28 Mdse. Discounts Contra.on purchases 39 97 28 Mdse. Petty cash sales 25 20 10296 07 Invoice INV. NO. DATE F NAME AND ADDRESS TERMS AMOUNT 1 2 3 4 5 6 7 S 9 Feb. 1 4 4 2 5 9 12 18 17 17 18 14 13 17 12 14 15 16 Merrill & Co. Sew York Fleming & Deming Boston, Mass. Gray & Dunkle New York Browii & Son Boston, Mass. Merrill & Oo. New York • C. W. Hall New York Coates & Son Buffalo, N.Y. Bender & Hill Philadelphia 0. H. Shaw Co. New York Accts. Pay. (Cr.) The posting of the special columns is indi- cated by the small figures in parenthesis. Vio> net 30 days VlO. net 60 days Vso VlO ViOi net 30 days Vio» net 30 days ViOi net 30 days Vso. net 60 days Net 60 days 125 420 326 900 725 182 72 100 462 90 40 60 10 50 50 90 10 3314 90 SET IX — MANUFACTUKING 273 Cash Book PURCHASE LEDGER DATE F ACCOUNT TO BE DEBITED EXPLANATION GENERAL DISC. CR. NET CASH AOOTS. PAY. Feb. 3 3 Mdse. Whalebone Eawhide Trimmings Paints and Oils Agents' Salaries Insurance Finished stock bought Raw material bought Kaw material bought Raw material bought Raw material bought Traveling exp. adv. 2% prm. on pol. No. 791 1200 400 750 120 150 120 75 90 7 Mason & Co. Inv. 2d, less 3% 7 20 232 80 240 12 Simpson & Smith Iny. 5th, less 3% 21 679 700 13 Labor Pay roll 430 16 Lapham & Snow Inv. 7th, less 3% 3 97 100 19 Bills Pay. Note charged at bank 240 19 Interest On above 2 40 21 C. B. Mayhew & Son Inv. 14th, less 1% 1 27 124 63 126 90 24 Osgood & Bedell Inv. 15th, less 2% 1 50 73 60 75 26 Expense Per petty cash book 10 90 27 Simpson & Smith Inv. 20th, less 3% 6 194 200 27 28 Expense Acots. Pay. Per petty cash book Total for month 12 1441 40 39 97 1400 93 1441 90 90 28 Mdse. Discounts Contra, on sales 14 62 28 Balcmce In hank 5327 95 10296 07 Register DISTRIBUTION WHALE- BONE RAW- HIDE WOOD BUTTS REEDS THREAD TRIM- MINGS PAINTS AND OILS HARD- WARE LEATHER AND CLOTH PAID COUNT CASH — 420 420 40 40 725 C3) 725 — 325 (6) 326 60 60 182 (3) 182 50 50 72 (9) 72 60 50 462 (4) 462 90 90 125 (5) 125 90 90 100 (7) 100 900 (8) 900 10 10 Feb. 8 12 22 14 IB 2 8 3 14 52 41 26 50 73 123 411 322 710 71 38 99 34 50 77 274 ACCOUNTING AND BUSINESS PEACTICE TOucher system, however, is explained and illustrated in the preceding pages. To this explanatory statement both the teacher and the pupil should give careful attention. The books used in this set are the journal, cash book, petty cash book, iavoice register, sales book, general ledger, sales ledger, and pur- chase ledger. With the exception of the cash book, the petty cash book, and the invoice register, the books are the same as used in the preceding sets of this book. Cash Book. — The cash book is provided with special columns for accounts receivable, accounts payable, and merchandise. These columns are similar to those of the cash books used in Sets VI and VII. In addi- tion to columns for net cash and discount a column is provided for accounts receivable and accounts payable. These columns record the amounts that are to be posted to the sales ledger and the purchase ledger respectively. The special column for merchandise on the left side is for recording cash sales. A reference to the model cash book, pages 272 and 273, will give the student a clear understanding of the plan of this book. Petty Cash Book. — This book is used for recording small receipts and expenditures of cash. The ruling of an ordinary journal page affords one form of petty cash book. All receipts are to be placed in the first money column and all payments in the second money column. Special columns may be used if desired. The form of the petty cash book is illustrated on page 279. Invoice Register. — The invoice register is not essentially different from the purchase book with which the student is already familiar. In a manufacturing business it is desirable that the cost of the various manufacturing products be kept in separate accounts in the ledger. This necessitates the addition of a number of special columns in the invoice register for the proper distribution of all raw material bought. When an invoice is received it is audited and entered in the invoice register. The first part of the record is the same as that of the. ordinary purchase book. After this part of the record is completed, the amount of the purchase is carried to the proper distributing column. In this set the purchasers are credited weekly for the amount of the invoice, and at the end of the month Accounts Payable is credited for the total of the Amount column. Instead of debiting Merchandise, as is the case when the ordinary purchase book is used, each of the articles used in manufacturing should be debited separately under the names appearing at the heads of the several columns. Care should be taken to properly check all items posted. (See model on pages 272 and 273.) SET IX — MANUFACTUEING 275 Memoeanda of Transactions February 1 J. W. Melton, E. M. Williams, Geo. Inman, A. P. Zaner, and L. H. Messier, of Springfield, Mass., have decided to form a corporation under the title of the Union Whip Co., for the purpose of manufacturing whips. Certificates of incorporation have this day been filed with the proper state ofiicial. The capital stock is to be $25,000, divided into 250 shares of the par value of $100 each. Each one of the incor- porators has subscribed for 50 shares of stock. This corporation has been formed under the laws of the Common- wealth of Massachusetts. The stockholders above named are to con- stitute the board of directors for one year. The following officers have been elected: Geo. Inman, President; L. H. Messier, Secretary; J. W. Melton, Treasurer. The student has been chosen to act as bookkeeper for the corpora- tion, at a salary of $60 per month. To THE Student. — The above memoranda is to be copied verbatim in the journal. As the laws of the Commonwealth of Massachusetts require that all capital stock must be paid in before commencing business, each stock- holder has paid the following : J. W. Melton, for 50 shares, $5000 ; E. M. Williams, for 50 shares, $5000 ; Geo. Inman, for 50 shares, $5000; A. P. Zaner, for 50 shares, $5000; L. H. Messier, for 50 shares, $5000. Make a proper entry in the cash book for the investment. The Springfield Whip Co. has decided to go out of business and the Union Whip Co. has taken a lease of their factory, all complete for manufacturing whips, for a term of three years, at a yearly rental of $1800, the rent to be paid monthly. Copy the above memorandum in your journal. Deposit in the Union Bank all the cash on hand except $50. Use a sheet of journal paper for recording all deposits made and all checks drawn. Use the first money column for recording deposits .and the second money column for recording checks drawn. The $50 kept on hand is to be entered as a balance in the petty cash book. (See the first entry in the model petty cash book, page 279.) 276 ACCOUNTING AND BUSINESS PKACTICE Fbbetjaky 3 The Springfield Whip Co. has on hand raw material amounting to $2000, and finished whips ready for the market amounting to f 1500. The Union Whip Co. purchases the above items for cash. Give tlie Springfield Whip Co. a check for the sum of the two amounts named. Enter in the cash book as follows : debit Merchandise for the amount of the finished goods, and debit the following accounts for the raw material : Whalebone, |200 ; Rawhide, $200 ; Reeds, flOOO ; Thread, $250 ; Sundries, $40 ; Trimmings, $110 ; Paints and Oils, $100 ; Hard- ware, $50 ; Leather and Cloth, $50. S. B. Hardy and F. M. Kinney have been employed as traveling sales- men, each to receive a salary of $100 per month and traveling expenses. Place the above memorandum in the journal. Give each of the traveling salesmen a check for $150, and charge the amount to Agents' Salaries. Enter in the Greneral column in the cash book. Mr. A. C. Parker, attorney, was the legal adviser of the company at the time of incorporation ; give him a check for $50 for his services. Charge Expense. The company has taken out an insurance policy with the Niagara Insurance Co. for $5000. Owing to the location of the factory and the combustible material used, the rate of insurance is $20 per thousand. Give the agent of the Niagara Insurance Co., Henry Lete, a check for the amount of the premium at the rate named. Charge to Insurance. Febetjaey 5 Give Connor & Co. a check for $32.50 in payment of their bill for a set of office books. Charge Expense. Pay TuUer & Co. $7.85 in cash for office stationery. Enter this item in the petty cash book under Expense. Refer to the model on page 279. Note. — Items that are entered in the petty cash book are not entered in the regular cash book until the petty cash book is closed. This will be explained at the end of the week. Buy $2 worth of postage stamps and pay cash for them. Enter in the petty cash book. Pay Thos. Lottridge $2.80 in cash for carpenter work in repairing the office. Enter in the petty cash book. Sell Wm. Lane for cash 1 doz. whips, #287, $7.50. Enter the amount in the petty cash book, crediting Merchandise. SET IX — MAJS-UFACTUEING 277 Febktjaky 6 The following goods have been received : Invoice of thread from Hasson & Son, Boston, Mass., dated Feb. 4. Terms : 1/10, net 30 days. Amount, flOO. Invoice of trimmings from Fleming & Co., New York, dated Feb. 6. Terms: 2/10, net 30 days. Amount, |60. Invoice of reeds from Kellar & Co., New York, dated Feb. 3. Terms : 1/10, net 30 days. Amount, |250. The above invoices are to be entered in the invoice register. By referring to the model on pages 272 and 273 the student will readily understand the entry required. Be sure that the amounts are extended into the proper columns. Note In recording invoices the date of the invoice should be used, and not the date under which the student is working. The following orders have been received and filled. Terms : 2/10, net 30 days, F.O.B., Springfield, Mass. F. R. Pickles, Reading: 6 doz. #30 12 doz. #37 5 doz. #60 8 doz. #102 10 doz. #200 D. D. Miller, Moberly : 12 doz. #279 10 doz. #428 15 doz. #1017 1 doz. #312 2 doz. #455 2 doz. #287 H. S. Blower, Palmer: \ doz. #530 1 doz. #465 i doz. #617 i doz. #688 S. D. Merrill, Canton : 10 doz. #200 10 doz. #37 10 doz. #279 20 doz. #102 20 doz. #60 2 doz. #287 15 doz. #30 2 doz. #428 A. C. Cotton, Albany: i doz. #1079 i doz. #530 10 doz. #1017 1 doz. English Crops D. M. Heath, Worcester : 10 doz. #279 10 doz. #200 2 doz. #874 Enter the above orders in the sales book. 278 ACCOUNTING AND BUSINESS PEACTICE The names of the persons employed in the factory, and the weekly salary of each, are given below. Arthur Daley, foreman $18 W. P. Nye $14 David Brown, foreman 18 H. C. Wayne 9 John Sauter 14 Maurice Eox 12 Elmer Tierney 11 W. V. Young 13 Silas Willis 9 Daniel Gilbert 10 Theo. Nash 12 D. B. Hinman 11 Benj. Lever 15 Leon Craig 14 Wm. Kenney 13 E. M. Ward 10 Leslie Carton 10 T. B. Murray 15 0. H. Sidney 12 Jas. Brigham 9 Howard Gohle 11 Alice Benton 7 Geo. Wirtz 9 Mary Anson 6 Wesley Kress 12 Susan Frye 8 Edward Short 13 Sarah Harum 8 Thos. Wallace 11 Ellen Steele 6 Jacob McVey 10 Jessie Day 9 Eichard Evans 13 Ida Bowers 7 Isaac Shaw 15 Cora Kellar 7 Henry Utz 11 Ada Weet 8 Frank Boler 10 Edith Noyes 9 Draw a cash check for the total amount of the pay roll. The Pay Roll. — A form of pay roll is given below. These forms differ widely in different lines of business. Payments of employees are usually made by placing the amount to be paid in an envelope, and at the conclusion of the week this envelope is handed to the person whose name it bears. The total amount that has been placed in these envelopes is made up and drawn from the bank by a cash check. As no business forms are being used in this set the student will simply record the amount of the cash check in the main cash book, Greneral column, under Labor. i/ime. W^^k eneling .. r9 NAME M T W T f S TOTAL TIME RATE PER DAY AMOUNT PAID $ CTS. RECEIVED PAYMENT SET IX — MANUFACTUEING 279 Close the petty cash book in the manner indicated in the outline given below. Petty Cash Book Feb. 1 Balance Brought forward 50 5 v/ Expense Postage 2 5 v' Expense Carpenter work 2 80 5 •J Mdse. Cash sale 7 50 5 •J Expense. Office stationery 7 85 6 Balance Balance In safe Brought down lo 44 8S 57 57 50 Feb. 8 44 85 , After closing the petty cash book carry the sum of the three expense items to the main cash book. Record in the Greneral column. Transfer the merchandise item to the left side of the main cash book. Check all items transferred. This finishes the work of closing and transfer- ring the items in the petty cash book. None of the other books are to be closed, but the amounts are to be posted to the different ledgers. Space in the Different Ledgers. — The first account to be opened in the general ledger is Capital Stock. Give this account six lines; on the same page give Merchandise twenty lines, and Expense the remainder of the space. Give all other accounts in the main ledger one-fifth of a page each. Give all accounts in the purchase ledger and sales ledger one-fifth of a page each. Posting Post all the items in the General column of the main cash book to the general ledger ; post aU the items from the sales book to the sales ledger; post all the items in the Amount coluirai of the invoice register to the purchase ledger, credit side. This concludes the work for one week. Fbbkttaky 8 The following have been received: Invoice of paints and oils from Leland & Son, Boston, Mass., dated Feb. 6. Terms : 1/10, net 30 days. Amount, 154.20. Invoice of leather and cloth from Palmer and Brown, New York, dated Feb. 6. Terms : 1/10, net 30 days. Amount, $80,50. 280 ACCOUNTING AND BUSINESS PRACTICE Give the Springfield Whip Co. a check for one month's rent. For the amount consult the memoranda in the journal. Enter in the cash book under Fuel, Light, and Rent. Sell Geo. Provo 1 doz. #312, for cash. Enter in the petty cash book. Febeuaey 10 Send each of the following persons a check in payment for invoice : Hasson & Son, for the invoice dated Feb. 4, less discount. Kellar & Co., for the invoice of Feb. 3, less discount. Enter each payment in the main cash book. A reference to the model cash book on page 273 will give the student all needed suggestions. Pay 50/ in cash for a telegram sent to S. B. Hardy, one of the traveling salesmen. Enter in the petty cash book. Checks have been received from the following parties : F. R. Pickles, for the invoice of the 6th, less discount. H. S. Blower, for the invoice of the 6th, less discount. A. C. Cotton, for the invoice of the 6th, less discount. Enter each amount in the main cash book. (See page 272.) The following orders have been received and filled. Terms : 2/10, net 30 days. E. T. Fuller, Leland : 12 doz. #30 24 doz. #37 10 doz. #60 16 doz. #102 20 doz. #200 10 doz. #428 C. C. Dewey, Bristol: 24 doz. #279 20 doz. #428 30 doz. #1017 2 doz. #312 4 doz. #455 4 doz. #287 Henry Lee, Norwich : 1 doz. #530 2 doz. #465 1 doz. #617 i doz. #688 Febetjaey 12 The following orders have been received and filled. Terms: 2/10, net 30 days. A. B. Smith, Hartford : 20 doz. #200 20 doz. #37 15 doz. #279 36 doz. #102 25 doz. #60 4 doz. #287 30 doz. #30 10 doz. #428 SET IX — MANUFACTURING 281 Geo. H. Sanford, Lynn : 1 doz. #1079 1 doz. #530 20 doz. #1017 2 doz. English Crops The terms on the following invoice are : subject to sight draft. F. M. Caswell, City : 25 doz. #279 20 doz. #200 4 doz. #874 February 13 Send Fleming & Co. a check in payment for the invoice dated Feb. 5, less discount. D. D. Miller sends his check in payment for the invoice dated Feb. 6, less discount. H. C. Wayne and T. B. Murray have been absent the past week on account of sickness. Deduct the amount of their salaries from the total pay roll of last week. Draw a cash check for the amount of the weekly pay roll. Deposit all the checks on hand ; collection, 85/. Debit Expense for all collection charges in this set. Close the petty cash book and carry the amounts to the main cash book. Post the week's work. The items in the Accounts Receivable column of the main cash book are to be posted to the sales ledger and the items in the Accounts Payable column are to be posted to the purchase ledger. Open new accounts with all new names that appear in the invoice regis- ter and sales book. February 15 Send each of the following a check in payment for invoice : Leland & Son, for the invoice of Feb. 6, less discount. Palmer & Brown, for the invoice of Feb. 6, less discount. Checks have been received from the following parties : S. D. Merrill, for the invoice of the 6th, less discount. D. M. Heath, for the invoice of the 6th, less discount. Pay cash for petty expense items, 12.50. The following orders have been received and filled. Terms : 2/10, net 30 days. F. R. Pickles, Reading: 8 doz. #1017 10 doz. #287 6 doz. #428 10 doz. #455 282 ACCOUKTING AND BUSINESS PRACTICE D. D. Miller, Moberly : ■ 20doz. #30 18doz. #102 15 doz. #37 14 doz. #200 20 doz. #60 2 doz. #312 H. S. Blower, Palmer: 18 doz. #1017 20 doz. #200 10 doz. #428 12 doz. #37 6 doz. #279 6 doz. #287 Febetjaey 16 The following have been received : Invoice of whalebone from Ran- dall & Co., New York, dated Feb. 13. Terms : net, 10 days. Amount, 1106.20. Invoice of rawhides from Stockwell & Co., Boston, Mass., dated Feb. 12. Terms : 2/10, net 30 days. Amount, 1124.35. Invoice of wood butts from Eaton & Son, New York, dated Feb. 13. Terms : 1/10, net 30 days. Amount, 162.50. Advance the bookkeeper $20 in cash, to apply on his monthly salaiy. Enter in the petty cash book under Salaries. Fbbktjaey 17 The following orders have been received and fiUed. Terms: 2/10, net 30 days. A. C. Cotton, Albany: 10 doz. #102 5 doz. #874 20 doz. #1017 3 doz. #287 4 doz. #455 '20 doz. #60 D. M. Heath, "Worcester : 22 doz. #30 5 doz. #287 18 doz. #60 4 doz. #874 12 doz. #1017 2 doz. #1079 Pay J. K. Hart 18.75 in cash, for plumbing and other repairs. Enter in the petty cash book under Expense. Febetjaey 18 Give the Home Printing Co. a check for $43.65, in payment for a printing bill. Enter in the main cash book under Printing and Advertising. SET IX — MANUFACTUEING 283 Checks have been received from the following parties : From E. T. Fuller, for the invoice of the 10th, less discount. From Henry Lee, for the invoice of the 10th, less discount. From C. C. Dewey, for the invoice of the 10th, less discount. From A. B. Smith, for the invoice of the 12th, less discount. Give Scott & Co. a check for 132.90, in payment of their bill for boxes, etc. Enter in the main cash book under Shipping. February 19 The following orders have been received and filled on regular terms. Horace M. Hatton, New York : 50 doz. #102 100 doz. #1017 20 doz. #312 100 doz. #30 40 doz. #200 50 doz. #37 D. K. Nelson, Boston : 20 doz. #428 15 doz. #312 10 doz. #455 40 doz. #102 12 doz. #287 50 doz. #60 A. C. Bruner, Providence : i doz. #688 4 doz. #874 2 doz. #1079 2 doz. #530 1 doz. #617 25 doz. #279 Fbbeuaey 20 Buy of Eureka Coal Co. 15 tons of coal at $4.50 per ton. Give in payment a sight draft on P. M. Caswell for the amount. Enter in the main cash book as foUows : on the right side Fuel, Light, and Rent, and extend into the General column; on the left side F. M. Caswell and extend into the Accounts Receivable and Net Gash columns. Note. — The above entry debits Expense and credits F. M. Caswell, ■which accom- plishes the same end as a journal entry. As there is no special column in the journal for accounts receivable, to avoid double posting the above transaction is recorded in the cash book. The company have at the present time a surplus of cash, and at a meeting of the board of directors it was decided to purchase 100 shares of city waterworks bonds at flOO per share. As these bonds are sell- ing at par it represents a good investment. Give the city treasurer a check for the amount. Enter on the right side of the cash book, under Waterworks Bonds. 