Chapter LXV: Appendix: B

PRACTICE WORK FOR STUDENT—SECOND HALF-YEAR

The practice work for the second semester is designed to give facility in the use of accounting records, and accuracy and confidence in the handling of a volume of transactions. Accordingly, this work consists largely of two somewhat extended problems to be recorded in blank books. The first is a problem in partnership, involving particularly the adjustment of partners’ accounts at the close of the fiscal period. Many points met in the operation of records using controlling accounts are included. The second is concerned with a trading corporation. Here some of the problems peculiar to the corporation are met, as well as those connected with the operation of a departmental business.

The stationery furnished provides two sets of blank books, as indicated above, the one for the partnership, the other for the corporation. Specific directions for their use are given with each problem. Upon completion of the problem these blanks are to be turned in for inspection and may be retained by the school if deemed best. A few miscellaneous problems are also provided. The loose-leaf supplies will usually be found suitable for their solution.

Here, also, sufficient practice work is furnished to accompany 30 hours of lecture or classroom work. If desired, this may be supplemented by the use of material in Appendix C. If an adequate understanding of the use and operation of accounting records is to be secured, disconnected problem work should not be substituted for the practice work provided in this Appendix B.

In handling this semester’s work, the student must not allow himself to fall behind in the preparation of the assigned work There is quite a volume of work to be done and the material of the various assignments is so interrelated that unless the practice work is kept up to date, most of its value is lost through the student’s not being ready to carry out instructions given covering the current work. Careful work and the proving of its accuracy will prevent much waste of time in making corrections.

I

This set comprises a general journal; a sales journal, a
purchase journal, and the cash journals, for convenience
bound together in one book; and a general ledger, purchase
ledger, and sales ledger, also bound together in one book.
Of the general journal, pages 1-15 inclusive will be used
for transactions which cannot be recorded in the special
journals, the rest of the blank being used as a place of
record of the monthly trial balances. Of the special journal
blank, pages 1-4 inclusive will be used for sales; pages 5-7
inclusive for purchases; page 8 and following for the cash
book. For the purpose of securing a better comprehension of
some features of the operation of controlling accounts the
general journal is not provided with the customary analysis
columns. The student is thus compelled to consider the
effect of each entry on the controlling account as well as
on the subsidiary account.

The sales journal provides for the analysis of sales into
cash, credit, and partners’ withdrawals, the first column
being the total or general column in which all items are to
be entered; the others, “On Account,” “Cash,” and “Partners’
Withdrawals.” The same provisions, with the exception of the
Partners’ Withdrawals column, are to be made in the purchase
journal.

The cash book columns will be, on the debit side, General,
Accounts Receivable, Sales Discount, and Net Cash; and on
the credit, General, Accounts Payable, Purchase Discount,
and Net Cash. All items affecting the controlling accounts,
“Accounts Receivable” and “Accounts Payable,” are to be
entered gross in their respective columns, the totals of
which are posted to the controlling accounts when the cash
book is summarized. The discount columns on both sides of
the cash book are to be used for the recording of sales and
purchase discounts, and all items to be posted to general
ledger accounts other than the controlling accounts should
be entered gross in the “General” columns. All amounts
will be extended net into the “Net Cash” columns, and the
difference between these two columns will represent the cash
balance.

The general ledger will include pages 1-27 inclusive, the
sales ledger pages 28-34 inclusive, and the purchase ledger
35-40 inclusive. The first four pages preceding ledger
ruling are to be used for index purposes.

All transactions affecting individual customers’,
creditors’, and partners’ accounts are to be posted daily
to those accounts. The postings to the controlling accounts
will follow the explanations in the text or special
instructions.

This set affords the student facility in handling a
partnership set of books operated under a controlling
account system. The operation of this set will require great
care in posting to controlling and subsidiary accounts in
order to keep them in agreement.

To secure the maximum of practice with a minimum of detail
work, the transactions for each month are summarized and
are to be dated as of the last day of the month. The dates
of issuance or maturity of the notes, however, are given so
that this can be recorded.

The student should become familiar with the following
ledger accounts to which he should strictly adhere in the
classification of all transactions. These accounts are to
be opened in the ledger at the places indicated. The first
numeral following the account title indicates the page, the
second the line on that page. “Line 1” refers to the very
first line at the top of the page.

LEDGER ACCOUNTS (40 pages)

