Chapter LIV: Illustration of Single Entry

=Opening Entries.=—In opening a set of single-entry books, as complete a record should be made as under double entry. If the proprietor begins business with an investment of cash only and without any obligations, an entry in the cash book of the amount invested as a credit to the proprietor’s capital account is all that is necessary. If the investment consists of a variety of properties and liabilities to creditors, and obligations on leases, salaries, etc., are assumed, a very careful and complete record should be made in the journal, showing the kinds and values of the properties invested, and the kinds and amounts of the liabilities assumed. This is best arranged in schedule or statement form, with extension into the posting money columns only of those personal items for which accounts are to be opened in the ledger. Illustration will be given of a simple set of single-entry books, the journal, cash book, sales and purchase records, and the ledger. In order that the entries may be traced, a separate statement or diary of the transactions will be given, covering in summarized form a six months’ period.

PROBLEM. June 30, 19—, A. B. Cornell purchased
a store and business, paying $7,750.

He took over the following assets and liabilities
at the values shown:

Store building and lot $3,000.
Furniture and fixtures $500.
Horse and wagon $250.
Accounts receivable: B. C. Davis $50; C. D. Elliot $75;
D. E. Foley $100; E. F. Gaynor $25; F. G. Harvey $125.
Stock of merchandise $5,250.
Mortgage on real estate $500.

Accounts payable: G. H. Jackson & Co. $250; H. J.
Kelsey $375; J. K. Landon Co. $500.

He deposited $500 as an additional investment.

During the six months the following transactions took
place:

Cash sales $10,000.
Sales on account: Davis $300; Elliot $400; Foley $500;
Gaynor $600; Harvey $700.
Purchases were: Cash $3,500; Jackson & Co. $500; Kelsey
$450; Landon $750; Morey & Co. $1,000.
Cornell returned goods to Morey & Co. $50, and received
an allowance from Kelsey $20.
He made Harvey a rebate of $25.
He received cash on account from Davis $250; Elliot
$300; Foley $400; and notes from Gaynor $250 and
Harvey $500.
He paid on account cash to Morey & Co. $500; Jackson & Co.
$600; Kelsey $675.
He gave his note for $1,000 to Landon.
He paid off the mortgage with interest $530.
Expenses paid were: Clerks $750; cashier, stenographer, etc.,
$250; N. Y. C. Ry. for freight $250; horse feed and expense
of driver $125; newspaper and street-car advertising $300.
Cornell drew $2,000, and made an additional investment
of a safe valued at $250.

At the close of the year inventories and appraisals of data not on the ledger were as follows:

Store building and lot $2,970.
Furniture and fixtures $725.
Horse and wagon $235.
Merchandise $3,000.
Notes receivable $750, with accrued interest $2.50.
Notes payable $1,000, with accrued interest $15.
Accrued salaries and expenses $25.
It was decided to value the accounts receivable at face
value less 2%.

JOURNAL
=============================================================
19— June 30
A. B. Cornell commenced business, purchasing the
store and stock of the ........ Company, taking over
all its assets and assuming all its liabilities and
obligations. He deposited $500 as a working fund for
the business. The following shows his investment assets
and obligations:

_Assets_ L.F. Items Dr. Cr.
Store Bldg. and Lot 3,000.00
Furniture and Fixtures 500.00
Horse and Wagon 250.00
Merchandise 5,250.00
Accounts Receivable:
B.C. Davis Dr. 50.00 5 50.00
C.D. Elliot Dr. 75.00 5 75.00
D.E. Foley Dr. 100.00 5 100.00
E.F. Gaynor Dr. 25.00 5 25.00
F.G. Harvey Dr. 125.00 375.00 5 125.00
------
Cash 500.00
------
Total Assets 9,875.00

_Liabilities_
Mortgage on Real Estate 500.00
Accounts Payable:
G. H. Jackson
& Co. Cr. 250.00 5 250.00
H. J. Kelsey Cr. 375.00 5 375.00
J. K. Landon
Co. Cr. 500.00 1,125.00 5 500.00
------ --------
Total Liabilities 1,625.00
--------
A. B. Cornell, Capital Cr. 6 8,250.00 8,250.00