284 ACCOUNTING AND BUSINESS PRACTICE February 20 The following order has been received and filled. Terms : note at 30 days, with interest. W. G. Cooper, Westfield: 20 doz. #37 30 doz. #102 20 doz. #60 20 doz. #1017 Enter the above in the sales book in the regular way. Then record in the cash book as follows : on the right side Bills Receivable and extend into the General column ; on the left side W. G. Cooper and extend into the Accounts Receivable and IVet Cash columns. (See note under transaction with the Eureka Coal Co.) Give a cash check for the weekly pay roll. All the help have been employed this week. Deposit all the checks on hand ; collection, 12. Close and post the petty cash book. Post the week's work. Febeuaky 24 Checks have been received from the following parties : F. R. Pickles, for the invoice of the 15th, less discount. D. D. Miller, for the invoice of the 15th, less discount. H. S. Blower, for the invoice of the 15th, less discount. The following have been received: Invoice of thread from Hasson & Son, Boston, Mass., dated Feb. 23. Terms: 1/10, net 30 days. Amount, f 200. Invoice of trimmings from Fleming & Co., New York, dated Feb. 23. Terms : 2/10, net 30 days. Amount, |75. Invoice of paints and oils, $75 ; hardware, $50, from Leland & Son, Boston, Mass., dated Feb. 23. Terms : 1/10, net 30 days. The sum of the two invoices should be extended into the Amount column in the invoice register, and the separate amounts extended to the proper distributing columns. Invoice of leather and cloth from Palmer & Brown, New York, dated Feb. 21. Terms : 1/10, net 30 days. Amount, $64.35. Invoice of reeds from Kellar & Co., New York, dated Feb. 20. Terms : 1/10, net 30 days. Amount, $1160. Invoice of wood butts from Eaton & Son, New York, dated Feb. 23. Terms: 1/10, net 30 days. Amount, $43.25. Invoice of whalebone from Randall & Co., New York, dated Feb. 20. Terms: 10 days. Amount, $145. SET IX — MANUFACTUEING 285 Invoice of rawhides from Stockwell & Co., Boston, Mass., dated Feb. 21. Terms: 2/10, net 30 days. Amount, $165.40. Febeuaey 25 The following orders have been received and filled. Terms : 2/10, net 30 days. C. C. Dewey, Boston: 60 doz. #102 30 doz. #30 40 doz. #60 12 doz. #874 A. B. Smith, Hartford:, 100 doz. #102 100 doz. #1017 50 doz. #200 10 doz. #874 25 doz. #279 20 doz. #428 Geo. H. Sanford, Lynn: 60 doz. #30 15 doz. #874 80 doz. #60 5 doz. #312 20 doz. #279 6 doz. #630 F. M. Caswell, City: 12 doz. #287 40 doz. #60 20 doz. #428 20 doz. #37 50 doz. #102 50 doz. #30 Henry Lee, Norwich : 70 doz. #30 100 doz. #1017 60 doz. #60 40 doz. #200 60 doz. #37 8 doz. #428 February 27 Received from C. C. Dewey a check in payment of the invoice of the 25th, less discount. Febeuaey 28 Checks have been issued in payment of the following : Student, balance on salary $40 Chas. M. Bradburn, Superintendent 100 Enter the sum of the above items in the main cash book under Salaries. Checks have been sent to the following : S. B. Hardy, traveling salesman $100 F. M. Kinney, traveling salesman 100 286 ACCOUNTING AND BUSINESS PKACTICE Enter the sum of the foregoing items in the main cash book under Agents' Salaries. Issue a cash check for the full amount of the pay roll. Give the Metropolitan Carting Co. a check for $135, in payment for freight and cartage for the month. Enter in the main cash book under Freight and Cartage. Give the City Gas Co. $22.10 in cash, for bUl to date. Enter in the petty cash book under Fuel, Light, and Rent. Deposit all checks on hand ; collection, f 1.75. Close the petty cash book and carry the item to the main cash book. Post the week's work. Present your books to your teacher for inspection. If approved by him, proceed to close the books as follows : Close the main cash book. Consult the model cash book on pages 272 and 273. The discount columns are termed contra columns. The mean- ing is this : The discount on the left side of the cash book is a debit, but it is placed on the credit side of the cash book for convenience. By this Statement of Losses and Mdse. Finished goods 1200 Raw Material, classified : 1531 Whalebone Purchases 340 Whalebone Per inventory 120 220 Rawhide Purchases 320 Rawhide Per inventory 120 200 Wood Butts Purchases 85 Wood Butts Per inventory 23 62 Reeds Purchases 1«00 Reeds Per inventory 810 790 Thread Purchases 365 Thread Labor Per inventory Pay roll 106 259 840 Mdse. Disc. Allowed to others 32.40 Mdse. Disc. Allowed to us 6.80 26 60 Expense, classified: Expense Sundry items 74 50 Freight and Cartage Total for month 82 Printing and Advertising Total expended 39.50 Printing and Advertising Per inventory 9.25 30 25 Fuel, Light, and Rent Total outlay 210 Fuel, Light, and Rent Net Gain Per inventory Profits for month 40 170 383 4S0 35 65 4385 SET IX — MANUFACTURING 287 arrangement the discount, net cash, and total of any invoice paid are shown together. The same explanation would apply to the Discount column on the right side of the cash book. This column represents a credit. The footing of the Discount column on the left side is carried to the summary on the right side. The footing of the column on the right side is car- ried to the summary on the left side. This places each footing in its proper place for posting. Close the sales book and make the following journal entry for the total footing: Accounts Receivable to Merchandise. Close the invoice register. Consult the model on pages 272 and 273. Post the summary of the cash book to the main ledger. From the invoice register post the footing of the Amount column to the credit of Accounts Payable in the main ledger, and debit the footing of each distributing column to its proper account in the general ledger. This completes the posting to the general ledger. As the sales book and Amount column of the invoice register have been posted to the sales ledger and purchase ledger respectively, and Gains, Feb. 28, 19 Mdse. Mdse. Total sales for month Finished goods, per inventory 3560 825 4385 288 ACCOUNTING AND BUSINESS PRACTICE the items from the Accounts Receivable and Accounts Payable columns of the main cash book have been posted at the end of each week, all posting is now completed. The student will now make a trial balance from the main ledger. Have the same approved by the teacher. Make an abstract of the pur- chase ledger and prove with the Accounts Payable in the general ledger. Make an abstract of the sales ledger and prove with the Accounts Receivable in the general ledger. Make a statement of losses and gains, referring to the model given on pages 286 and 287. Make a statement of resources and liabilities. The above statements are necessaiy in order that the board of directors may be infolded regarding the condition of the business before declaring a dividend. The following outline will suggest the form of resource and liability statement to be used. The student wiU. supply amounts from his own ledger. Resources Cash, on deposit Finished Goods, per inventory Raw Material, per inventory Incidentals, per inventory Accounts Receivable, due the business Waterworks Bonds, par value Bills Receivable, on hand Liabilities Capital Stock, par value Accounts Payable, due from the business Loss and Gain, per statement Closing Accounts eelating to Merchandise Raw Material. — The classification of accounts with raw material has been explained and illustrated in connection with the invoice register on page 274. In closing the ledger these accounts are trans- ferred to the Merchandise account. If all raw material had been consumed, there would be no inventories on hand. Therefore all inventories in these accounts represent unconsumed raw material. In order that the Merchandise account may show just what it has cost, in raw material, to manufacture goods, these accounts are closed into the Merchandise account in the manner indicated on page 289. SET IX— MANUFACTUEING 289 Labor. — The labor required for the production of finished goods also represents an element of cost in merchandise. Therefore this account is closed into the Merchandise account. Merchandise Feb. 3 C. B. 13 687 50 Feb. 16 g.B. 12 34 20 28 Whalebone 16 127 20 28 S.B. 14 1216 40 28 Rawhide 14 62 90 28 Inventory 32 S47 25 28 Labor 14 285 28 Expense 16 172 75 28 Gain Inventory 28 262 50 1597 85 1597 85 Mar. 1 347 25 ■Whalebone Feb. 4 28 C. B. LB. Inventory 13 14 100 142 50 Feh. 28 28 Inventory Mdse. 32 4 115 127 30 20 242 50 242 fiO Mar. 1 115 30 Ra'whide Feb. 2 28 C. B. LB. Inventory 13 14 110 125 40 Feb. 28 28 Inventory Mdse. 32 4 n2 62 50 90 235 40 236 40 Mar. 1 172 50 Labor Feb. 6 28 C. B. C. B. 13 14 150 135 Feb. 28 Mdse. 4 286 285 285 The following are to be closed into the Merchandise account in the form and manner already explained. Inventories are placed opposite the accounts to which they belong. If no inventory is given, the full balance of the account is to be closed into the Merchandise account. Whalebone $135.80 Paints and Oils $66.70 Eawhide 148.75 Hardware 35. Wood Butts 28.60 Leather and Cloth 56.45 Eeeds 1020. Sundries 18.50 .Thread 110. Labor Trimmings 64.20 Mdse. Discounts 290 ACCOUNTING AND BUSINESS PEACTICE Do not close the Merchandise account at this point. Incidentals. — A third element in the manufacture of goods is inci- dental expenses. As a matter of fact, all expenses are incurred as a means of carrying on the manufacturing interests, and all money paid out for incidental expenses simply adds to the cost of goods. These incidental items are of importance in closing the books, as showing what relation they bear to the total cost. These accounts are closed into the Expense account as a means of knowing what the total inciden- tals represent, and then the Expense account is closed into the Merchan- dise account. The inventories represent material on hand belonging to the incidental accounts. The manner of closing is indicated below. Expense Feb. 2 5 20 28 28 28 C. B. C.B. C. B. Print, and Ad. Salaries Insurance 13 13 13 14 16 19 30 15 1 16 95 14 80 50 45 Feb. 28 Mdse. 4 172 75 172 75 172 75 Printing and Advertising Feb. 20 1 C.B. Inventory- 13 36 45 FA. 28 28 Inventory Expense 32 16 20 16 46 36 45 36 45 Mar. 20 Salaries Feb. 20 28 C.B. C.B. 13 13 10 85 Feb. 28 Expense 16 95 95 95 Insurance Feb. 6 Inventory 72 50 Feb. 28 28 Inventory Expense 32 16 58 14 50 72 60 72 50 Mar. 1 58 50 SET IX — MANUFACTURING 291 The following accounts are to be closed into the Expense account as shown on page 290. Printing and Advertising $10.: Freight and Cartage Agents' Salaries Insurance 85. Fuel, Light, and Eent 50. Salaries Shipping 11.. After the above accounts have been closed into the Expense account close the Expense account into the Merchandise account. Closing the Merchandise Account. — The merchandise inventory, repre- senting finished goods on hand, is $1285.46. Enter this inventory in the Merchandise account, find the gain, and close the account in the usual manner. Transfer the gain on merchandise to the Loss and Gain account. Closing the Loss and Gain Account. — In corporation accounting the closing of the Loss and Gain account is effected by a journal entry. The entry for closing the Loss and Gain account will be like the follow- ing, except the amounts. Loss and Gain $323.60 To Dividend account $300. To Undivided Profits 23.60 Dividends are usually declared in business quarterly, semiannually, or annually. In this set, in order that the student may have the work of closing the Loss and Gain account, a monthly dividend will be declared. At a meeting of the board of directors, a statement of the business having been presented, it was voted that a dividend of 2% on the capital stock be declared. The student will compute the amount of the dividend and then make a journal entry similar to the one just given. The net gain will be verified by your teacher. Open accounts with Dividends and Undivided Profits. Post the journal entry and close the Loss and Gain account. When the dividends are paid in cash the Dividend account will be closed. As the dividends have not yet been paid to the stockholders, that account will remain open. After completing the work of closing the books a trial balance of the ledger should be taken. 292 ACCOUNTING AND BUSINESS PRACTICE An Analysis of the Merchandise Account. — The student will now turn to his ledger and follow carefully the statements given below. Finished goods on hand Feb. 1 $1500. Finished goods on hand Feb. 28 1285.46 Finished goods included in sales 214.54 Total sales for the month $6801.50 Less finished goods sold 214.54 Sale of goods manufactured during the month 6586.96 The total cost of the manufactured goods included the following : Eaw material $3131.75 Labor 1732. Incidentals 1166.10 Mdse. discount 40.38 Total cost 6070.23 Gain on merchandise 516.73 The aboTe analysis shows that the raw material cost, in even numbers, 52% ; labor, 28% ; incidentals, 20%. The above analysis is made possible because of the classification of the Merchandise account. In the above manner the manufacturer can determine whether any one division of manufacturing is costing too much, or whether the proportion of each is wisely distributed for the most economical production of his goods. By taking the total raw material consumed he can readily determine the per cent of cost of each kind of raw material. It is suggested that the student find out for himself just what per cent of the total amount of raw material consumed is represented in each of the raw material accounts. It is further suggested that the student analyze the Expense account, and learn just what per cent of the total incidental amount is repre- sented in each one of the classified expense accounts. Note. — The teacher can well afford to use a number of recitation periods in developing the work outlined above. THE BUSINESS OE BANKING 293 BANKS AND BANKING THE UTILITY OF BANKS A Bank, in its simplest form, is an institution provided for the safe-keeping of money; but the ordinary commercial bank of to-day is designed to render to the public many varied and important services. The general utility of commercial banks may be stated as follows : 1. They provide a place for the safe-keeping of money and secu- rities. 2. They afford a business man an opportunity to borrow money to carry on his enterprises while his capital is locked up in merchandise or in the hands of his debtors. The credit of many mercantile houses is worth as much to them as the capital they possess. 3. They save the transmission of money from one part of the world to another, thus avoiding great risks and keeping money in more active circulation. Settlements are effected by issuing to customers a. Bankers' drafts. h. Bills of exchange. c. Letters of credit. 4. They facilitate the payment of bills by permitting money deposited to be withdrawn upon a simple order called a check. This check when issued serves the business man in various ways, which may be specified as follows : a. It saves time in paying large sums. To count the money would be a long process. h. It obviates the risk that attends the handling of money. c. It constitutes a record of expenditures and furnishes the business man convenient data from which to make entries in his books. d. When the check is canceled it serves the purpose of a receipt. 5. By issuing letters of credit they afford people who travel a means of securing money in distant parts without the risk attending the carry- ing of real money. 6. They afford excellent facilities for the collection of negotiable paper, — bills, notes, bonds, coupons, etc. 7. They are often a source of useful business information pertaining to investments and other matters. 294 ACCOUNTING AND BUSINESS PRACTICE 8. They are a means of organizing capital. 9. They tend to encourage thrift, honesty, and punctuality. Sources of a Bank's Profits The principal sources of a bank's profits may be specified as follows : 1. Money earned for discounting business paper and from lending money on good security. The available funds of a bank for lending purposes accrue from a. Amounts paid in by stockholders. h. Amounts deposited by individuals, corporations, bankers, etc. c. Accumulated surplus. 2. Charges for collecting notes, drafts, etc. 3. Interest upon bonds deposited with the United States Treasurer to secure circulation, if it be a national bank. 4. Fees for issuing drafts, bills of exchange, etc. 5. Profit on circulation, if it be a national bank. Sources of a Bank's Expenses. — The principal sources of a bank's expenses may be specified as follows : 1. Interest on special deposits. 2. Fees for collecting foreign paper. 3. Taxes. 4. Salaries and various other office expenses. Kinds of Banks. — Banks may be classified as follows : 1. National. 2. State. 3. Private. NATIONAL BANKS Distinguishing Features. — Some of the distinguishing features of a national bank may be stated as follows : 1. It is organized under the National Bank Act. Note Authentic information with reference to the organization of national banks may be obtained upon application to the Comptroller of Currency, Wash- ington, D.C., for a copy of each of the following pamphlets: "National Bank Act" and "Instruction^ Relative to the Organization and Management of National Banks." These pamphlets contain valuable suggestions for all interested in the business of banking. 2. It is always an incorporated institution. 3. It has general authority to issue circulating notes as well as to conduct an ordinary banking business. 4. It is under the direction of the Comptroller of Currency, Washing- ton, D.C. NATIONAL BANKS 295 5. Its general methods of conducting business are consistent with those of every other national bank in the United States. 6. Its stockholders are liable for twice the amount of their subscrip- tion; that is, in case a bank fails and is in need of funds to meet its liabilities, a stockholder who owns $5000 worth of stock is liable to the Comptroller to the amount of |5000 in cash in addition to the loss of his stock. 7. A definite proportion of its stock must be invested in United States bonds. 8. It must have at all times on hand an available lawful money reserve. This amount ranges from 15% to 25% of its deposits, depending upon the city in which the bank is located. 9. It must form a surplus fund. Before making a dividend it must carry to its surplus fund one-tenth of its net profits since the last pre- ceding dividend, until the fund shall amount to at least 25% of the capital stock, thereby establishing a reserve fund from which losses may be met. Organization of a National Bank. — The successive steps required to organize a national bank, together with the prescribed forms of articles of association and by-laws, are given in the pamphlets referred to on page 294. A summary of the necessary steps may be given as follows : 1. There must be at least five persons. Corporations, etc., cannot become organizers of a national bank. 2. No national bank can be organized with a capital smaller than $25,000. The minimum capital stock with which a national bank may organize varies with the size of the town or city ; as : a. Minimum capital for banks organized in towns with a population of not over 3000, 125,000. h. For towns with a population of not more than 6000, $50,000. c. For towns or cities with a population of more than 6000 and less than 50,000, $100,000. d. For towns or cities with a population of 50,000 or more, $200,000. 3. A paper is prepared, which it is expected people will sign, stating the amount of capital it is desired to raise and the number and value of the shares. This paper is circulated until the requisite amount is subscribed. 4. A name must be selected. This may be anything that does not conflict with a name already in use in that particular town or city. 296 ACCOUNTING AND BUSINESS PRACTICE 5. Written application is made to the Comptroller of Currency at Washington, giving: a. The name and location of the proposed bank. h. The amount of the capital stock. c. The names of at least five persons who are to be stockholders. 6. If the application receives the Comptroller's approval, the sub- scribers unite in Articles of Association. 7. Having executed the articles of association, the stockholders then execute a paper entitled Organization Certificate. This certificate defi- nitely specifies : a. The name and location of the association. h. The capital stock. c. The names and residences of the stockholders and the number of shares held by each. d. A general statement as to why the certificate is made. 8. The Organization Certificate is then signed, acknowledged, and filed with the Comptroller. 9. The stockholders meet and elect directors. To be eligible as a director a stockholder must a. Be a citizen of the United States. I. Own at least flOOO of the capital stock of the bank. e. Three-fourths of the directors must have resided in the state in which the association is located for a year or more preceding their elec- tion ; they must also continue to reside there while they remain in office. 10. The directors then proceed to elect a president, vice president, cashier, etc., and call in at least 50 % of the capital stock. Note. — Fifty per cent of the capital stock of a bank must be paid in before the Comptroller will give it authority to commence business, and the remainder must be paid in in five equal monthly installments. Thus the entire capital stock must be paid in within six months from the time the bank is authorized to commence business. In the majority of cases, however, stockholders contribute the entire amount of their capital at the outset of the bank's history. In many cases a surplus fund is created by the payment of an additional sum, this surplus fund serving to enhance the bank's credit and stability. 11. Another certificate is then made and sworn to by a majority of the directors. This paper certifies the following: a. The amount of paid in capital. h. The name, residence, and number of shares of each stockholder. c. That the bank has complied with the various requirements of the National Bank Act. NATIONAL BANKS 297 12. A portion of the capital stock must then be invested in United States bonds and deposited with the Treasurer of the United States. This amount varies ; as : a. It cannot be less than one-fourth of the capital stock if the capital stock is 1150,000 or less. h. If the capital stock is more than 1150,000, 150,000 in bonds must be deposited. 13. After the Comptroller has given authority for the bank to do business, a code of by-laws is adopted for the government of the bank. 14. If the Comptroller is assured that all the requirements of the law have been executed, he will give to the bank a certificate stating that it is authorized to commence business. This certificate must be published in the town or city in which the bank is located, for sixty days or more after it is issued. Circulating Notes of a National Bank. — Whether a bank avails itself or not of the privilege of taking out circulating notes, the law requires the above-mentioned deposit of United States bonds. Having complied with the law in depositing bonds, a national bank is entitled to receive its circulating notes, equal in value to the par value of the bonds deposited, unless the bonds should be below par, in which case it may receive circulating notes for only the market value of the bonds. A national bank is not required to take out circulating notes ; but having invested a part of its capital in the above manner, it is usually desirous of utilizing its credit by getting as many notes as the law per- mits. The profits on these circulating notes, in most eases, are not large, varying from 1% to 2% on the capital employed. Tax on Circulation. — A national bank is required to pay to the Treas- urer of the United States a tax of i% each half year upon the average amount of notes in circulation, secured by 2 % gold bonds. Circulating notes secured by ali other classes of bonds are subject to a semiannual tax of \%. Interest on United States Bonds. — The Comptroller authorizes the payment of interest on the bonds deposited to the bank depositing them. From this income to the bank no deduction is made for taxation, since United States bonds are exempt from taxation. Redemption Fund with the United States Treasurer. — National banks are required to keep at all times on deposit with the Treasurer of the United States 5% of their circulation. This fund is to be held and 298 ACCOUNTING AND BUSINESS PRACTICE used by the Treasurer for the redemption of woiri, mutilated, or defaced national bank notes that may be received from time to time and redeemed in sums of f 1000 or any multiple thereof. CORPORATE POWERS OF AND RESTRICTIONS ON NATIONAL BANKS The Powers possessed by national banking associations may be enu- merated as follows : 1. To adopt and use a corporate seal. 2. To have succession for twenty years, unless sooner voluntarily dissolved or their franchises become forfeited by some violation of law. 3. To sue and to be sued. 4. To elect and appoint directors, and by the directors to appoint a president, cashier, etc. 5. To adopt necessary by-laws not inconsistent with law. 6. To make contracts. 7. To exercise by their board of directors such incidental powers as may be necessary to carry on the general business of banking ; such as discounting paper, receiving deposits, loaning money on personal secu- rity, buying and selling exchange, etc., obtaining and issuing circulating notes. The Principal Restrictions placed upon national hanking associations may be enumerated as follows : 1. National banks cannot hold real estate except on the following conditions : a. Such as may be needed for their immediate accommodation in the transaction of business. h. Such as may be mortgaged or conveyed to them in good faith by way of security for debts previously contracted. c. Such as they shall purchase at sales under judgments, etc., held by the association. Possession of real estate under mortgage, or title and possession of any real estate purchased to secure debts due to national banks, cannot be held for a longer period than five years. 2. No increase or reduction of the capital stock of national banks can be made without the approval of the Comptroller. No increase is valid until the full capital stock has been paid. 3. They are prohibited from loaning a person or a firm an amount exceeding one-tenth part of their capital. This restraint is to prevent excessive loans, which always impair the general usefulness of a bank. NATIONAL BANK OFFICEES AND CLERKS 299 4. They cannot use their own circulating notes to pay for or increase their capital stock. 5. They are expressly prohibited from certifying a check in excess of a depositor's account. NATIONAL BANK OFFICERS AND CLERKS OfElcers. — The officers of a national bank are chosen by the board of directors to superintend and direct its affairs. These are usually : President. Vice President. Cashier. Assistant Cashier. Clerks and Employees. — Among the clerks and employees of a bank are: receiving teller, paying teller, note teller, general bookkeeper, individual bookkeeper, discount clerk, collection clerk, correspondence clerk, runner, porter, watchman, and such other assistants as the. char- acter and extent of the business maiy create a necessity for. The Bank of England employs about one thousand clerks. The President is the official head of the bank. The bank is dependent upon him for its standing, and it is therefore highly important that he be a man of the strictest honor and integrity, with a very considerable knowledge of men and financial affairs. He should, by considerate action, an accurate knowledge of character, a keen interest in the movements of trade, have under his command all the forces that tend to enhance his bank's interests. His most important duties may be specified as follows : 1. To preside at all the meetings of the board of directors. 2. To furnish such information concerning the bank's transactions as may be desired by the directors. 3. To adopt a policy which will govern the bank in its operations. 4. To be influential in securing depositors. 5. To sign circulating notes and certificates of stock. 6. To be alert in watching the loans of the bank to see that they do not go beyond safe limits. The Vice President, in the absence of the president, takes his place and performs the duties of the office. In some of the larger banks of the country this officer shares the responsibility of the president and aids in extending the efficiency of the bank's service. The Cashier ranks next to the president and vice president, and has certain duties to perform. These duties are mentioned in the law under 300 ACCOUNTING AND BUSINESS PRACTICE which the bank exists. His most important duties may be stated in a general way as follows : 1. He acts as secretary of the board of directors and keeps a record of all business transacted at their meetings. 2. He supervises various departments of work and sometimes employs clerks and prescribes their duties. 3. He conducts the correspondence of the bank. 4. He signs certificates of stock and circulating notes. 5. He pays out the bank's funds and borrows money in the name of the bank. 6. He indorses all paper that is sent away for collection. 7. He signs the checks of the bank and draws drafts on correspondents. 8. He may indorse the bank's paper for the purpose of securing loans. 9. He should aim to build up the business of the bank and commend it to public favor. The Assistant Cashier is employed only in the larger banking institu- tions of the country. His official signature is recognized in everything the same as the cashier's, except in the bank's reports to the Comp- troller of Currency. He assists in performing any of the duties ordi- narily devolving upon the cashier. PROPOSITIONS ILLUSTRATING THE OPENING ENTRIES OF A NATIONAL BANK 1. («) A national bank is organized with a capital stock of §300,000. (6) The capital stock is fully paid in. (c) Also a surplus fund of $50,000 is created and paid, (d) United States bonds with a par value of 1100,000 are purchased for |101,500 cash, (e) Circulating notes to the extent of f 100,000 are received from the Comptroller of Currency and duly signed. (/) 15000 is forwarded to the Treasurer of the United States, as provided by banking laws, to redeem worn-out and mutilated circulating notes, (g) Disbursements ordered by the board of directors amount to $2900. Required the necessary opening entries. Give them in ordinary journal form. To THE Student. — The above proposition gives a statement of the usual transactions resulting from the organization of a national bank. If you have the successive steps of organization well in mind you are now ready to study the follow- ing entries. To show the various debits and credits, the entries are all given in journal form. After a careful study of the entries for proposition No. 1, take a sheet of journal paper and make the entries for proposition No. 2. NECESSARY ENTEIES 301 Necessaky Entkibs Subscription To Capital Stock $300000 $300000 Cash To Subscription Cash To Surplus Fund (0) (d) Premium on U.S. Bonds U.S. Bonds to secure Circulation To Cash (^) Cash To Circulation (/) Redemption Fund with U.S. Treasurer To Cash i9) Expense To Cash 300000 60000 1500 100000 100000 5000 2900 300000 60000 101500 100000 5000 2900 2. (a) A national bank is organized with a capital stock of $200,000. (b) The first installment of 50% of the capital stock is duly paid. (c) United States bonds with a par value of $75,000 are purchased for $76,000 cash, (d) Circulating notes are received from the Comptroller of Currency for $75,000 and duly signed by the president and cashier, (e) One of the stockholders makes a further payment of $20,000 to apply on the capital stock. (/) The necessary 5% redemption fund is forwarded to the Treasurer of the United States to redeem worn and mutilated circulating notes, [g) Disbursements ordered by the board of directors amount to $3100. Required the necessary opening entries. Make them in ordinary journal form. To THE Teacher. — The teacher ■will find it a most helpful exercise to require the students to analyze fully each of the entries called for in the foregoing propo- sitions. This ■will, at the outset, firmly fix in mind the fundamental principles in the orgamzatiou of a national bank. 302 ACCOUNTING AND BUSINESS PEACTICE TRUST COMPANIES Organization. — Trust companies are in reality banking institutions organized under and subject to the laws of the different states. The Business of Trust Companies ranks among the important activities of commerce. Since trust companies are state institutions, their man- agement and scope vary in the different states. In general the business of trust companies may be stated as follows : 1. They receive money on deposit, subject to checks, the same as national banks. 2. They allow interest on special deposits, usually on amounts above a specified sum. 3. They make loans in the same careful, conservative way that is so characteristic of national banks. 4. Where they have superseded state banks they undertake the collection of commercial paper. 5. They are usually connected with the clearing house, either directly or through some convenient national bank. 6. They receive on deposit money, government securities, stocks, bonds, coin, jewelry, valuable papers and documents, evidences of debt, etc., upon such terms and conditions as may be agreed upon. 7. They collect and disburse the interest or income, if any, upon property received on deposit and at maturity collect and disburse the principal of such property as produces interest or income. 8. They act as trustees for widows and children. 9. They act as agents in transferring stocks and bonds. 10. They act as agents for the care and management of invested property. 11. They may be appointed by probate courts as receivers, executors, administrators, etc. 12. They are usually authorized to receive and hold moneys and property in trust and on deposit from courts of law and equity, executors, assignees, guardians, and trustees upon such terms and agreements as may be decided upon. Note. • — In Massachusetts and some of the other states trust companies are required to maintain a reserve fund similar to the reserve fund of national banks, and to annually set aside 10% of their net earnings as a surplus or guaranty fund until such fund amounts to 25% of their capital stock. The liability of the stock- holders is also the same as that of the stockholders of a national bank. STATE BANKS 303 STATE BANKS Organization. — State banks are organized under and subject to the regulations and restrictions of the banking department of the particular state in which they are located. The preliminary steps necessary in the organization of a state bank are quite similar' to those already out- lined for national banks. State and National Banks compared. — State and national banks may be compared as follows : 1. Their management is similar. 2. Their scope is nearly the same. 3. They are equally careful and conservative in the matter of making loans. 4. In many cases the protection afforded the creditors of state and national banks is equally strong. State and National Banks contrasted. — State and national banks may be contrasted as follows : 1. National banks are organized under and subject to national law and authority. State banks are purely state institutions, organized under and subject to state law and authority. 2. National banks issue circulating notes, while state banks do not. N"oTE. — Prior to July 1, 1866, state banks issued circulating notes. On that date an amendment to the National Bank Act imposed a tax of 10% on these notes. This tax proved too high to allow any profit to the state banks, and the circulating notes were withdrawn. 3. National banks are subject to a more critical examination than state banks. 4. National banks are required to make fuller returns to United States officials than state banks are required to make to state officials. 5. National banks are required to invest a portion of their capital in United States bonds. State banks are not. 6. On the whole the numerous requirements of the National Bank Act strengthen public confidence in national banks and make them more popular institutions than state banks. Note. — In Massachusetts and a few other states there are no state banks, l6an and trust companies having superseded them. Authentic information respecting the organization of state banks and trust companies may be obtained by addressing the proper Secretary of State. 304 ACCOUNTING AND BUSINESS PRACTICE PRIVATE BANKS Organization. — Private banks are organized in the same manner as ordinary partnerships. They may belong to an individual or a firm. Functions. — The business of private banks varies in different locali- ties. In many cases they possess the principal functions of national banks ; in other cases their attention is directed only to special features of banking, such as the buying and selling of foreign exchange, stocks and bonds, etc. Protection to Creditors. — In a few states private banks are restricted in their operations by statute, in which case they are subject to the inspection of state officials ; but usually their operations are regulated and restricted only by the common laws of business. Thus it will be seen that their safety is dependent upon the integrity and financial responsibility of the individuals conducting them. Note Private bankers are quite numerous in nearly all large cities, their capital stock aggregating, in some instances, more than the capital stock of national banks. Some private bankers make a specialty of loaning their capital for the promotion of business enterprises, taking for security the stocks and bonds of the enterprise pro- moted. These stocks and bonds are disposed of to customers, usually at a good profit. REVIEW QUESTIONS 1. State the principal functions of a commercial bank. 2. Briefly outline the principal advantages of making payments by the ordinary bank check. 3. A busi- ness man is about to pay a bill of $49.75. He finds that there is over $200 in currency in his safe. He has a good-sized bank account. Which vpould be the more business-like way of paying his bill, by check or in currency ? Why ? 4. Name the principal sources of a bank's profits. 5. From what do the available funds of a bank for lending purposes accrue? 6. State the principal soiirces of a bank's expenses. 7. Name the three general classes of banking institutions. 8. Name the chief distinguishing features .of a national bank. 9. Why are the underlying principles of the national banking system practically uniform? 10. State the indi- vidual liability of the stockholders of a national bank. Illustrate. 11. What lawful money must the national banks in your city have at all times on hand? 12. Define the following: (a) surplus fund; (b) United States bonds; (c) incor- porated institution ; (d) National Banking Act. 13. How many persons are required to form a national bank ? 14. Could the number be made up wholly or in part of fictitious persons, as corporations, etc. ? 15. What is the minimum capital under which a bank may organize in your city ? 16. State the law with reference to the minimum capital required to organize a national bank. 17. A national bank is being organized in your city. There are already a nuxnber of national EEVIEW QUESTIONS 305 banks doing business there. Could the new bank adopt the name First National Bank ? There is no other bank of that name in your city. Give reasons for your answer. 18. What per cent of the capital stock of a national bank must be paid in before the bank can be authorized to commence business? 19. State the necessary qualifications for a bank director. 20. What is generally the par value of a share of national bank stock ? ^ 21. Suppose a national bank is formed with a fully paid in capital of $300,000. Another national bank is formed at the same time with a capital stock of f 200,000, and a surplus fund of $100,000, both amounts f uUy paid in. Which bank in your judgment is the stronger institution ? Why ? 22. What proportion of the capital stock of a national bank must be invested in United States bonds V 23. Why is there no tax levied on United States bonds ? 24. Define the following : (o) circulating notes ; (b) redemption fund with the United States Treasurer. 25. Is a bank bound to take out circulating notes ? 26. Do almost all national banks carry circulating notes? Why? 27. What per cent of the bonds deposited may the circulating notes be? 28. What is the market value of United States 2% gold bonds at the present time? 29. Are circulating notes a source of profit to national banks? 30. What is the yearly tax on national bank notes? 31. Are the United States bonds deposited with the United States Treasurer a source of income to the bank depositing them? Explain. 32. For what is Redemption Fund with the United States Treasurer created ? How is the amount of it determined ? 33. A fire occurs in A's warehouse. In the office of this warehouse $500 in national bank bills are burned to ashes. Has anybody gained by this destruction of bank notes ? Explain. 34. State the principal corporate powers of national banks. 35. Under what con- ditions may a national bank hold real estate ? 36. How can a national bank increase or diminish its capital ? 37. Why are national banks prohibited from using their own circulating notes to pay for their capital stock ? 