Dec. 31 Morey & Co. Dr. 5 50.00
Returned goods as
unsatisfactory.
H. J. Kelsey Dr. 5 20.00
Allowance a/c inferior
goods.
F. G. Harvey Cr. 5 25.00
Rebate a/c dissatisfaction.
E. F. Gaynor Cr. 5 250.00
Note at 3 mo. 6% on a/c.
F. G. Harvey Cr. 5 500.00
Note at 60 da.,
no interest on a/c.
J. K. Landon Co. Dr. 5 1,000.00
Note at 6 mo. 6% on a/c.
A. B. Cornell, Capital Cr. 6 250.00
Made additional investment
of office safe.
-------- ---------
1,445.00 10,400.00
======== =========

JOURNAL
======================================================================
19— L.F. Items Dr. Cr.
Dec. 31 FINANCIAL STATEMENT
_Assets_
Store Bldg. and Lot 2,970.00
Furniture and Fixtures 725.00
Horse and Wagon 235.00
Merchandise 3,000.00
Accounts Receivable:
B.C. Davis 100.00
C.D. Elliot 175.00
D.E. Foley 200.00
E.F. Gaynor 375.00
F.G. Harvey 300.00
--------
1,150.00
_Less_—
Bad Debts est. 23.00 1,127.00
Notes Receivable 750.00
Accrued Interest on above 2.50
Cash 1,970.00
--------
Total Assets 10,779.50

_Liabilities_
Notes Payable 1,000.00
Accrued Interest on above 15.00
Accounts Payable:
G. H. Jackson & Co. 150.00
H. J. Kelsey 130.00
J. K. Landon Co. 250.00
Morey & Co. 450.00
------
980.00

Accrued Salaries and Expenses 25.00
-------
Total Liabilities 2,020.00
--------
Net Worth 8,759.50

A.B. Cornell,
Capital, 6/30 8,250.00
Additional Investment 250.00
--------
8,500.00
Drawings 2,000.00
--------
6,500.00
Net profit this period 2,259.50 8,759.50
-------- ========
A.B. Cornell, Personal Cr. 6 2,259.50
To carry the net profit
to Cornell’s Personal
account.
A.B. Cornell, Personal Dr. 6 259.50
A.B. Cornell, Capital Cr. 6 259.50
To transfer the balance
of profit left in the
business to Cornell’s
Capital account.
------ --------
Totals 259.50 2,519.00
====== ========

Dr. CASH CASH Cr.
===========================================================================
19— | 19—
June 30 |Dec. 31
A. B. Cornell ✔ 500.00|Purchases 3,500.00
Dec. 31 Sales 10,000.00|Morey & Co. on a/c 5 500.00 500.00
B.C. Davis on a/c 5 250.00 250.00|Jackson & Co. ” 5 600.00 600.00
C.D. Elliot ” 5 300.00 300.00|H.J. Kelsey Co. ” 5 675.00 675.00
D.E. Foley ” 5 400.00 400.00|Mortgage and
| Interest 530.00
|Clerks 750.00
|Cashier
| Stenographer, 250.00
|N.Y.C. Ry. Freight 250.00
|Horse Feed and
| Driver Expense 125.00
|Newspaper
| Advertising 300.00
|A.B. Cornell 6 2,000.00 2,000.00
|Balance 1,970.00
------ ---------| -------- ---------
950.00 11,450.00| 3,775.00 11,450.00
====== =========| ======== =========
19— |
Jan. 2 Balance 1,970.00|

SALES JOURNAL
========================================================
19—
Dec. 31 Cash 10,000.00
B. C. Davis 5 300.00
C. D. Elliot 5 400.00
D. E. Foley 5 500.00
E. F. Gaynor 5 600.00
F. G. Harvey 5 700.00
---------
Sales on Account 2,500.00
---------
Sales for Cash 10,000.00 10,000.00
---------
Total Sales 12,500.00
========= =======================