38. By whom are the officers of a national bank chosen ? 39. Name the usual officers of a national bank. 40. Name the usual clerks employed in the average national bank. 41. Why should the presi- dent of a bank be a man of extended experience and superior ability? 42. State the principal duties of the average bank president. 43. Where there is a vice president in a bank what are his duties? 44. State the most important duties of the cashier of a national bank. 45. When there is an assistant cashier what are his duties? 46. Give the initial opening entry for a national bank. 47. Give the entry for the payment of the capital stock. 48. Give the entry for the purchase of United States bonds at a premium. 49. Give the entry for taking out circulating notes. 50. Give the entry for the funds remitted to the Treasurer of the United States to redeem worn and mutilated circulating notes. 1 The National Banking Act now requires the shares of stock to have a par value of $100, in harmony with the usual practice of joint-stock companies throughout the country. Some of the state hanks, however, were originally organized with shares having a par value of $50. Where these banks were later changed into national banking associations they were given the privilege of forming with shares of a par value of |50. This may account for the fact that some national banks have shares whose par value is less than ' 306 ACCOUNTING AND BUSINESS PEACTICE SET X — BANK ACCOUNTING Object. — This set is designed to illustrate in as brief a way as pos- sible the practical workings of an ordinary national bank. In order to get at the work directly the various books are opened from statements showing the condition of a bank that is in operation. To open a bank and gradually bring it to a well-organized and paying institution would be a long, unnecessary process. In order to illustrate the closing entries in bank accounting, state- ments are made and dividends declared March 3. Books used. — The books illustrated in this set are : general balance ledger, individual ledger, discount register, discount tickler, collection register, collection tickler, draft register, remittance register, certified check book, general cash book, and paying and receiving tellers' check sheets. For greater clearness and more satisfactory results in the schoolroom the various uses of these books, and. the ordinary routine of entries resulting from the transactions recorded in them, are illustrated and explained in connection with the various departments of bank routine which make up the set. Auxiliary Books. — The auxiliary books and records necessary in the organization of a national bank are essentially the same as those of any other joint-stock company or corporation. These books may be briefly referred to as follows : 1. Subscription Book, made up of a record of the names of the persons subscribing for stock and the number of shares wanted. 2. Stock Certificate Book, containing the receipts showing the number of shares delivered to each stockholder. 3. Installment Book, in which are written the names of the stock- holders and the amo\int paid by each. 4. Transfer Book, in which is written a history of the certificates canceled and of the new ones issued. 5. Stock Ledger, showing the amount of capital stock and the balance to the credit of each stockholder. 6. Minute Book, in which are recorded the proceedings of the board of directors. T. Dividend Book, in which are recorded the names of the stock- holders, the number of shares owned, the amount of their dividends at various dividend periods, and receipts for the payment of dividends. SET X— BANK ACCOUNTING 30Y Classified Work. — The work of the set is so classified that the student is made to see the principal duties devolving upon the various officers and clerks in the daily routine of recording the transactions of the bank. This classification gives the student practice in the performance of the chief duties of : 1. Paying teller. 5. Collection clerk. 2. Receiving teller. 6. Correspondence clerk. 3. Note teller. 7. Individual bookkeeper. 4. Discount clerk. 8. General bookkeeper. 9. Cashier. General Directions and Suggestions. — In this set Commercial National Bank is the name under which the banking association is incorporated. The location is Boston, Mass. The student is about to familiarize himself with the details of an ordinary national banking institution, and he will be carefully instructed as to the duties of the various officers and clerks by : 1. Being allowed to examine carefully the present condition of the books used. 2. Being specifically instructed as to the powers, responsibilities, and general duties of the various officers and clerks. 3. Being allowed to make further entries in tlie various books during the progress of each day's business. WORK OF THE DISCOUNT CLERK The records of the discount clerk are to be examined first. These records are found principally in the discount register and discount tickler. The Discount Register contains a full record of all paper accepted for discount. It is the bill book of the bank and gives, in addition to the information ordinarily contained in a common bill book, the amount of discount and collection and exchange charged, the proceeds of the paper, etc. The illustration on pages 308 and 309 is self-explanatory. It shows a day's records, with the necessary check marks, etc. No record is made in the discount register at the maturity of paper; therefore it will not be necessary for the student to enter the discounted paper on hand in the discount register. The Discount Tickler contains a classified record, with reference to maturity, of all the paper entered in the discount register. These records are made to "tickle," or remind, the discount clerk to have paper presented for payment at the proper time. 308 ACCOUNTING AND BUSINESS PRACTICE Discount DATE DIS- COUNTED FOR WHOM DISCOUNTED MAKES OR PAVER INDORSER WHERE PAYABLE NUM- BER DATE OF PAPER 19— June 20 20 20 20 20 D. E. Avery Powers & Sprague E. V. Buckley & Son J. H. Crandall Bodge Bros. "Wilson & Son C. Eeardon & Co. W. 0. Badoliffe Prey & Mason Rogers, Peet & Co. Cook Bros. Bates Bros. Alliance Nat'l, City Farmers Bank, Chicago First Nat'l, Syracuse Our Bank Traders Nat'l, Phila. 230 231 232 233 234 ID- Apr. May Apr. June 20 1 1 15 15 As soon as paper is accepted for discount it is entered in the discount register, the due date is written across its face in red ink, and it is recorded in the discount tickler under the proper number and date. After these records have been completed the notes are carefully checked back from the tickler. The tickler is generally ruled in sections for each day in the year. At the top of each section is printed the day and date. The Remarks column is used for noting irregularities in payment, etc. Discount Monday, NO. PAYER WHERE PAYABLE TO WHOM SENT 800 C. W. Sail & Co. Our Bank 8S1 Morton & Davis First National Bank, Bvffalo Traders National, Btiffcdo 8^7 C. W. Carey Allston & Co., Bankers, City Tuesday, 78^ Baymond Bros. Union Trust Co., City 790 Stickney, Poor & Co. National City Bank, Brooklyn Chemical National Bank, N.T. 765 F. E. Sherman Our Bank 778 De Young Bros. Citizens Bank, Troy Farmers Bank, Albany Paper to be entered in the Discount Tickler. — The following dis- counted paper is now in the possession of the bank and is shown by the uncanceled records in the discount tickler. Take your discount tic- kler and enter this paper, being guided by the accompanying model. SET X — BANK ACCOUNTING 309 Register TIME WHEN DUE TERM OF DIS- COUNT RATE OF DIS- COUNT AMOUNT OF PAPER INTEREST AND DISCOUNT COLLECTION AND EXCHANGE PROCEEDS TO BE CREDITED TIC- KLER CK. REMARKS 3 mo. 3 mo. 90 da. 90 da. 30 da. 19— July Aug. June July 20 1 30 14 16 30 da. 42 da. 10 da. 24 da. 25 da. 6% 6% 6% 6% 2000 IBOO 900 6000 3000 10 ^ 10 1 24 12 50 50 BO 1 3 88 75 1990 1487 898 5976 2983 62 50 75 • s/ Issued Casliier's Ck. v' 13400 58 50 5 63 • 13335 87 Write dates in the discount tickler as follows : March 1, 2, 3, 4, 5, 6, 9, 11, 12, 16, 26, 26, 29, 31, and April 1. Do not show any totals at this time, as the entries in the general debit and credit books will not be made until the general bookkeeper's work is given. Note. — In. this work all paper maturing on Sundays or legal holidays should be entered in the ticklers under the date of the first business day following. The statutes of the different states, however, are not uniform on this point. Feb. 15, 19- Tickler BY WHOM DISCOUNTED AMOUNT TO BE COLLECTED CK. REMARKS Decker Bros. D. E. Avery E. L. Howard 7S00 1500 9000 •J Cash Charged to Traders, Buffalo Certified, Allston & Co., Bankers 18000 Feb. 16, 19 — W. I. Pratt 2500 •J Protested. Fees, fl.75. Charged to Pratt J. 0. Baker 3000 -v\L c/. €.aX>^attonal utiank of i/Ceoe/nptio/t JLaif to the ofden of Nature of Deposits. — As deposits come in from customers they may consist of any one, or all, of the following items : 1. Currency. 2. Orders payable through the clearing-house association. 3. Orders payable out of town. 4. Orders payable by our bank. 5. Orders payable by bankers in our city not members of the clearing-house association. Classifying Items on the Deposit Ticket. — As a deposit comes in, the receiving teller places the deposit ticket before him and pro- ceeds to count the coin and bills. If they are found to agree with the amounts on the ticket, a check mark ( V) is placed at the left of the items listed. Each check, draft, or other bankable instrument is then carefully examined to see if it is properly indorsed. If this paper is approved, it M next checked off and classified on the deposit ticket as follows : 1. If payable by a bank which is a member of the clearing-house association, the clearing-house number of that bank is written at the left of the item. 2. If payable by an out-of-town bank, a cross ( X ) is written at the left of the item. Note. — Sometimes deposit tickets are provided with a separate column for items payable out of town. In such cases the out-of-town items are sufficiently classified when the deposit ticket comes in to the receiving teller. 322 ACCOUNTING AND BUSINESS PRACTICE 3. If payable by a city bank not a member of the clearing-house association the letter O is written at the left of the items. NoTB. — O is intended to signify Office, a term meaning that the paper is payable at some banking or business office in the city instead of through the clearing-house association. These items are sent by runners and payment received in cash or by an acceptance payable at a clearing-house bank. If the paper is accepted instead of paid, it is returned and entered with the exchanges for the clearing-house associa^ tion for the following day. 4. If payable by our bank, the letter B is written to the left of the items. DEPOSITED IN THE Moston, •S-'e/f-. /5, 19— Dollars Cents Specie . . v" ^00 Bills . . V 700 Check . . . ... #37 SfO 99 € / SOO SO #/^ / V-00 ^ •500 18 700 s 1^1 '^9 Teaksactions for the Receiving Teller, March 1 Take the blank for receiving teller's daily check sheets and enter the following deposits. Study very carefully the form given on page 319, and if you do not understand any point, consult your teacher. The nature of the deposit in the following transactions is indicated by the characters just explained. SET X — BANK ACCOUNTING 323 Decker Bros., V.f600, B |1500, B $720.50. Mace,Gilmore & Co., V 1720, V $iOO,# 61 $1290, #4 11500, #31 1650. Spencer, Mead & Co., B $1250.20, B $340.20, X $1340.20, x $1343.46, X $342.90 ; less collection, $2.76. D. B. Roberts, V$120, V $60, #32 $950.60, O $1625, B $72.60. Fernald, Son & Co., \/ $725, B $650.60, O $900, X $1750 ; less col- lection, $1.75. W. I. Pratt, V $120, B $1625, X $1900; less collection, $1.90. F. E. Sherman, O $156.90, B $1750, #15 $165.90, V $7200. C. E. Denison, X $1590.60, V $2500, B $200, #12 $1560; less col- lection, $1.50. Thomas Bennett & Co., V $400, B $262.90, B $40.50, B $200, # 60 $4126.20, # 11 $2142.10, # 5 $1462.90, # 3 $2460.10, x $1325.62, X $1462.91, X $142.10; collection, $2.25, paid in cash. Note. — When the collection charges on any paper deposited are paid in cash the amount is not deducted from the deposit slip. On the receiving teller's sheet the items of deposit and collection charges are entered as usual, and, in addition, the amount of the collection charges is written in the Currency column. E.L.Howard, V $1450, B $1242.10, X $1121.40, x $24.16, X $142.60; less collection, $1.25. Charles J. Kennedy, V $350, #17 $1210, #27 $1620.40. E. V. Buckley & Son, X $621.40, X $340, X $4000; less collec- tion, $1. Foot the columns of the receiving teller's daily check sheet. The , sum of the first five columns should .equal the sum of the last two. Make out the Recapitulation and Proof blank. Bills on hand, $10,760 ; coin, $987.25. You have given to the paying teller during the day $2900. The remaining items of the proof are taken from the receiving . teller's daily check sheet footings. The debit and credit sides of your proof should balance. Submit the receiving teller's work to your teacher for approval. WORK OF THE PAYING TELLER The records of the paying teller in this set are to be found on the paying teller's daily check sheets. Paying Teller's Daily Check Sheet and Proof. — A great variety of forms of this sheet is used by banks. The nature of the records in this department would depend upon the general routine and volume of the work of any particular bank. The sheet on pages 324 and 325, with 324 ACCOUNTING AND BUSINESS PRACTICE Paying Teller's Daily PAYMENTS CK. B OUR BANK # CLEARING HOUSE X OUT-OF-TOWN OITV OFFICE EXPENSE s/ Melds Milling Co. SOO %/ Charles J. Kennedy 13000 s/ C. E. Selover & Co. 7B0 \/ C. M. Denison (N. T. D.) 560 75 ^ D. E. Avery {N. Y. D.) UO 60 V J. S. Crandall 1001 60 V W. I. Pratt Bunker Hill Traders Park Square Traders, Buffalo Alliance, Springfield Farmers, Albany Mechanics Powers Coal bill Carpenter work S38 75 10160 300 560 40 1346 7645 1900 50 90 40 200 150 6 9 50 50 15961 50 11020 40 10892 SO 350 15 Recapitulation RECEIPTS 1. Cash from yesterday 90150 50 S. IBeceiming Teller 9200 50 3. Note Teller 11420 4. Jtecelvin(( Teller (Special) 14000 S, Collection and Exchange S.^, 12.°° 15 e. Xew Tork Drafts 2100 7. Balance from Clearing Souse 7120 60 I34OO6 SO SET X — BANK ACCOUNTING 325 Check Sheet and Proof RECEIPTS Saturday, April 7, 19^ SALE OF NEW YORK DRAFTS SOLD FOR CASH J. M. Cox & Co. B. BaUe & Co. SOLD FOR CHECK C. E. Benison D. E. Avery J&alance from yesterday's proof deceiving TelleVf fram yesterday Note Teller, from yesterday deceiving Teller (Special) tt tt it Balance from Clearing/ XCouse 500 800 560 2100 75 00 SUNDRY RECEIPTS 90150 9000 5000 7120 1S1891 50 50 SUNDRY COLL. i EXGH. S5 65 00 and Proof PAYMENTS 1. Checks on our Hank 15961 50 9. Clearing-Bouse Checks 11020 40 3. Out-of-town Checks 10892 80 4. City Office Items 350 S. Sundry JExpense 15 6, Balance to Clearing Souse 7. Cash on hand 95766 80 134006 50 326 ACCOUNTING AND BUSINESS PRACTICE slight modifications, is representative of the paying teller's records in many large banks of the country. As will be readily seen, all money paid out or received by the paying teller at the time of such disbursement or receipt is entered on this daily check sheet. Recapitulation and Proof. — At the close of each day's business the paying teller prepares the proof, showing the character and condition of the cash on hand, and the receipts and disbursements during the day. The items of this proof may be explained as follows : Receipts 1. Balance on hand from the previous day's proof. 2. Bills and coin received from the receiving teller at the close of the previous day's business. 3. Bills and coin received from the note teller at the close of the previous day's business. 4. Cash transferred from the receiving teller during the day. 5. Receipts for collection and exchange. 6. Receipts for the sale of drafts. 7. Balance (if any) paid by the clearing house. The clearing-house balance may appear on either side of the paying teller's proof sheet. If the amount of the checks, drafts, etc., taken to the clearing house is greater than the amount of cheeks received there, the clearing house pays the settling bank the difference, and the amount is counted among the receipts on the paying teller's proof. If the amount of the checks received at the clearing house is, greater than the amount of checks brought, the bank settling pays the clearing house the difference, and this amount is counted among the payments on the paying teller's proof. Payments The items on this side are self-explanatory, since they are merely the footings of the payments on the check sheet summarized. The cash on hand is the total bills and cpin in the possession of the paying teller at the close of the day's business. These bills and coin are generally classified as follows: 1. National bank notes. 5. Silver certificates. 2. Gold coin. 6. Legal-tender notes. 3. Gold certificates. 7. Subsidiary silver coin. 4. Silver dollars. 8. Minor coin. SET X — BANK ACCOUNTING 327 The Duties of the Paying Teller may be specified as follows : 1. He is the custodian of the cash, and the general disbursing officer of the bank. 2. He cashes checks presented by customers and others. 3. He certifies the checks of customers. 4. He may sell bank drafts. The paying teller's position is charged with more responsibility than that of any other person in the bank, except the officers. He must be a man of the strictest integrity, possessed of tact, and thoroughly con- versant with the laws governing bank checks and drafts. His most responsible duty is to see that no money is paid out improperly. Among the many things that he should have in mind when checks are presented the most important may be stated as follows: 1. Signatures of customers. 2. New signatures, powers of attorney, notices stopping payments of checks, etc. 3. Definite knowledge of the parties presenting vouchers. 4. Average balances of customers, so that overdrafts may be prevented. When checks, etc. are received the paying teller should note : 1. That they are properly dated. 2. That they are indorsed. 3. That the amounts written in words agree with the amounts written in figures. Form of Certified Check Boston, ^^l,, SiA. fO, r9— J^o. 720 1 O J i ^ ^«y mtil^o^^o% h. (yyui ^ ^., f7500r '^olL UPS ^tiohnMf; S'cm, S^ §0-, The Certified Check Book. — The paying teller preserves a record of all checks certified, in a book kept especially for this purpose. From 328 ACCOUNTING AND BUSINESS PRACTICE this book the customer is charged in the individual ledger and Certified Checks credited. The following is the usual form of this book. Certiiied Check Book DATE CERTIFIED 19— Feb. Fet>. DRAWER OF CHECK D. B. Eoberts Thos. Bennett & Co. Spencer, Mead & Co. W. I. Pratt J. 0. Baker Decker Bros. F. E. Sherman FOR WHOM CERTIFIED D. B. Eoberts M. D. Borrows W. W. Bennett "W. I. Pratt Elwood & Sperry Reardon & Smith F. E. Sherman AMOUNT OF CHECK 5000 1750 2000 8750 1500 2000 7249 1500 12249 20 20 19— Feb. Feb. 5000 1750 1500 2000 1500 Transactions for the Paying Teller, March 1 Take the blank for paying teller's daily check sheets and enter the following transactions. Study very carefully the form given on pages 324 and 325. Consult your teacher if you need to. 1. Checks on our bank paid to-day are as follows : Charles J. Kennedy (New York draft), $420.75; F. E. Sherman, 11200; Powers & Sprague, $1000; Lane, Rowell & Co., $300; Wyckoff, Seamans & Benedict, $450 ; Janis, Cooper & Tremper, $1500; Fields Milling Co., $500; J. O. Baker, ' $1049.75 ; W. I. Pratt, $725. 2. Checks on clearing-house banks paid to-day are as follows : Bunker Hill National Bank, $920 ; Suffolk National Bank, $750 ; Colo- nial National Bank, $609.05; Shoe and Leather Bank, $500; Third National Bank, $400 ; Metropolitan National Bank, $725 ; Eliot National Bank, $1250.40; Citizens National Bank, $4120.40; Park Square National Bank, $2140.50 ; New England National Bank, $1440.50. 3. Checks on out-of-town banks paid to-day are as follows: ManufaTJturers and Traders Bank, Philadelphia, $700.50; collection, 75/. Bank of Commerce, Baltimore, $1300; collection, $1.25. Fourth National Bank, Hartford, $3250; collection, $3. Farmers Bank, Albany, $1500 ; collection, $1.50. 4. Checks on banks in our city not members of the clearing house, paid to-day, are as follows: Union Trust Co., $300; Powers Bank, $572.50. SET X — BANK ACCOUNTING 329 Sold the following drafts on Chemical National Bank, New York. 1. Sold for cash : Frey & Thomas Co., 11500; exchange, |1.50. David Gray, $500; exchange, 50/. Charles M. Miner, $750 ; exchange, 75/. 2. Sold for check : Charles J. Kennedy, 1420.50; exchange, 25/. Enter the above on the paying teller's daily check sheet. Open the certified check book. There is but one unpaid check, as follows: check of Wyckoff, Seamans & Benedict, dated Feb. 23, certified for Elliot Mfg. Co., 117,500. Draw a double red line immediately under this amount, so that it will not be counted when the certified checks for to-day are footed. Certify the following checks: J. H. Crandall, 11200; C. E. Denison, $500; W. I. Pratt, $600. Enter the above in the certified check book. Pay cashier's charge ticket for 2 tons of coal, $9.50. The items for the Sundry Receipts column are as follows : BiUs and coin from yesterday's proof, $206,710.81; bills and coin received from the receiving teller at the close of yesterday's business, $15,280.45 ; bills and coin received from the receiving teller during the day, $2900; bills and coin received from the note teller at the close of yesterday's business, $5504.40 ; received from the clearing house for to-day's exchanges, $31,863.11. Add the columns of the paying teller's daily check sheet. Make out the Recapitulation and Proof blank. A careful count of the cash now on hand under various heads (subdivisions of bills and coin only) shows an amount of $237,804.92. Foot the certified check book. Submit your paying teller's records to your teacher for approval. Note. — The paying teller makes out his proof before the cash from the receiv- ing teller and note teller has been turned over to him. After the receiving teller and note teller respectively make their proofs they turn over the balance of cash in their hands to the paying teller. These amounts appear on the paying teller's proof on the day foUovnng. WORK OF THE NOTE TELLER The Duties of the note teller are diificult to define, since there is a wide difference among banks as to the work assigned to this clerk. In nearly all banks, however, he is required to present for payment such notes, acceptances, coupons, etc., as are due and payable in the city, 330 ACCOUNTING AND BUSINESS PRACTICE and to collect the city office items turned over to him at the close of each day by the receiving teller, paying teller, and correspondence clerk. The Runners of the bank are generally under the supervision of the note teller. These runners are assigned a definite route, which they cover daily, and present for payment or acceptance such paper as may be allotted to them. They keep a route book, in which is recorded a full description of such paper. The Note Teller's Records. — As a rule the charge and credit tickets, letters, or other memoranda which affect the general ledger, the credit tickets for the proceeds of bills discounted, and collection items for the individual ledger pass through the note teller's hands before reaching the general and individual bookkeepers. To make this work as simple as consistent with approved banking practice, we have deviated from this plan to the extent of deferring these items until the enumeration of the memoranda for the general and individual bookkeepers' transac- tions is given on subsequent pages. The note teller's daily check sheets and proofs will therefore be omitted. The sagacious student, however, would soon perceive the offices and possibilities of these sheets in banks making use of them. Charging Notes to Out-of-Town Banks. — Notes and drafts discounted, payable out of town, are usually sent away for collection about ten days before they are due. At the maturity of these notes and drafts they are charged to the banks to which they are remitted, without waiting for letters advising collection. Each morning the discount clerk takes the bills discounted, payable in the city and falling due on that particular day, from the note file and compares them with the items listed on the discount tickler, after which they are handed to the note teller for collection. As the paper is disposed of a record is made in the Remarhs column of the discoimt tickler. Make the proper records in the discount tickler for the paper disposed of to-day. In the Remarhs column write : For No. 889, Charged to Pratt. For No. 866, Charged to Traders National. For No. 842, Charged to Traders National. For No. 893, Certified, M. N. B. ■ For No. 901, Certified, E. N. B. Note. — Nos. 866 and 842 will be charged to the banks specified at their face. It is customary with banks not to make any record of collection and exchange on such items until the bank to which the notes were remitted sends notice of collection. SET X — BANK ACCOUNTING 331 Rule and foot the discount tickler. (See model, pages 308 and 309.) Each morning the collection clerk proceeds, in much the same manner as the discount clerk, to turn over to the note teller the collections payable in the city and falling due on any particular day. As this paper is disposed of a record is made in the Remarks column of the collection tickler. Make records in the collection tickler for the paper disposed of to-day. In the Remarks column write : For No. 744, Paid, S/1. For No. 765, Paid, 3/1. Collections are not charged to the banks to which they are sent until a report of collection has been received. Farmers Bank, Albany, reports that collections 650 and 702 have been paid and placed to the credit of your account. In the Remarks column of the collection tickler write : For No. 650, Charged Farmers Bank, 3/1. BanKs collection, $1.75; our collection, 7S/. For No. 702, Charged Farmers Bank, 3/1. Bank's collection, $1.20; our collection, $3. Form of Letter advising of Collections Credited John 0. Norris, President Robert Hall, Vice President L. H. PlERSON, Cashier National Exchange Bank Albany, N.Y., S'e.{^.. /2, 19 Mr. @Aa^. Z#, /-fcwyyittcyyv, Cashier Dear Sir, — We credit your account this day for the proceeds of collections as stated below. Respectfully yours, L. //. ii&'MAyyo, Cashier YOUR NO, PAYER AMOUNT CHARGES PROCEEDS 720 7/6 6(^S 710 (g. €.. Bcyyul W-. ,&. £cyn^ ^00 ^00 7S0 600 S / / 50 SO 25 7Ji.i: €. (g. BouUfS., (Bashief BooZcyn, TfliM^. £Dear Sir, -Please find, hepeivith for CREt>IT to oun account the items listed, beloiv. DATE DRAWEE ITEMS AMOUNT CHARGED <^6^, 23 2S 750 600 90 IS/ cJi-j /SO <3^io-cl. 220/ 80 /5 V 3^6 250 60 c^6^. /6 >/ 336 800 / S ^ 3£r 600 f6 /6 V 336 60S 20 / 5 3S8 JfCfq 66 /6 >/ 337 600 15 / 5 •J V 3^9 330 1 600 760 /6 • 338 6^ Jf-/6'f i ifseo 60 ffe^-. 16 V 33/ 720 /6 33S S80 V-0 16 y/ 333 600 <^0 /6 ^/ 33^ Swd. 700 60 2201 80 336 ACCOUNTING AND BUSINESS PRACTICE Special Agents or Correspondents A bank does not enter into busi- ness relations with every individual bank from which checks and drafts may be received. In the course of a month a large bank would have paper for collection payable at. many hundred banks located at different points throughout the country. To send this paper to the various banks upon which it is drawn would be most inconvenient as well as expensive. To obviate this, banks have special agents or correspondents located at convenient centers through which it makes' its collections. This arrangement simplifies the whole business of collecting paper and reduces the correspondence of the bank to a minimum. We have this day made the following remittances to out-of-town banks for credit. (See form for remittance letter, page 334.) To Traders National Bank, Buffalo. Check of Bates, Torey & Co., dated Feb. 26, on Second National Bank, Buffalo, indorsed by Spencer, Mead & Co., for 11340.20; check of A. B. Murray, dated Feb. 25, on Central Bank, Rochester, indorsed by Manu- facturers and Traders Bank, Philadelphia, for $1321.72 ; draft of First National Bank, Worcester, dated Feb. 25, on Traders National Bank, Buffalo, indorsed by Alliance National Bank, Springfield, for 1722.40. To Bank of Commerce, Baltimore. Check of F. E. Barry, dated Feb. 25, on Commercial Bank, Balti- more, indorsed by Spencer, Mead & Co., for 1342.90 ; check of M. E. Gay, dated Feb. 24, on Bank of Commerce, indorsed by Alliance National Bank, Springfield, for 1142.16. To Fourth National Bank, Chicago. Check of A. B. Tonner, dated Feb. 23, on First National Bank, St. Louis, indorsed by Alliance National Bank, Springfield, for $1721.95 ; check of D. O. Manning, dated Feb. 23, on Commercial Bank, Cincin- nati, indorsed by Farmers Bank, Albany, for $122.75 ; check of F. W. Wayne & Co., dated Feb. 23, on Union Bank, Minneapolis, Minn., indorsed by Farmers Bank, Albany, for $1420.50. To Chemical National Bank, New York. Check of C. E. BoUes, dated Feb. 23, on Eliot National Bank, Poughkeepsie, indorsed by Spencer, Mead & Co., for $1343.46 ; check of Morton & Mills, dated Feb. 21, on City National Bank, Peekskill, indorsed by Thomas Bennett & Co., for $1325.62; check of D. E. Brown, dated Feb. 21, on Second National Bank, Brooklyn, indorsed SET X — BANK ACCOUNTING 337 by Thomas Bennett & Co., for $1462.91; check of Earl & Henderson, dated Feb. 20, on Merchants Bank, Paterson, indorsed by Thomas Bennett & Co., for 1142.10 ; check of A. B. King, dated Feb. 24, on Rockland National Bank, Brooklyn, indorsed by E. L. Howard, for 1142.60. To Alliance National Bank, Springfield. Check of C. W. Gray, dated Feb. 24, on Bay State Bank, Worcester, indorsed by C. E. Denison, for 11590.60 ; check of C. H. Thurber, dated Feb. 26, on Alliance National Bank, Springfield, indorsed by E. L. Howard, for fll21.40 ; check of W. H. Greeley, dated Feb. 24, on National City Bank, Northampton, indorsed by E. L. Howard, for f 24.16. To Ninth National Bank, Hartford. Check of Jones Dairy Co., dated Feb. 23, on City Bank, Hartford, indorsed by E. V. Buckley & Son, for $621.40 ; check of Oak Grove Creamery Co., dated Feb. 23, on Citizens Bank, Torrington, indorsed by E. V. Buckley & Son, for |340. To Chase National Bank, Providence. Check of C. F. Gray, dated Feb. 21, on Second National Bank, Provi- dence, indorsed by Fourth National Bank, Chicago, for $1694.26; check of E. C. Delano, dated Feb. 21, on Union Bank, Providence, indorsed by Fourth National Bank, Chicago, for $1500 ; check of C. A. Snow, dated Feb. 20, on Union Bank, Providence, indorsed by Alliance National Bank, Springfield, for $1166.37. To Farmers Bank, Albany. Check of F. E. Smith, dated Feb. 23, on Central Bank, Troy, indorsed by Fernald, Son & Co., for $1750 ; check of Crescent Mfg. Co., dated Feb. 24, on Commercial Bank, Utica, indorsed by W. I. Pratt, for $1900. Enter the above paper in the remittance register, showing each item in detail. The letters containing a description of this paper are sent away, and unless we take a copy of such letters we have nothing to show in detail the amounts of our remittances from time to time. The note teller has advised you, by means of charge tickets, of the following debits to out-of-town banks. Traders National Bank, Buffalo, note for $5000 (discount No. 842) Traders National Bank, Buffalo, note for $7500 (discount No. 866) Farmers Bank, Albany, proceeds of collection No. 650, $723.25 Fanners Bank, Albany, proceeds of collection No. 702, $1198.80. 338 Ji.CCOUNTING AND BUSINESS PRACTICE Enter the foregoing items in the remittance register. Consult your teacher if necessary. Form of Charge Ticket Uhe ,yruclers 'National UDafik Boston. .Jiass.. /«^ S, 79— i^hange H.em.'Ua.t cAaZ't ISamk,, of. If. # 750 7sdo Tne^amlm. cAat'l Bam£, Bi^jalo #6^ationul %Jjank Credit 68oston. ^Jiass., S'eA. ^5, 79 NUMBER OF COLLECTION ACCOUNT TO BE CREDITED PROCEEDS 7S0 WysJco^, ^&a/nuMVQ^ V Be^&cHit ^(5> 60 6qo f. &. Ba£eA. 7/2 f^ 7f0 ^aw-e/ui^ V dj>AM/fio& 8f/ 20 jahn, /"f, CObyyviaZ&cicC, Collection Clenk Credit tickets have also been received from the note teller for paper discounted for customers to-day. Enter the proceeds of these notes in the Deposits column of the indi- vidual ledger. Refer to the discount register for the amounts. Check the items transferred. The total of the checks certified for to-day, as reported by the paying teller, is |2300. Enter the amount in the Deposits column, opposite Certified Checks. Check the amount in the certified check book. Checks of depositors have been received by the paying teller and turned over to the individual bookkeeper, as shown in the Our Bank column of the paying teller's daily check sheet. Enter these items in the Checks in Detail column of the individual ledger opposite the names of the drawers. Check the items transferred. Charge tickets have been received from the paying teller on account of certified checks. Refer to the certified check book for the amounts of these tickets. Enter the amounts in the individual ledger the same as regular checks. Check the items transferred. Checks of depositors have been received by the receiving teller, entered on his check sheets, and turned over to the individual bookkeeper. A list of these checks, with the names of the drawers, is as follows ; 342 ACCOUNTING AND BUSINESS PRACTICE Mace, Gilmore & Co., $720.50, $1500; Decker Bros., $1250.20; Spencer, Mead & Co., $340.20; Fernald, Son & Co., $72.60; W. I. Pratt, $650.60 ; F. E. Sherman, $1625 ; C. E. Denison, $1750 ; Thomas Bennett & Co., $200, $1242.10; E. L. Howard, $40.50; Charles J. Kennedy, $200, $262.90. Enter the above items in the Checks in Detail column. The note teller has turned over a charge ticket for discount No. 88y. Refer to the discount tickler for the amount. Check the item transferred. The following depositors' checks have come in from the clearing house. D. E. Avery, $625, $127.52 ; J. 0. Baker, $1275 ; Thomas Bennett & Co., $2500 ; E. V. Buckley & Son, $115.40 ; J. H. Crandall, $462.50; Decker Bros., $1200, $750.42, $500 ; Freeman, Austin & Co., $1750 ; E. L. Howard, $75.40; Charles J. Kennedy, $400.60; Mace, Gilmore & Co., $120, $40.50; D. B. Roberts, $22.40; Wyckoff, Seamans & Benedict, $167.50, $125; F. E. Sherman, $750, $211.40, $600. Enter the above in the Checks in Detail column. The correspondence clerk has turned over the depositors' checks received from out-of-town banks. Enter them in the Cheeks in Detail column. Spencer, Mead •& Co., $650; Fields Milling Co., $850; Janis, Cooper & Tremper, $560; Lane, Rowell & Co., $721.42; Powers & Sprague, $1000. Extend the sum of the checks drawn by each depositor into the Total Checks column of the individual ledger. Foot the Checks in Detail, Total Checks, and Deposits columns. The sum of the Total Cheeks column should agree with the sum of the Checks in Detail column. Determine the new balance to the credit of each depositor by adding the deposits and subtracting the total checks for the day. Enter the new balance in the Balance column for March 1. Foot the Balance column. Prove the correctness of the individual ledger as follows : Add the total deposits for to-day to the total balances for yesterday. From this sum subtract the total checks for to-day. If no error has been made, the difference so found should be the same as the total balances for March 1. Present your individual ledger to your teacher for approval. WORK OF THE GENERAL BOOKKEEPER The records of the general bookkeeper are principally found in the general balance ledger and general cash book. SET X — BANK ACCOUNTING 343 The General Balance Ledger contains a summary of the entire operations of the bank, systematically collated from the various departments. It is provided with three columns for each business day in the week. The first column contains the balances of the viirious accounts. The debit balances are written in black ink, and the credit balances in red ink. It is a regular double entry ledger ; therefore the total of the red ink balances should at all times equal the total of the black ink balances. The next two columns are for daily debit and credit additions to the accounts in this ledger. Among the advantages of this form of ledger over the old form of mercantile ledgers are : 1. It furnishes more convenient data for preparing the daily statement of the bank. 2. It requires less clerical work. 3. It serves the purpose of a trial balance. General Balance Ledger Monday, Feb. 5, 19 BALANCE DEBITS CREDITS BALANCE Cash 281690 28 76665 90 58665 90 299690 28 Out-of-Town Banks 121200 72 75240 16 81240 16 115200 72 Bills Discounted 129640 30 32500 32129 84 130010 46 Redemption Fund 4500 4500 Furniture and Fixtures 6000 6000 Premium on U.S. Bonds 2000 2000 Real Estate 7500 7500 Expense 240 50 04 290 04 U.S. Bonds 100000 100000 Capital Stock 200000 200000 Circulation 100000 100000 Collection and Exchange Z902 34 120 10 3022 U Deposits 230008 57 72840 10 84840 10 242008 67 Surplus Fund 100000 100000 Undivided Profits 12500 75 12500 75 Discount 7S59 G4 300 10 7659 74 652771 30 665191 50 652771 30 257296 20 257296 20 665191 50 The General Cash Book contains a record of all amounts affecting the general balance ledger of the bank. Any account that does not appro- priately belong to the special books already referred to is recorded directly in this book. It is not essentially different from the cash book used by mercantile houses. The left side is provided with four 344 ACCOUNTING- AND BUSINESS PKACTICE General Monday, F ACCOUNT AND EXPLANATION COLLEC- TION AND EXCHANSE OUT-OF- TOWN BANKS GENERAL TOTALS Balance On hand 162940 50 3 Bills Discounted D. T. 12000 V Alliance Nat'l Bank, Springfield 2400 60 V Bank of Commerce, Baltimore, ISOO", 729." 2S29 40 V Farmers Bank, Albany, 200.™, 821.»» 1021 , II.20 14 70 s/ Coll. and Exch. C. T., I.m, 2.«>, l.» 4 75 3 3 3 Deposits I. L. Coll. and Exoh. Total for day Out-of-Town Banks Total for day 35 178240 106 17950 95 35 90 208568 106 179BO 90 70 371509 20 columns, one for collection and exchange, one for receipts from banks, one for sundry receipts, and one for totals. The right side is pro- vided with three columns, one for cash remittances to banks, one for sundry payments, and one for totals. The difference between the sides of tliis book should at all times show the balance of cash on hand. The General Bookkeeper in a large bank occupies a position of special responsibility. He is the chief accountant of the bank, all the work in each of the several departments coming under his general supervision. Upon him devolves the work of classifying the general results of the bank and the rendering of statements required by the board of directors and by the regulations of the bank. He usually has personal charge of the general cash book and the general balance ledger. Transactions for the General Bookkeeper, March 1 The general balance ledger exhibited the following balances at the close of Saturday, Feb. 27. SET X — BANK ACCOUNTING 345 Cash Book Feb. 15, 19 F ACCOUNT AND EXPLANATION OUT-OF- TOWN BANKS GENERAL ' TOTALS 3 Bills Discounted Disc. E. 12500 of-Town Banks Due from U.S. Treasurer U.S. Bonds to secure Circulation Salaries Stocks and Bonds Keal Estate Eedemption Fund with the U.S. Treasurer Furniture and Fixtures Premium on U.S. Bonds Expense Taxes 200000. 21275.10 590180.57 16240.10 100000. 5728.14 $238995.66 496722.50 273795.30 2000. 200000. 4750. 62500. 27500. 10000. 12625.50 4000. 214.95 320. 346 ACCOUNTING AND BUSINESS PRACTICE Enter the above balances in the general balance ledger. "Write the credit balances in red ink and the debit balances in black ink. When the accounts are properly opened ascertain if the footings of the debits and credits are equal. Present your work to your teacher for approval. Write the balance of cash on hand, $238,995.66, in the general cash book. (See model, pages 344 and 345.) In practice the general bookkeeper would have before him charge and credit tickets, letters, etc., from which to make entries in the general cash book. These entries are generally made when the day's trans- actions have been completed. Then all the tickets can be assorted so that they may be recorded conveniently. The debits and credits for the general cash book March 1 are as follows : 1. From the discount register debit Bills Discounted for the total of the Amount of Paper column, and credit Collection and Exchange for the total of the Collection and Exchange column, and Interest and Dis- count for the total of the Interest and Discount column. Properly check these totals in the discount register. 