PURCHASE JOURNAL
========================================================
19—
Dec. 31 Cash 3,500.00
G. H. Jackson & Co. 5 500.00
H. J. Kelsey 5 450.00
J. K. Landon Co. 5 750.00
Morey & Co. 5 1,000.00
--------
Purchases on Account 2,700.00
---------
Purchases for Cash 3,500.00 3,500.00
--------
Total Purchases 6,200.00
========= ========================

B. C. DAVIS
===========================================================
19— | 19—
June 30 J2 50.00 | Dec. 31 C4 250.00
Dec. 31 S4 300.00 |

C. D. ELLIOT
===========================================================
19— | 19—
June 30 J2 75.00 | Dec. 31 C4 300.00
Dec. 31 S4 400.00 |

D. E. FOLEY
===========================================================
19— | 19—
June 30 J2 100.00 | Dec. 31 C4 400.00
Dec. 31 S4 500.00 |

E. F. GAYNOR
===========================================================
19— | 19—
June 30 J2 25.00 | Dec. 31 J2 250.00
Dec. 31 S4 600.00 |

F. G. HARVEY
===========================================================
19— | 19—
June 30 J2 125.00 | Dec. 31 J2 25.00
Dec. 31 S4 700.00 | ” ” ” 500.00

G. H. JACKSON & CO.
===========================================================
19— | 19—
Dec. 31 C4 600.00 | June 30 J2 250.00
| Dec. 31 P4 500.00

H. J. KELSEY
===========================================================
19— | 19—
Dec. 31 J2 20.00 | June 30 J2 375.00
” ” C4 675.00 | Dec. 31 P4 450.00

J. K. LANDON CO.
===========================================================
19— | 19—
Dec. 31 J3 1,000.00 | June 30 J3 500.00
| Dec. 31 P4 750.00

MOREY & CO.
===========================================================
19— | 19—
Dec. 31 J2 50.00 | Dec. 31 P4 1,000.00
” ” C4 500.00 |

A. B. CORNELL, PERSONAL
===========================================================
19— | 19—
Dec. 31 C4 2,000.00 | Dec. 31 J3 2,259.50
” ” J3 259.50 |
======== | ========

A. B. CORNELL, CAPITAL
==============================================================
| 19—
Net Worth (down) 8,759.50 | June 30 J2 8,250.00
| Dec. 31 J3 250.00
| ” ” J3 259.50
-------- | --------
8,759.50 | 8,759.50
======== | ====== ========
| 19—
| Jan. 1 8,759.50

LEDGER LIST (BEFORE CLOSING)
B. C. Davis $ 100.00
C. D. Elliot 175.00
D. E. Foley 200.00
E. F. Gaynor 375.00
F. G. Harvey 300.00
G. H. Jackson & Co. $ 150.00
H. J. Kelsey 130.00
J. K. Landon Co. 250.00
Morey & Co. 450.00
A. B. Cornell, Personal 2,000.00
A. B. Cornell, Capital 8,500.00
--------- ---------
$3,150.00 $ 9,480.00
3,150.00
----------
Excess of credits $ 6,330.00
==========

PROOF

Total postings from Journal $1,445.00 $10,400.00
” ” ” Sales Journal 2,500.00
” ” ” Purchase Journal 2,700.00
” ” ” Cash Book 3,775.00 950.00
--------- ----------
$7,720.00 $14,050.00
7,720.00
----------
Excess of credits as above $ 6,330.00
==========

=Net Profits.=—Inasmuch as the change in proprietorship is determined only by a comparison of the two financial statements, at least the result of the comparison should be incorporated into a journal entry and so be brought into the ledger account. Sometimes the statement itself and the calculation of change in net worth are made on the face of the journal, thus making permanent record of them. This is worth while since they are an essential part of the system. A permanent statement book will accomplish the same result. In the illustration the statement is entered in the journal. The net profit of $2,259.50 may be set up in the proprietor’s personal account, and the balance of that account, being the amount of profits retained in the business, transferred to the capital account; or the net amount left in the business may be transferred directly to the capital account and the personal account ruled off without balancing as suggested in Chapter LIII. The same result is accomplished, but the ability to prove postings against the books of original entry is lost. Hence the first method which is the one shown in the illustration is the better.