2. From the discount tickler credit Bills Discounted for the total of the Amount to he Collected column. Properly check the item transferred. 3. From the remittance register credit the several banks for the amounts in the Credits column, and debit them for the amounts in the Charges column. Properly check the items transferred. If there is more than one item in the debit or the credit column, short extend the amounts in the general cash book. 4. From the individual ledger credit Deposits for the total of the Deposits column, and debit Deposits for the total of the Total Checks column. Properly check. 5. From the collection tickler credit Collection and Exchange for our collection charges on Nos. 650 and 702. 6. From the receiving teller's daily check sheet credit Collection and Exchange for the total of the Collection and Exchange column. Properly check. 7. From the paying teller's daily check sheet debit Expense for the total of the Expense column, and credit Collection and Exchange for the totals of the Sundry Collection and Exchange and Exchange columns. Properly check. Prove the cash. The amount of bills and coin on hand is 1258,884.32. Clearing-house items on hand amount to |26,205. Cash items (city and foreign) on hand amount to 111,623. SET X — BANK ACCOUNTING 347 Rule and foot the general casii book. Proceed carefully and make absolutely no errors. Study the model given on pages 344 and 345. Before bringing down your balance for Tuesday, March 2, present your general cash book to your teacher for approval and suggestions. Post the general cash book to the general balance ledger. Post only the totals of the Collection and Exchange and Out-qf-Town Banks columns. Debit Cash in the general balance ledger for the total receipts, and credit it for the total payments for the day. Foot the Debit and Credit columns of the general balance ledger. If correct, they should agree. Determine the new balances in the general balance ledger. Foot these new balances. If correct, the red and black ink totals should agree. Compare your balance ledger with the model given on page 343, and see if anything remains to be done. If not, present all your books to your teacher for criticism. Transactions for the Discount Clerk, March 2 The following paper has been offered and accepted for discount. Make proper records for it in the discount register. Deduct the dis- count for the time notes have to run. No. 925. Note of Boyd Bros., at 60 days from Jan. 31, discounted for F. E. Sherman, payable at Manufacturers and Traders Bank, Phila- delphia, for f 17, 250. Collection and exchange, 117.50. Proceeds credited. No. 926. Note of Peterson Bros. & Co., at three months from Jan. 1, discounted for D. B. Roberts, payable at Fourth National Bank, Chicago, for $11,390. Collection and exchange, 111.50. Pro- ceeds credited. No. 927. Note of C. P. Jameson, at 15 days from March 1, indorsed by Janis, Cooper & Tremper, discounted for D. E. Avery, payable at our bank, for 19275.80. Proceeds credited. No. 928. Note of A. P. Little & Co., at 30 days from Feb. 23, indorsed by Merrill & Co., discounted for Fields Milling Co., payable at First National Bank, Worcester, for |6290. Collection and exchange, 16.30. Proceeds credited. No. 929. Note of W. I. Pratt, at 30 days from March 2, payable at Merchants Bank, Torrington, Conn., indorsed by Wells, Osbcrrn & Co., discounted for Charles J. Kennedy, for $12,795. Collection and exchange, $12.75. Proceeds credited. 348 ACCOUNTING AND BUSINESS PRACTICE No. 930. Note of Powers and Sprague, at 30 days from Feb. 24, discounted for Thomas Bennett & Co., payable at our bank, for $3276. Proceeds credited. No. 931. Note of W. V. Brown, at 30 days from Feb. 27, discounted for Spencer, Mead & Co., payable at our bank, for $1500. Proceeds credited. Rule and foot the discount register. Prove the footings as explained at the close of discount clerk's work March 1. Post the entries from the discount register to the discount tickler. Follow instructions to the discount clerk March 1. Be sure to properly check all items transferred. Traksactions for the Collection Clerk, March 2 The following is a list of paper received for collection to-day. Enter it in the collection register. No. 806. Note signed by D. Appleton & Co., dated Feb. 8, at 30 days, indorsed by C. W. Ellis, payable at our bank, for $7200. To be collected for Ninth National Bank, Hartford. No. 807. Note signed by Scott & Lucas, payable two months from Jan. 4, at Park Square National Bank, City, for $5162.50. To be col- lected for Fourth National Bank, Chicago. No. 808. Note signed by Fanning & Cook, payable in 60 days from Jan. 4, at Union Trust Co., City, for $2750. To be collected for Bank of Commerce, Baltimore. No. 809. Draft dated Jan. 8, at 60 days from date, on Trenholm Bros., payable at Briggs Bank, Westfield, for $2152.90. To be collected for Farmers Bank, Albany. No. 810. Draft dated Jan. 8, at 60 days from date, on W. S. Stanton, Springfield, for $1500. To be collected for Fourth National Bank, Chicago. No. 811. Sight draft dated March 2, on Taylor Bros., City, in favor of Powers & Sprague, payable at our bank, for $1950. To be collected for Powers & Sprague. No. 812. Sight draft dated March 2, on William Sloan & Son, Pough- keepsie, in favor of Lane, Rowell & Co., for $2750. To be collected for Lane, Rowell & Co. No. 813. Sight draft dated March 3, drawn on E. C. Baldwin, Spring- field, in favor of E. L. Howard, for $1357.60. To be collected for E. L. Howard. SET X — BANK ACCOUNTING 349 No. 814. Note of David Wells, at 30 days from Feb. 16, with interest at 6%, payable at our bank, for |750. To be collected for J. H. Crandall. Compute the interest on the 1750 for 30 days. Add this interest to the face of the note and write the total in the Amount column of the collection register. This should be done with all interest-bearing paper. No. 815. Note of L. F. Chappell, payable at Fourth National Bank, Chicago, at three months from Jan. 1, for $1250. To be collected for Thomas Bennett & Co. No. 816. Note of W. B. Burdick, at two months from Jan. 27, with interest, payable at Merchants Bank, St. Louis, Mo., for |2790. To be collected for Thomas Bennett & Co. No. 817. Sight draft dated March 2, on Bradley & Co., Buffalo, N.Y., for 1290.50. To be collected for Thomas Bennett & Co. No. 818. Sight draft dated March 1, on Winslow & Co., Rochester, N.Y., for $375.62. To be collected for Decker Bros. Post the collection register to the collection tickler. (See instructions to collection clerk, March 1.) Transactions foe the Receiving Teller, March 2 The following are the regular deposits for to-day. Enter them on the receiving teller's daily check sheet. WyckofE, Seamans & Benedict, V 11600, V |562, B $2500, B 1750, B $12,200, Spencer, Mead & Co., V $1740, V $190, #61 $400, #4 $800, #16 $1290. D. E. Avery, B $14,270, B $640.70, x $1162.95, x $1486.52, X $1349.20; less collection, $4.15. J. O. Baker, V$ll,400, n/$45, B $1600, B $9250, B $5450, x $1400; less collection, $1.40. Thomas Bennett & Co., V $240, V $60, #7 $1950, #9 $2825, #15 $1600, O $400. J. H. Crandall, X $2400, x $1500 ; less collection, $4. Decker Bros., V $3700, B $5210, O $900, X $4500, less collec- tion, $4.50. Freeman, Austin & Co., #21 $2145, #27 $1360. E. L. Howard, V $2400, B $3262.90, B $3040.50, B $6200. Janis, Cooper & Tremper, $1500, B $1100, B $2400, #3 $1140.60, #27 $11,000. 350 ACCOUNTING AND BUSINESS PBACTICE Charles J. Kennedy, #17 $2410, \/ $4000, x- 11621.40 ; less collec- tion, 11.65. Mace, Gilmore & Co., O fllOO, B |6270, x |1125.60, #25 $1460, # 31 11652 ; less collection, $1.25. Foot the columns of the receiving teller's daily check sheet. Make out Recapitulation and Proof blank. Balance on hand: coin, $712; bills, $18,000. You have given to the paying teller during the day $8725. The debit and credit sides of your proof should always balance if the work is correct. Transactions for the Paying Teller, March 2 The following are lists of checks paid by the paying teller to-day. Enter them on the paying teller's daily check sheet. 1. Checks on our bank : Wyckoff, Seamans & Benedict (New York draft), $14,260 ; Spencer, Mead & Co. (New York draft), $4500 ; F. E. Sherman (New York draft), $3762.50 ; D. B. Roberts (New York draft), $1000 ; Powers & Sprague, $7265 ; W. I. Pratt, $1217.50 ; Mace, Gibnore & Co., $8290 ; Charles J. Kennedy, $400; E. L. Howard, $350; Freeman, Austin & Co., $2790 ; Fields Milling Co. (New York draft), $1400. 2. Checks on clearing-house banks : Bunker Hill National Bank, $1940 ; Suffolk National Bank, $1875 Colonial National Bank, $2750.06; Shoe & Leather Bank, $2500 Third National Bank, $400; Metropolitan National Bank, $1700 Park Square National Bank, $3400.60 ; Citizens National Bank, $6250.60; Eliot National Bank, $4000; New England National Bank, $3257. 3. Checks on out-of-town banks : Traders National Bank, Buffalo, $17,500, $750, and $1600; collec- tion, $19.85. Bank of Commerce, Baltimore, $400, $1450, and $1725; collection, $3.60. Manufacturers and Traders Bank, Philadelphia, $8500; collection, $8. Fourth National Bank, Chicago, $4685; col- lection, $4.75. Chase National Bank, Providence, $4500.50; collec- tion, $4.50. Ninth National Bank, Hartford, $3250; collection, $3.25. Chemical National Bank, New York, $1100, $2500, $1660, $9250; collection, $14.50. Eliot National Bank, Springfield, $4792.50 ; collec- tion, $4.60. 4. Checks on banks in our city not members of the clearing house : Powers Bank, $172.50; Union Trust Co., $150. SET X — BANK ACCOUNTING 351 Sold the following drafts on Chemical National Bank, New York. 1. Sold for check : WyckofE, Seamans & Benedict, 114,260; exchange, 114.25. Spencer, Mead & Co., $4500 ; exchange, |4.50. D. B. Roberts, flOOO ; exchange, $1. Fields Milling Co., 11400; exchange, $1.40. F. E. Sherman, 13762.50; exchange, 13.75. Note. — The exchange items on the above drafts were, in this instance, paid in cash. The record on the paying teller's sheet wili be identically the same as -where these items are covered by check. By referring to the checks covering these drafts on the left side of the sheet it will be seen that the amounts entered are for the face of the drafts only. 2. Sold for cash : A. L. Hopkins, |2000; exchange, |1. T. V. Smith, |1500 ; exchange, 75/. Certified the following checks. Enter them in the certified check book. Lane, Rowell & Co., |11,250 ; Charles J. Kennedy, |7295 ; Decker Bros., 11254 ; J. O. Baker, f 9265. Pay cashier's charge tickets for the following items : Postage, $12.50 ; stationery, etc., $25.90 ; blank books, $142.60. The items for the Sundry Receipts column are as follows : Bills and coin from yesterday's proof, $237,804.92; bills and coin received from the receiving teller at the close of yesterday's biosiness, $11,747.25; bills and coin received from the receiving teller during the day, $8725; bills and coin received from the note teller at the close of yesterday's business, $9832.15; received from the clearing house for to-day's exchanges, $28,349.17. Add the^ columns of the paying teller's daily check sheet. Make out Recapitulation and Proof blank. A careful count of the cash now on hand under various heads (subdivisions of bills and coin only) shows an amount of $187,006.03. Foot the certified check book. Transactions for the Note Teller, March 2 Make the proper records in the discount tickler for the paper disposed of to-day. In the Remarks column write : For No. 902, Charged Alliance National Bank. For No. 869, Charged Alliance National Bank. For No. 868, Paid, 3/2. For No. 895, Charged Farmers Bank. For No. 867, Paid, 3/2. 352 ACCOUNTING AND BUSINESS PRACTICE Rule and foot the discount tickler. Advices have been received that the following collections have been paid. Make records in the collection tickler for these collections. In the Remarks column write : For No. 723, Charged to Chemical National Bank. Bank's col- lection, $1; our collection, §1.10. For No. 726, Charged to Chase National Bank. Bank's collection, $4! our collection, $S. For No. 742, Charged to Chase National Bank. Bank's collection, $5; our collection, $5.20. For No. 743, Charged to Bank of Commerce, Baltimore. Bank's collection, $1; our collection, $1.25. Collections Nos. 756, 800, and 811 have been paid. In the Remarks column of the collection tickler write : For No. 756, Paid, 3/2. For No. 800, Paid, For No. 811, Paid, Transactions for the Cokrespondence Cleek, March 2 This morning's mail contained the following remittances from the banks named, for credit. Enter in the remittance register. Traders National Bank, Buffalo $9273.40 Bank of Commerce, Baltimore 4213.93 Manufacturers and Traders Bank, Philadelphia 5272.50 Fourth National Bank, Chicago 6395.40 Ninth National Bank, Hartford 6427.30 Chase National Bank, Providence 8216.50 Farmers Bank, Albany 5324.80 Alliance National Bank, Springfield 4152.70 The following are the drafts drawn on Chemical National Bank, New York, as per stubs in the draft book. No. 434, 114,260 ; No. 485, |4500 ; No. 436, 13762.50 ; No. 487, $1500; No. 438, 11000; No. 439, 12000; No. 440, 11400. Enter these drafts in the draft register. Credit Chemical National Bank in the remittance register for the total. We have this day made the following remittances to out-of-town banks for collection. In the To Whom Sent column of the collection tickler write the name of the bank to which the paper is sent. No other record SET X — BANK ACCOUNTING 353 is needed at this time. Nos. 804, 805, 809, 810, 813, sent to Alliance National Bank, Springfield; No. 812 sent to Farmers Bank, Albany; Nos. 815 and 816 sent to Fourth National Bank, Chicago; Nos. 817 and 818 sent to Traders National Bank, Buffalo. Form of Letter to accompany Paper remitted for Collection and Credit C. H. THURBER, PRESIDENT J. W. MACE, VICE PRESIDENT CHAS. W. HAMILTON, CASHIER MERCHANTS NATIONAL BANK Boston, Mass., S'eA. 8, I9 €. W-. S'&a/u>-dif, Esq., Cashier cf&e,cyyucl cAaXLo'vud, l8amA, o4&w- y,cnJc &ity Dear Sir, — 1 inclose for collection and credit the items stated below. NO. PAVER AMOUNT 7S0 6(^0 7/1 7S'?0 972 /26I /6 19 Please advise us of the payment of the items inclosed. Paper not paid at maturity should be returned to us at once. Very respectfully yours, ^k^o. 7/25 on. 3~ke, c/taticyyval BamJc oi /^&de/m/^itio?v for ^77/f.''^ in pcu/= ment of collections as stated below. YOUR NO. DATE OF YOUR LETTER PAYER AMOUNT 7S0 721/- 7(?S S'eA. / /O 10 R. m. ffcLtt a. B. #i.fiy V o/w i/otal collected Cess Collection and Exchange ■Amount remitted /060 700 6000 60 77SS 7 60 72 77/f 78 Veri/ respectfully yours, &ka^. /if. S'a.t'vn.EA., (BasAier The note teller has also advised you that the following collections have been paid and the proceeds credited to the banks named. Proceeds of No. 7.52, credited to Traders National Bank, Buffalo, $721 ; proceeds of No. 757, credited to Alliance National Bank, Spring- field, 11746.25 ; proceeds of No. 819, credited to Traders National Bank, Buffalo, 112,252.75 ; proceeds of No.-820, credited to Manufacturers and Traders Bank, Philadelphia, 15717.85 ; proceeds of No. 822, credited to Chase National Bank, Providence, 13717.75; proceeds of No. 823, credited to Farmers Bank, Albany, 12127.59. SET X — BANK ACCOUNTING 367 The note teller advises that collection No. 821 has been protested and the protest fees, $3.25, charged to Ninth National Bank, Hartford. Extend the balances in the remittance register. Teaksactions for the Individual Bookkeeper, March 3 Enter the deposits from customers in the individual ledger from the receiving teller's daily check sheet. The note teller has turned over credit tickets for the proceeds of collection paper, collected for depositors to-day as follows : Nos. 765, 828, and 829. Enter the proceeds of these collections in the individual ledger. Credit tickets have also been received from the note teller for paper discounted for customers to-day. Enter these notes to the credit of depositors directly from the discount register. The total of checks certified to-day, as reported by the paying teller, is 17100. Enter this amount to the credit of Certified Checks. Checks of depositors have been received by the paying teller and turned over to the individual bookkeeper, as shown on the paying teller's daily check sheet. Enter these items in the individual ledger. Charge tickets have been received from the paying teller on account of certified checks. Refer to the certified check book for these amounts, and enter them in the individual ledger. Checks of depositors have been received by the receiving teller, entered on his sheet, and turned over to the individual bookkeeper. A list of these, with the names of the drawers, is given below. Enter the items in the individual ledger. Spencer, Mead & Co., 11900 ; Wyckoff, Seamans & Benedict, f6-273.'50, $1950, $14,360; E. V. Buckley & Son, $1400, $1200; C. E. Selover & Co., $1700 ; Fernald, Son & Co., $1340 ; Powers & Sprague, $500; Decker Bros., $11,290; F. E. Sherman, $6000. Checks of depositors have come in from the clearing house as follows : WyckofE, Seamans & Benedict, $17,700; Spencer, Mead & Co., $15,000, $1800; F. E. Sherman, $960.50; C.E. Selover & Co., $300; D. B. Roberts, $750 ; Powers & Sprague, $1200 ; Janis, Cooper & Tremper, $2400 ; Mace, Gilmore & Co., $1500 ; Lane, Rowell & Co.,. $1250; D. E. Avery, $900; J. O. Baker, $1700; Thomas Bennett & Co., $3100 ; E. V. Buckley & Son, $9150.60 ; J. H. Crandall, $45,120 ; Decker Bros., $15,200; C. E. Denison, $25,300; Fernald, Son & Co., $1300 ; Fields Milling Co., $10,500. 368 ACCOUNTING AND BUSINESS PRACTICE The correspondence clerk has turned over depositors' checks received from out-of-town banks. Wyckoff, Seamans & Benedict, 1625.80, 12000 ; Charles J. Kennedy, $150.20, 12500 ; W. I. Pratt, 12500. Extend the balances of customers' accounts in the individual ledger. Foot and prove the individual ledger. Transactions for the General Bookkeeper, March 3 Make the records in the general cash book for the following. 1. Items from the discount register. 2. Items from the discount tickler. 3. Items from the remittance register. 4. Items from the individual ledger. 5. From the collection tickler credit Collection and Exchange for our collection charges on the following collections: Nos. 752, 757, 819, 820, 822, and 823. 6. From the receiving teller's daily check sheet credit Collection and Exchange for the collection and exchange items listed there. 7. From the paying teller's daily check sheet debit Expense for the total expense items, and credit Collection and Exchange for the totals of the Exchange and Sundry Collection and Exchange columns. 8. From the collection tickler credit Protest Fees for f3.25, the notary's charges for protesting collection No. 821. 9. From the discount tickler debit Protested Paper for discount No. 897, 129,900. Note. — Nearly all national banks have some bank official qualified as a notary public. In the majority of cases this official receives all protest fees ■which are paid to the bank for protesting paper. He is usually a person of high standing in the bank, such as cashier, discount clerk, etc. When these fees go to an official of the bank they are charged to Protest Fees in the general balance ledger. At the end of any given period the notary may draw such fees by check. No protest fees are entered on discount No. 897 at this time. They are not recorded until collected, unless they are charged to an out-of-town bank. Rule and foot the general cash book. Post the general cash book to the general balance ledger. Extend the new balances in the general balance ledger. Prove the general balance ledger. Submit your book to your teacher for approval. SET X — BANK ACCOUNTING 369 Closing the Banking Set Inventories, Maech 3, 19 — Eeal Estate : Banking house and lot $27000 Furniture and Fixtures : Estimated value $12500 United States Bonds : At cost $200000 Stocks and Bonds : Present value $63750 Interest and Discount : Accrued on United States bonds $650 Trial Balance. — No trial balance is necessary in this set, as the general balance ledger is in itself a trial balance of the general ledger accounts of the bank. Dividends. — It is customary for national banks to declare dividends semiannually and close their books. Before any dividend can be declared every national bank must carry at least one-tenth part of its net profits for the half-year immediately preceding to its surplus fund, until the same shall amount to 20% of its capital stock. After the surplus fund has been deducted the directors may declare a dividend of so much of the profits remaining as they deem expedient. Statement of Resources and Liabilities A statement of resources and liabilities is usually made out daily in all large national banks. Such a statement gives the condition of all the general ledger accounts of the bank, together with a detailed exhibit of the cash account. All items of information entered on this statement are properly classified, thus furnishing data for the computation of the bank's reserve, and for the necessary reports to the Comptroller of Currency. The National Bank Act also requires that every national bank shall make to the Comptroller of the Currency not less than five reports during each year. These reports must be made in accordance with a prescribed form and be published in a newspaper wfierethe bank is established. They exhibit in detail the resources and liabilities of the bank, the amount of each dividend, and the net earnings in excess thereof. In this set you will make but one general statement of resources and liabilities. Carefully study the form given on pages 370 and 371, and then proceed to make your statement of resources and liabilities. 370 ACCOUNTING AND BUSINESS PRACTICE Statement of Qommenclal -^fational Mank, Cash iJesouj-ces Bills and Coin Exchanges for Clearing House Cash Items (City and Foreign) Bills Receivable Bills Discounted Protested Paper Stocks and Bonds U.S. Bonds with U.S. Treasurer (per inventory) Premium on U.S. Bonds Other Stocks and Bonds (per inventory) Properties Real Estate (per inventory) Fixtures (per inventory) Out-of-Town Banks, Dr. Due from Reserve Agents United States Treasurer 5% Redemption Fund Due from U.S. Treasurer Overdrafts Statement of 243700 55166 6240 405750 7200 150000 6000 103500 17500 5200 7500 1000 40 •305107 412950 259500 22700 22940 100000 8500 620 1132318 72 32 40 60 40 Somm.er'cial •^ationat Mank, Losses Current Expenses Salaries, due and paid Taxes, due and paid Incidental Expenses, total paid Depreciation Furniture and Fixtures Real Estate Dividends, 4% of Capital Stock Surplus Fund, 10% of Net Gain Undivided Profits, balance of Net Gain 4500 . 960 240 93 5700 650 16000 3415 S735 03 150 500 OS U .30501 09 SET X — BANK ACCOUNTING 371 Resources and Liabilities SSoston, >.Ata.ss., March. 3, 19 Liaiiilities Capital Stock Surplus Fund • Undivided Profits Cireulation Out-of-Town Banks, Cr. Deposits Cashier's Checks Certificates of Deposit Certified Checks Individual Deposits Protest Fees Undivided Profits {Net Gain) Losses and Gains SSoston, -.^H-ass., March 3, 19- 4050 17500 19295 401750 400000 93530 9250 150000 12650 442596 140 U150 1132318 72 16 00 90 90 16 Gains Revenue Receipts Interest and Discount, net amount earned Collection and Exchange, net amount earned Interest (per inventory), due on U.S. Bonds Stocks and Bonds, increase in value 16500 12500 500 40 29501 1000 .30501 09 09 372 ACCOUNTING AND BUSINESS PEACTICE Hand your statement of resources and liabilities to your teacher for approval. Statement of Losses and Gains. — Preparatory to declaring dividends and closing the ledger make a statement of losses and gains. Before proceeding with this statement carefully study the form given on pages 370 and 371. The net. gain will be divided as foUows : To Dividend account, 4% of the capital stock; to Surplus Fund, 10% of the net gain ; to Undivided Profits, the balance of the net gain. Hand your statement of losses and gains to your teacher for approval. Closing the Ledger. — When a bank employs the form of ledger used in this set, the loss and gain accounts should be closed by journal entries. To take the gains out of the several gain accounts and carry them to the Loss and Gain account, an entry similar to the following should be made in the journal. 40 Interest and Discount Net amount earned 16500 Collection and Exchange Net amount earned 12500 Stocks and Bonds Increase in value 1000 Interest Due on U.S. bonds 500 To Loss and Gain Total gains 30501 09 To take the losses out of the several loss accounts and carry them to the Loss and Gain account, an entry similar to the following should be made in the journal. Loss and Gain To Expense Salaries Taxes Real Estate Furniture and Fixtures Total losses Incidental expenses Due and paid Due and paid Depreciation Depreciation 6350 93 240 4500 960 500 150 93 To close the Loss and "Gain account, an entry similar to the following should be made in the journal. Loss and Gain To Dividends Surplus Fund Undivided Profits Net gain; 4% of capital stock 10% of net gain Balance of net gain 24150 16 16000 2415 5735 02 14 After making the necessary entries to close the loss and gain accounts post them to the general balance ledger. Dividends are usually paid by cashier's checks. Dividend account is debited and Cashier's Checks account is credited when dividends are SET X — BANK ACCOUNTING 373 paid. You will omit the dividend checks, as no list of stockholders has been given. Extend the new balances in the general balance ledger. Prove the general balance ledger. Prove the correctness of the out-of-town banks ledger by an abstract similar to the following. Abstract of Out-of-Town Banks Ledger, March 3, 19—. Union Bank, Troy Traders National Bank, Buffalo Chemical National Bank, New York Merchants Bank, Philadelphia Mechanics National Bank, Baltimore City Bank, Providence Balance as per Out-of-Town Banks in G. B. L. 7200 31250 2692 1790 42934 906 1200 42934 See if Deposits account in the general balance ledger agrees with the individual ledger. Prove the discount tickler. The total of the unpaid notes shown in the discount tickler should equal the balance of Bills Discounted account in the general balance ledger. Present all your books to your teacher for examination. 374 ACCOUNTING AND BUSINESS PRACTICE THE CLEARING HOUSE A Clearing House is an institution organized by associated banks to simplify and facilitate daily exchanges of items and settlements of balances resulting from such exchanges. Many clearing-house associations also look after the mutual welfare of their members by prescribing rules to govern in various important matters ; as, uniform rates of collection and exchange, interest, etc. Origin. — Before clearing houses were organized each bank in a given city had to keep an account with practically every other commercial bank in that city. Statements of these accounts were made up daily and given to "runners," who took them, together with the items of charge, to the debtor banks for settlement. All amounts were usually paid in gold. In the larger cities this work was very laborious and unsatisfactory. To facilitate matters these runners conceived the idea of meeting at a given point and adjusting balances. From these first crude gatherings has sprung the stupendous clearing-house system. The Officers of a clearing-house association are usually president, vice president, secretary, treasurer, manager, and clearing-house committee. Frequently there are one or more special committees ; as, conference committee, nominating committee, arbitration committee, etc. Preparing Exchanges for Delivery. — When exchangeable paper is received at a bank it is classified according to the bank at which it is payable. The work of assorting the items for delivery to the clearing house is facilitated by the use of a case of compartments. This case is provided with a compartment for each member of the clearing house. The compartments are designated by the clearing-house numbers of the banks. Before the items are placed in these compartments they are stamped with the receipted indorsementusually required by clearing-house associations. The form of this indorsement is not always the same, but it should always indicate the channel through which the paper has passed. Received Payment through the Boston Cleaeing House, Feb. 16, 19—. WiisTTHKOP National Bank. The above is a common form of indorsement used for items paid through the clearing house. THE CLEAEING HOUSE 375 At the close of the day, or at intervals during the day, the exchanges are taken from the compartments, and the amounts listed on a blank entitled Exchange Slip, as shown in the accompanying illustration. The first total on the ex- change slip represents the a;mount of exchanges received by No. 24 before the close of banking hours on Feb. 15, to be sent to the clearing house the following day. The addi- tional items represent the morn- ing exchanges which are received by mail or among the deposits before ten o'clock. The second total is, then, the amount of claims carried to the clearing house by No. 24, Faneuil Hall National Bank, against No. 22, the National Bank of Commerce. A separate exchange slip, appropriately labeled, is pre- pared for each member of the clearing house. Duplicate lists of all items taken to the clearing house are made by the bank and preserved for future reference. The totals of the exchange slips are next copied on a blank entitled Settling ClerKs State- ment. The Settling Clerk's Statement contains a printed list of the names and numbers of all the banks connected with the clearing-house association. The first debit colunin of this sheet is usually made up from the exchange slips at the close of each busi- ness day, thus completing the heaviest part of the work the day before clearing. On the morning of clearing the second debit column is filled out from the final totals of the exchange slips. The credit column is EXCHANGE SLIP NO. 22 COIVEIMERCB krom; no. 24 Date S^&lf-. /6, /f Si'fO 7S0 ™,™,,-w^due Clearing House, $ Balance due the Massachusetb National Bank, $ 57,0<^7°'' f. /■{-. Bemde,v, Settling Clerk When the proof clerk receives the balance tickets from the several settling clerks he immediately transcribes the debit exchanges (the amount received by any bank) in the Banks Dr. column, and the dif- ference between the debit and credit exchanges in the Due Banks or the Due Clearing House column, as the case may be, on the clearing- house proof. The credit exchanges having been previously entered, the proof clerk now proceeds to complete his proof. As the total exchanges brought must be the same as the total exchanges taken away, the debit and credit columns of the proof should agree if the work is correct, as also the total due banks and the total due the clearing house. While the preparation of the proof is in progress the settling clerks are verifying their work by means of check tickets. If there are no THE CLEARING HOUSE 381 errors in the clearing-house proof the manager announces the fact and the settling clerks return to their banks. If there is an error, and this is not infrequently the case, the proof clerk announces the difference to the manager. The manager then announces the difference to the set- tling clerks, who proceed to search for it. When this announcement is made the settling clerks have usually completed a revision of their statements, and can many times locate discrepancies as soon as they are announced by the manager. Various methods are resorted to in locating differences. Usually the manager calls for an exchange of sheets to the right or to the left for an examination of footings, and in cases where an error in entry is apparent the amounts are called back. This revision is final, and if the additions are correct it must make the proof balance. The accompanying, Clearing-House Proof and Settling Clerk's State- ment are actual forms used in transactions at the Boston Clearing House. Debtor and Creditor Banks. — Thus far no money has entered into the exchanges at the clearing house. The clearing, however, is not yet complete. If the total of the items brought to the clearing house by any particular bank is less than the total of the items brought by other banks against it, the bank owes the clearing house the difference between such totals. On the other hand, if the items brought to the clearing house by any bank are greater than the totals brought against it, that bank is entitled to receive from the clearing house the difference between such totals. To complete the clearing, therefore, it is necessary to make settlement for the debit and credit balances. Form of Manager's Receipt lU No. 50. Boston Clearing House MoA^ 3, 19 Received from COLONIAL NATIONAL BANK S'w-emXA^-O'eAj-e/yi S'kcyiMAnyicL tAune- li-iM^dvul ^vxtu ^ Dollars in full for balance due the Clearin^g House. &. CL. R'W(fcfle^, Manager 382 ACCOUNTING AND BUSINESS PRACTICE At 12.15 P.M. each day except Saturday, and then at 11.30 A.M., the debtor banks must pay to the manager at the clearing house the balances due from them respectively, either in coin or in such other currency as the laws of the United States shall require, or in such certificates as shall be authorized by the clearing-house association, excepting sums less than one thousand dollars, which may be paid in bills of the debtor banks. Receipts signed by the manager are given to the banks making the payments. (See page 381.) At 1.30 P.M. each day except Saturday, and then at 12 M., the creditor banks shall receive from the manager at the clearing house the balances due them respectively. Receipts signed by the cashiers of the creditor banks are given to the manager of the clearing house. Form of Cashier's Receipt National Security Bank %S^,6J/-0.^^ Boston, TfloA^k 25, 19 Received from C. A. RUGGLES, Manager of the Boston Clearing House, by f^oi-eAX, Z#. ^umt , Messenger of this Bank, St'w-emtAf-lcyuA, S^katoa^wicL cfioc /i■^^m on the third page of r ' ' this letter of credit. LETTERS OF CREDIT 385 The Reverse or Back of the Letter of Credit Indorsements once made hereon, of payments, must be allowed to remain without alteration or erasure. Care should therefore be taken to under- stand exactly about payments desired, before inscribing amounts below. On the payment of any sum exhausting this credit, this letter must be sur- rendered by the holder and attached by the banker negotiating the draft to the said draft. DATE WHEN PAID BY WHOM PAID NAME OF TOWN AMOUNT STERLING WRITTEN IN WORDS AMOUNT IN FIGURES £ s. d. 1906 April May June July Aug. 2 20 5 20 5 25 15 Union Bank Credit Lyonnais Mendelssohn & Co. Anglo-Austrian Bank Banca Commerciale Italiana Filiale der Dresdner Bank Brown Brothers & Co. London Paris Berlin Vienna Rome Hamburg Boston Seventy-five pounds Twenty-five pounds Ten pounds One hundred pounds One hundred pounds Ninety pounds One hundred pounds 75 25 10 100 100 90 100 — 500 — — Note. — On the pages following, in a regular letter of credit, are the names of towns and cities, and banks therein, any one of which will advance money upon the letter of credit. The list includes banks in all parts of the world. In what Funds usually drawn Letters of credit are usually drawn payable in pounds sterling ; but they are paid in the current money of the country in which they are negotiated. They pass everywhere as cash, since any banker in the world would usually be very willing to buy a reliable sterling draft on London. Thus with a letter of credit a traveler can make a trip around the world with no more real money on his person than is necessary to meet immediate local expenses. Commission Charges. — The cost to the purchaser for a letter of credit is usually about 1 % of the amount of issue, though no letter will be issued for less than $5. REVIEW QUESTIONS 1. Briefly .outline the duties of the discount clerk. 2. When is collection and exchange charged on paper discounted ? 3. When paper is accepted for discount, upon what book is it first entered? 4. Explain how to post the footings of the discount register. 5. Explain the purpose and use of the discount tickler. 6. What 386 ACCOUNTING AND BUSINESS PRACTICE is the law in your state with reference to notes, etc., falling due on Sunday or a legal holiday? 7. Briefly outline the duties of the collection clerk. 8. State the sources from which a bank receives paper for collection. 9. What kind of sight paper should not be entered in the collection register? Why? 10. Explain the purpose and use of the collection register ; the collection tickler. 11. Briefly outline the principal duties of the receiving teller. 12. In examining paper deposited, what are the things that should be particulai-ly noted by the receiving teller? 13. Should paper payable to "bearer" be indorsed before deposited? Why? 14. Explain a method of classifying items on the deposit ticket. 15. On what class of checks does a bank charge collection ? 16. Explain the purpose and use of the receiving teller's daily check sheet. 17. Explain the manner of proving the receiv- ing teller's daily check sheet. 18. Briefly outline the principal duties of the paying teller. 19. When paper is presented for payment, what should the paying teller examine very critically? Why? 20. Should the amount expressed in figures on any given check differ from the amount expressed in writing, which amount would the paying teller be justified in paying? Why? 21. What is a certified check? 22. Do banks ever certify checks in excess of a depositor's account ? 23. In what particulars is a check stronger after certification than it was before? In what respects is it the same? 24. What is the purpose of a certified check book? 25. Why is a bank draft better than a check for making payments out of town? Explain fully. 26. Explain fully the purpose and use of the paying teller's daily check sheet. 27. Explain the manner of proving the paying teller's daily check sheet. 28. Briefly outline the principal duties of the note teller. 29. When are bills discounted that have been sent away for collection charged to the banks to which they are sent? 30. For what pm'pose are notes, drafts, etc., certified? 31, In your state are notes, etc., made payable at a bank charged to the depositor's account at maturity, or is it usual for business men to pay this paper by check? 32. When is a note or other negotiable paper protested ? 33. Explain the method of protesting paper. 34. What is a notice of protest? 35. To what officer are notary fees usually paid? 36. Briefly outline the principal duties of the corre- spondence clerk. 37. What is the purpose of the draft register? How is it posted? 38. What two books are combined in the remittance register. 39. Explain fully the purpose and use of the remittance register. 40. How is the remittance register posted? How proved? 41. Briefly outline the principal duties of the individual bookkeeper. 42. From what sources does the individual bookkeeper get his items for entry in the individual ledger ? 43. Explain the use of the individual ledger. 44. How is the individual ledger proved? 45. Explain how an overdraft is treated in the individual ledger. 46. What books are generally kept by the general book- keeper? 47. Explain the use of the general balance ledger. 48. Name aU the sources from which items are obtained for entry in the general cash book. 49. Define (a) letter of credit ; (b) clearing house ; (c) dividends ; (d) surplus fund. 50. Give a three-minute talk on clearing-house associations ; on letters of credit. APPEIN^DIX FORMS OF LEGAL DOCUMENTS Form I — Letter of Remittance W. 0. Weaveb C. W. Fkey W. D. Radcliffe Office of W. 0. Weaver & Co. lYnolesale C^rocers Boston, •^4tass., ^e/fit. /O, 79 RaeA&aZeAy, c/t. Zf. 'Se/ntte''m^&n' ; S't&a^& ^iAu£ A&ve/MHXA CL oA&^v- T^cyvk cU,a^ pyv €teA>e/yu /if-u/K- £&a^ S% 6/. S3 KA/yudJUf aahyuywZ&dcfi, ^&&ed/^ of tAs, cLva^, ayyud o^tu^e, licyUAyO' 'V-S.Vlf tAAoUf, 10-. €. la&OAj-eA. ¥ i-o. 387 388 ACCOUNTING AND BUSINESS PRACTICE Form II — Notice of Dissolution of Partnership Tou are hereby notified that the copartnership heretofore existing between John B. Evans and Herbert F. Osgood, under the copartnership name, style, and firm of John B. Evans df Co. , at Springfield, Mass., is this day dissolved. All accounts due the partnership are to he paid to Herbert F. Osgood at the office of the old firm, and all claims against the partnership should, at maturity, be presented to him for payment. Dated Springfield, Mass., Aug. 31, 1906. \_Signed'\ I John B. Evans. Herbert F. Osgood. Form III — Circular announcing the Retirement of a Partner W. D. MAETm A. S. Wakd Gffice of Martin & Ward I + jy'ii + ^ SSoston, •^fiass., (Lioa. S5, /9 Ro-&haaX,E.Vf cA'.lA. S'eA/yyuL ua^ to- vnAoxmi, u(yw tAaZ cm, tke> 3laX, iAvaZ. tA& s^cAmaZ- neA^Jvufs- AaXAsaZo- s/?oiaXAm,a i>-et/w-&em/ lA)-. ^. TMaAXJyn, a/yuL CL. o/. TAhiA/cL imIL {>■£, clAa^xytay&cL (yu 'yyuwtMcxL acnvo^e/yiZ. (ZitsA, tJvaZ aLaL& tke, {yuM/yv&a/O' of tAs' hcyu^S/ wZlt 6-& eo^yicUoeZ&cL (yu TViv. T/O-cubd, cyyi. Mm, cyidM^ a/s,exywnL wncLe-v tA& liA/vn, »ta/w-& ot CL. o^. lO-oA^d,. tJn AotteAjkyyi'a a, e-owA/nAUMi^e, o4, ucmaa, v-cd/U/&<£ 4i,aXA/yyia 3'ko-uQxMtcC 3w> /i-undv&d Dollars paid hy ^, iS. Z^MCCa/ynO' V' Go-,, ol tk& &X/ucwvcl (S-(yytv7yu>-n/ut-&a,ttA the receipt whereof is hereby achnowledged, do hereby grant, sell, transfer, and deliver unto the said juvitie^ ot tA.& a^&e-cyyvd, cu^^^umXA 'b&(S-&iA}-l&f a/yuL aZt otAeAy a^M-eta^ at tne/ /u/m- oi &. lA}-. TA}-u a.av&ef to cn^AMihs- ancC do aya/SA. A #^^^ ^_ ^_ mitca^ V &0. [S.A.] 390 ACCOUNTING AND BUSINESS PRACTICE Form V — Articles of Copartnership 3lttiClC?i of COpattttCtSll^tp made and entered into this first day of Auf/ust, one thousand nine hundred and six, between Malcolm D. Gilbert of the City of Boston and Commonwealth of Massachusetts, party of the first part, and Chas. M. Wentworth of the City and Commonwealth aforesaid, party of the second part, tt)itne#jietl) as follows : SliiiSdciCaS the said parties, having mutual confidence in each other, do hereby enter into a copartnership agreement on the terms and conditions following, to wit : iFtrfit. The copartnership formed shall be for the purpose of carrying on a Jobbing Furniture Business under the firm name of M. D. Gilbert Sf Co., in the said City of Boston, the partnership to commence on the date of this agreement, and to continue for two years unless sooner dissolved by mutual consent of the partners. StCtOnU. The said Malcolm D. Gilbert, party of the first part, shall con- tribute the entire resources of his late business located at :^ ^67 East Main Street, Boston, Mass., and the said new firm of M. D. Gilbert S( Co. shall as.iume the existing liabilities of the said business. These resources and liabilities are definitely described on a statement of resources and liabilities hereunto attached, and they show an aggregate net investment of $16,260.50. ^\)Vi1i, The said Chas. M. Wentworth, party of the second part, shall con- tribute resources as follows: cash, $7000; stock of furniture, $1500 ; account with Foley Bros., $S7$5. iFotirtf). The said investments shall be the capital stock of the said firm, to be used and enjoyed in common between them for the support and management of said business to their mutual benefit and advantage . JFittI). Neither party shall engage in any other business, but each shall devote his entire time and attention to, and put forth his best efforts and skill for, the furtherance of the business aforesaid ; and all gains that shall arise by means of their said business shall be divided between them equally, and all losses that shall happen to the joint business, by bad debts or otherwise, shall be borne and paid by them equally. St^t^t Neither party shall at any time withdraw from the bu^nncss a sum in excess of his share of the net profits of the firm. S)C))Ctlti)> Neither partner, during the continuance of this copartnership, shall assume any liability by indorsing notes, etc., or by becoming surety for any person or persons whomsoever, without the consent of the other said copartner. ®iffit6> It is further agreed that there shall be had and kept at all times during the continuance of the partnership), true books of account, wherein all matters and things whatsoever, proper to be entered into merchants' books, shall be properly recorded ; and these books shall be used in common, so that either of the partners may at all times have access thereto. %Xl SIMttneslfii SIi55{)ereof, the parties have hereunto set their hands and seals in duplicate, the day and year first above written. Signed, sealed, cmd delivered in the presence of g e ^ti, ., . TftaLsM/yiv A 'SuAeAt [seal] ' ' ' ' ^AoA.. 7fl. 1i}-&ntw-&cL iyyv tA& e^vAj^e, ot cyb i^a^tiA/yia JA/ytyv ouv {yu^uyu&t^j £ivin£ and hereby granting unto owb said Attorney full power and authority to oAxp^ cji/yvcL i/yuLyba/& oAi-eJh iyyi'MAA^vyvemAA', (WicL to 4i-ed4o^i/yyu alt ayyvoL eAJ-&w a^ wAaXM>eA>-eA^ aM-aut tk,& 'pbs/mA^eA' as freely, fully, and effectually as w-& could do if personally present, with full power of substitution and revocation, hereby ratifying and confirming all that . owu said Attorney or his substitute shall lawfully do or cause to be done by virtue hereof. 3fii Witness W^vctttl, we have hereunto set awb hands and seals this fv^t&e/nXA, cLoAf of fulj in the year nineteen hundred oauI ^a^x., ^JvaAjtM^ Tfl. RayviuyyicL ' ' '^f^A^ Attorney's Signature Ro^eAt /"fait [seal] Commonwealfh of Massachusetts)^ .^^ ^^^^^^ ^^ „, ^g^^ Countu of Suffolk ) 'If '^(avaa^'b Then personally appeared the above-named IS. W^. Tfl^ OA^d Rol-eAt /fall and acknowledged the foregoing instrument to be tA&uu free act and deed. 392 ACCOUNTING AND BUSINESS PRACTICE Form VII — Certificate of Protest Comtnon\j3ealt{) of JHassacjiUfiietts County of Suffolk City of Boston On the tem,tk day of ^ea&wi^e^, in the year of our Lord one thousand nine hundred Oy-yucL aA/?c, %, 1/0^. CC. fi-i/ii'vrux.n, Jl5otarp Ijlttiilic, duly admitted and sworn, and practicing in said Commonwealth, at the requ^est of £&iaA, /"f. S'vevMyyi, ©Bq., C-aeijjicr of the &/ymmvm.eAML cAatLo-naZ Bcwik,, went urith the original ruote^, which is hereto annexed, the time therein lim- ited and grace having fully elapsed, and demanded payment thereof a,t tJiEi S^c^&iMxyb cAaujyyvaZ loa/yik', cimcL w-a^ a/na/w-eA&cL {yu tA& S'cMM/yia S'eiZ&'b, "o4o- liAm^cL^." The ruot& remaining unpaid, I duly and officially notified the i/yi-dxyi^SAMy tA.&v&ot at trie' lotlo-iM/yva cicCcLi>6a^&a/ : Rotk V &CMf, f^SO 'Uhi^un,(f/yn, dt., ^<2y, B. W. /•fait V ^., cA&wtcyyp, Tfiam,. , (postage prrepaid) of said d&loAilt requiring payment. W^tv^oxt, I, the said JBotarp, iy request as aforesaid, have pro- tested and hy these presents do solemnly protest, against the drawer of said note, the indorser, and all others concerned therein, for exchange, re-exchange, and all costs, charges, damages, and interest, suffered and sustained, or to he suffered and sustained, by reason or in conse- quence of the non-payment thereof. 3fn @Ce£ltitnanp W\tXttil,-I have hereunto set my hand and affixed my Notarial Seal, the day and year first above written. Noting Non-Acceptance , . Postage Protesting for Non-Payment .Of 1/0: (X. /flyyi/nuMl, JQotarp Ptthlic APPENDIX — FOEMS OF LEGAL DOCUMENTS 393 Form VIII — Notice of Protest Lyommercial >J\a.tco/ial UDank. Boston, Mass., ^&&, /O, 19 Maa^aAjiy. Rotk V S^a/u ^, Bat&o^ V^ &a., and indorsed hy ucyw, dated ^e/JsZ. 10 , 19 , payable tA^&& ynomtka/ after date, has been -protested by me for non-payment after due demand at tAe, €'?c&&taAxyi, c4aj0uyyval BamJo this day, and that you are held answerable for the amount, with all legal costs, interests, and damages in consequence of the non-payment thereof. Respectfully yowrs, I/O-. CC. /"fVyi/vybayyi, Botarp |)ubUt 394 ACCOUNTING AND BUSINESS PRACTICE COMMERCIAL TERMS DEFINED Acceptance. — The name of an accepted draft; an agreement, by signature, to the terms named in the draft. Account Current. — An open or running account ; a detailed statement of transactions between two persons or firms. Account Sales. — An itemized statement of sales and expenses rendered by a commission merchant to his prin- cipal. Acknowledgment. — A formal admission made before a notary or other quali- fied officer, that the act described was done voluntarily; the officer's certificate of such admission. Affidavit. — A written statement made under oath. Auditor. — A person appointed to ex- amine accounts. Bankrupt. — One who fails in business and is unable to pay his debts. BiU of Lading. — A receipt of a trans- portation company, containing an account of the goods shipped and the conditions of shipment. Board of Trade. — A voluntary organiza- tion of business men for the advance- ment of commercial interests. Bond. — A written promise under seal, binding a person to do or not to do a certain thing. Capital. — The investment in a business. Certified Check. — A check that has been accepted by the bank on which it is drawn, thereby making the bank security for payment. Clearing House An institution in a city where daily settlements are made between banks by the mutual exchange of checks, drafts, etc., the difference between such exchanges being paid in cash. Collaterals. — The use of negotiable paper or other forms of value, real estate excepted, as security for a debt. Copartnership. — The voluntary associa- tion or joining of two or more per- sons in a business entei-prise. The same as partnership. Copyright. — A right of control granted by a government to an author or publisher. Coupon. — A certificate attached to a bond, showing when different install- ments of interest are due. Deed A contract under seal, usually transferring the title of real estate. Dishonor. — A refusal to pay an obliga^ tion when due, or to accept a draft when presented for acceptance. Dividend. — The allotment to each stock- holder in the division of profits. Extension. — An allowance of further time for the payment of a debt. Footing. — The adding of a column of figures, or the result of such addi- tion. Forgery. — The writing of another's name, with fraudulent intent, or altering a written document. Franchise. — A certain right or privilege granted by a government to indi- viduals or corporations. Good Will. — ■ The value in a business of established reputation or patronage. Honor. — To accept a draft, or to pay when due. Index. — An alphabetical table of con, tents. Indorse. — To write one's name on the back of a note, check, or draft; to record a partial payment on the back of a note. Installment. — The payment of a sum of money in stated portions. APPENDIX — COMMERCIAL TEEMS DEFINED 395 Jobber. — A "merchant who buys goods from importers and manufacturers, and sells to either wholesale or retail merchants. Lease. — A contract, usually in writing, for the temporary possession of re^il estate or other property. Letter of Credit. — ■ A letter usually issued by a bank, addressed to banks in foreign cities, authorizing the holder to receive credit for a stated amount. Such letters are usually carried by travelers. Manifest. — An invoice of a ship's cargo. Mercantile Agency. — An institution which obtains and furnishes infor- mation regarding mercantile enter- prises, their financial standing, business reputation, etc. Mortgage. —A conditional transfer of the title to real estate or chattels as security for the payment of a debt. Net. — Clear of all charges or deductions. Notary. — A public officer who acknowl- edges legal documents and protests paper for non-payment. Open Account. — A running or unsettled account. Open Policy. — An insurance policy cover- ing undefined risks, admitting of sub- sequent indorsements or additions. Outstanding Accounts. — ^Book accounts remaining unpaid. Overdrawn. — A term applied to bank accounts when a check has been issued for an amount greater than one's credit balance. Patent. — An exclusive right to an inven- tion, issued by a government. Power of Attorney. • — A legal authority to act for. another. Protest. — A formal notice issued by a notary to the indorser or indorsers of a note or draft, of the non- payment of a note or draft, or the non-acceptance of a draft. Rebate. — An allowance for overcharge, for early payment, or for other reasons. Retail. — To sell in small quantities. Short-extend. — To enter individual amounts at the left of the money column. Sinking Fund. — A fund set apart for the redemption of bonds or other specific uses. Syndicate. — A combination of capital- ists who unite their resources to advance some specific business en- terprise. Tariff. — A lawful rate of duty on imports and exports. Terms. — Conditions of sale or agree- ment. Tickler. — A book containing a memo- randa of all time paper. Underwriter. — One who insures. Valid. — Binding in law. Void. — Not binding in law. Way Bill. — A document containing description and shipping directions of goods sent by railroad. Wholesale. — To sell large quantities, usually in unbroken packages. 396 ACCOUNTING AND BUSINESS PEACTICE ABBREVIATIONS — GENERAL TERMS A. or Am. . . . America ; American. A I First class. Acct. or acct. . . Account. Acct. Cur. . . Account Current. Acct. Sales . . Account of Sales. Adv. or adv. . . Advertisement. Agt Agent. A.M. . . . Before noon; Master of Arts. Amt Amount. App Appendix. Asst Assistant, Atty Attorney. Av. or Ave. . Avenue. Bal. ... . Balance. B. B Bill Book. bbl. . ... Barrel. bdl Bundle. Bk Bank. bkts. . . . Baskets. B/L . . . Bill of Lading. Bldg. . . Building. Bot. . . Bought. B/S . . . Bill of Sale. bu Bushel. bx Box. c Cent. Cash Cashier. C. B Cash Book. Chgs Charges. Ck Check. Co Company; County. C.O.D Collect on Delivery. Coll Collection; Collector. Cr Credit; Creditor. cwt Hundredweight. da Day, Days. Dept Department. Dft Draft. Disc .Discount. do. .... The same. doz Dozen. Dr Debtor; Doctor, Dray Drayage. E. and O.E. . . Errors and omissions excepted. ea Each. e.g For example. Esq Esquire. etc. or &c. . . And so forth. Ex. . . . . Express; Example. Exch. . . Exchange. fig. .... Figure, Figures. F.O.B. orf.o.b. . Free on board. Fol Folio. Frt. . . . Freight. ft Foot, Feet. gal Gallon. gr. . . . Grain. gro. . . . . Gross. hhd. . . . Hogshead. hund. . . Hundred. I. B. . . . Invoice Book. i.e. . . . That is. in Inch, Inches. Ins Insurance. inst Instant; the present month. Int. . . . . Interest. Inv. . . . Invoice ; Inventory. J. . . Journal. Jr Junior. kg Keg. lb Pound. L. B. . . . Letter Book. L/C Letter of Credit. Led Ledger. L.F Ledger Folio. Ltd Limited. M Thousand. Mdse Merchandise. Mem Memorandum. Messrs. . . . Gentlemen ; Sirs. Mfg Manufacturing. min Minute. Mme. .... Madam. APPENDIX — ABBREVIATIONS 397 mo Month. M.O.D. . . . Mail Order Depart- ment. Mr Mister. Mrs Mistress. MS Manuscript. • MSS Manuscripts. Mtg Mortgage. N.A North America. N.B. . . . Take notice. No. or no. . . . Number. N.P Notary Public. O.K. . . . All correct. Oz. or oz. . . . Ounce. p Page. Payt. or payt. - Payment. pc Piece. pes Pieces. Pd Paid. per By. Per cent or per cent .... By the hundred. pk Peck. pkg Package. P.M Postmaster; After- noon. P.O Post Office. pp Pages. pr Pair. Pres President. prox Proximo ; of the next month. pt Pint. P.S Postscript. qr. . . . . Quire; Quarter. qt Quart. Reed Received. Reg Registered. Retd '■ Returned. Rev Reverend. R.R. . . . Railroad. Ry. Railway. S. B Sales Book. Sec Secretary. Shipt Shipment. sq. ft Square feet. Sr Senior. St Street; Saint. Str. . . . Steamer. Sunds. . . . Sundries. Supt Superintendent. Tr Transpose. Treas Treasurer. ult. . . . . Ultimo; of the last month. U.S.M. . . . United States Mail. via . . . By way of. viz. ... . Namely ; to wit. vol. . . . Volume. vs Against. W/B .... Way BUI. wk Week. wt Weight. Yd. or yd. . Yard. Yr. or yr. . . . Year. Arbitrary Signs a/c Account. @ at or to. e/o Care of. rf Cent. J . . . . Check mark. $ Dollar. Ji, Number. % Per cent. ii One and one-fourth. I^ One and two-fourths. jS One and three- fourths. INDEX Abbreviations 396, 397 Abstracts Of out-of-town banks' ledger . . 373 Of purchase ledger . . . 180, 213 Of sales ledger .... 185, 213 Accounts Classes of 1 Closing, by balance 11 C.O.D. 132 Definition of 1 How to open 17 Kinds of 2 Models for closing . . 49 Pi'ivate 175 Real .26 Representative 26 Allowances .... ... 2 Articles of copartnership .... 390 Auxiliary books ... . . 3 Balance sheet Definition of . . . . . 3 Exercises for 23, 38 Explanation of . .... 21 Model form 8 Bank Definition of 293 Expenses of . . . ... 294 Kinds of 294 Profits of 294 Utility of 293 Bank accounting, books for . 306, 308, 309, 312, 313, 314, 315, 319; 324, 325, 328, ' 332, 333, 335, 339, 343, 344, 345 Banks, national Capital stock of 295 Circulating notes of 297 Clerks of 299, 300 Corporate powers of . . . 298 Officers of 299 Organization of 295 Redemption fund of .... 297 Restrictions upon ..... 298 Tax on circulation of . . . 297 United States bonds of .... 297 Bill book Definition of 3 Model form 106, 107 Bill of sale 390 Bills of lading Shipper's orders . . . 132, 133 Shipping receipt 121 Bills payable . 2 Bills receivable 2 Bookkeeping 1 Book of original entry 3 Business transaction 1, 13 Capital Cash .... Cash book Definition of Exercises for 2 2 3 41 . . 321 176, 327 374-383 . . 3 127, 317 . . 236 394, 395 . . 4 256-259 . 255 Cash book Model forms . 40,41,110,111,160, 16], 204, 205, 246, 247, 272, 273, 344, 345 Petty 274, 279 Certificate of deposit . . ... 320 Certificate of stock 259 Charge 3 Charge ticket 338 Check book, model forms . . 42, 43, 117 Checks Cashier's . . Certified . . Clearing House . Closing by balance Collection charges . Commercial agencies Commercial terms . Compound entry . Corporations Books of . . Capital stock of Compared with partnership and joint^stock companies . . . 253 Definition of 253 Management of 255 Organization of 254 Powers of . 254 Stockholders of 256 Credit 1 Credit ticket 341 Daily cash proof 47 Debit 1 Deposit ticket 44, 322 Discount Definition of 2 Memorandum 128 Model for closing 36 Dissolution of partnership . 155, 150, 388 Dividends 256, 369 Double entry Changed to single entry . . . 252 Compared with single entry . . 245 Contrasted with single entry . . 245 Definition of 1 Drafts Analysis of . . 80-84, 88, 92, 93, 95 Definition of 79 Exercises on . 84, 85, 86, 90, 91, 90, 97, 100, 101 Kinds of 79 Model forms . 80, 82, 88, 91, 94, 99 Parties to 79 Purpose of . . 79 Rules for journalizing ... 84, 96 Entry ....'. 2 Expense Classification of 290 Definition of 2 Filing marks 46, 140, 211 Franchise 256 399 400 ACCOUNTING AND BUSINESS PRACTICE Gains ...... 1 Good will .... . . 171 Indorsements .... 43, 83, 89 Insolvency . 2 Interest Adjustment between partners . 197 Definition of . . ... 2 Model for closing 36 Inventories Definition of . . . . 1 Model for recording .... 11 Invoice Definition of 3 Model forms ... 45, 46, 162, 206 Invoice book 108, 109, 123 Invoice register 272, 273 Joint-stock companies . ... 253 Journal Analysis of 16 Definition of ... . . . 3 Model form . . 6, 164, 246 Posting of 17 Journalizing Exercises in 15, 20, 30 Rules for 4, 5 Ledger Analysis of 18 Balance . 343 Definition of 3 Exercises for closing . . 23, 26, 372 Model forms 7, 9 Purchase . . ... 163 Sales • . . . 163 Letters Bank remittance . . . 331, 334, 353, 356, 366 Containing remittances . 119, 120, 178, 387 Dunning . . . ... 240 General business 232 Of application ... ... 167 Of credit 383, 384, 385 Of recommendation 196 Ordering goods 48, 118 Soliciting trade 237 Liabilities 1 Losses 1 Merchandise Analysis of . . 292 Classification of ... . 288, 289 Definition of 2 To find gain on . . . . . 21 Net credit 2 Notes Charging, to depositors . . . 130 How to discount 219 Model form .48 On account 2 Opening entries Per banking 300, 301 For corporations . . . 258, 260-266 Por individuals 102, 103 For partnerships .... 172, 173 Overdrafts 243 Payroll 278 Posting 2, 17 Power of attorney 391 Present worth 2 Private banks Functions of 304 Organization of 304 Protection to creditors of . . 304 Protest Certificate of . . . ... 392 Method of . . . . ... 223 Notice of . . . . . . 393 Value of . . 223 Wheal necessary ... 222 Purchase book .... . . 42, 43 Receipt Definition of . . . . . 2 Model form . . . . 44 Red ink 3 Resources 1 Review exercises . 16, 20, 22, 29, 36, 64, 71, 86, 91, 97, 98, 101, 156, 201, 244, 270, 304, 305, 385, 386 Ruling 12 Sales book Definition of ... . . . 3 Model forms 39, 158 Single entry Changing, to double entry . . . 252 Compared with double entry . . 245 Contrasted with double entry . . 245 Definition of . . . ... 1 Solvency . . 2 State banks Compared with national . . . 303 Organization of 303 Statements Definitions of 3 Model forms . 10, 138, 139, 199, 200, 286, 287, 370, 371 Proof of 138 Stock Common . 255 Preferred 255 Treasury .... . . 255 Watered 255 Suspense account 218 Telegrams Model form 125 Suggestions for writing . . . 125, 126 Trial balance Definition of 3 Errors in 29, 242 Model form 8 Trust companies 302 Trusts 253 Value 1 Voucher Voucher and check combined . Voucher book Voucher check Voucher system of accounting . 268 269 270 266 / HF 5635 M32 c.l Author Vol. Moore, John Title Copy Accntg & bus practice — Date Borrower's Name