General ledger, pages 1-27
Sales ledger, ” 28-34
Purchase ledger, ” 35-40
Page Line
Cash 1 1
Investments 1 12
Notes Receivable 1 18
Accounts Receivable 1 30
Reserve for Doubtful Accounts 2 28
Merchandise Inventory 2 34
Notes Receivable, Special 3 1
Deposit with Westchester Lighting Co. 3 11
Delivery Equipment 3 21
Depreciation Reserve Delivery Equipment 3 31
Store Furniture and Fixtures 4 1
Depreciation Reserve Store Furniture and Fixtures 4 11
Office Furniture and Fixtures 4 22
Depreciation Reserve Office Furniture and Fixtures 4 31
Building 5 1
Depreciation Reserve Buildings 5 11
Notes Payable 5 22
Accounts Payable 6 1
Mortgage Payable 6 30
C. Allen Cotten, Profits Loan Account 7 1
Scott Wooster, Profits Loan Account 7 12
Landsdowne Woolsey, Profits Loan Account 7 26
C. Allen Cottenm Capital 8 1
C. Allen Cotten, Personal 8 13
Scott Wooster, Capital 9 1
Scott Wooster, Personal 9 13
Landsdowne Woolsey, Capital 10 1
Landsdowne Woolsey, Personal 10 13
Profit and Loss 11 1
Sales 12 1
Sales Returns and Allowances 12 19
Purchases 13 1
Purchases Returns and Allowances 13 19
In-Freight and Cartage 14 1
Salesmen’s Salaries 14 13
Salesmen’s Traveling Expenses 14 26
Advertising 15 1
Delivery Expense 15 13
Shipping Supplies 15 26
Out-Freight 16 1
Office Salaries 16 13
Office Supplies 16 26
Office Expense 17 1
General Expense 17 13
Cash Short and Over 17 29
Charity Donations 18 1
Association Dues 18 13
Light and Heat 18 26
Rent 19 1
Insurance 19 13
Taxes 19 26
Depreciation 20 1
Sales Discount 20 13
Bad Debts 20 26
Interest Cost 21 1
Purchase Discount 21 13
Interest Income 21 26
Miscellaneous Sales 22 1

On pages 28-34 inclusive, enter the following customers’ accounts,
four to the page:

Arnold Sheriff & Co.
Atlas Dry Goods Co.
Baird Dry Goods Co.
Bostonian Dry Goods Co.
Burrows Dry Goods Co.
Century Dress Goods Co.
Childs & Son
Daniel & Co.
Eagle Dress Goods Co.
Emporium Dry Goods Co.
Falk & Taylor
Hudson Dry Goods Co.
Macmillian & Co.
Marquis Dress Goods Co.
Melrose Dry Goods Co.
Metropolitan Dry Goods Co.
Henry Miller
T. H. Miller
National Dress Co.
New York Silk Co.
Public Bargain Store
Rogers & Son
Silk & Dress Goods Exchange
Southern Dry Goods Co.
Thompson Hudson Co.
Wilson Williams Co.
Young, Smith, Field Co.

Beginning on page 35, enter these creditors’ accounts,
four to a page.

American Dry Goods Co.
Associated Dry Goods Co.
Bentley, Gray & Co.
Claflins, Inc.
Carter Dry Goods Co.
Marshall Field & Co.
Miller & Rhoades, Inc.
Newcomb Endicott Co.
Wm. Taylor, Son & Co.
U.S. Dry Goods Co.
Wico Mills, Inc.

II

C. Allen Cotten, who has long been in the wholesale
merchandising business, anticipating a revival of commercial
activity in the early part of 19—, decided to enlarge his
business. Accordingly, on January 2, 19—, he enters into a
partnership agreement with Scott Wooster, a former executive
of the United Dry Goods Co., of Philadelphia, and Landsdowne
Woolsey, a retired real estate and insurance broker of New York.

According to the terms of the partnership agreement,
Cotten’s investment was his business, based upon the
following balance sheet which represented the book value
of the items:

C. ALLEN COTTEN
BALANCE SHEET, December 31, 19—

_Assets_

CURRENT ASSETS:
Cash $ 3,065.00
Notes Receivable (See Schedule 1) 2,500.00
Accounts Receivable (See Schedule 2) $25,150.00
_Less_—Reserve for Bad Debts 600.00 24,550.00
----------
U. S. Liberty Bonds 3,000.00
Accrued Interest 90.00
Merchandise 21,780.00

DEFERRED CHARGES TO OPERATION:
Prepaid Insurance $ 100.00
Office Supplies 150.00
Garage Rent 75.00 325.00
----------
FIXED ASSETS:
Delivery Trucks $ 5,000.00
_Less_—Depreciation Reserve 500.00 4,500.00
---------- ----------
Total Assets $59,810.00

_Liabilities_

CURRENT LIABILITIES:
Notes Payable (See Schedule 3) $ 4,000.00
Accounts Payable (See Schedule 4) 25,600.00
Accrued Interest on Notes 20.00
Accrued Taxes 190.00
----------
Total Liabilities 29,810.00
----------
_Net Worth_

Represented by:
C. Allen Cotten, Capital $30,000.00

Schedules appended to the balance sheet of C. Allen Cotten:

Schedule 1. NOTES RECEIVABLE:
Baird Dry Goods Co. $ 1,500.00
60-day 6% note due February 1.
Childs & Son 1,000.00
Non-interest-bearing note, due February 15.
----------
$ 2,500.00
==========
Schedule 2. ACCOUNTS RECEIVABLE:
Atlas Dry Goods Co. $ 2,283.00
Burrows Dry Goods Co. 2,000.00
Century Dress Goods Co. 4,800.00
Falk & Taylor 3,400.00
Marquis Dress Goods Co. 2,795.00
T. H. Miller 1,425.00
National Dress Co. 2,892.00
Rogers & Son 3,650.00
Wilson Williams Co. 1,905.00
----------
$25,150.00
==========
Schedule 3. NOTES PAYABLE:
Marshall Field & Co. $ 2,000.00
90-day 6% note due March 1, 19—.
American Dry Goods Co. 2,000.00
90-day 6% note, due March 15, 19—.
----------
$ 4,000.00
==========
Schedule 4. Accounts Payable:
Associated Dry Goods Co. $ 3,950.00
Claflins, Inc. 6,290.00
Wico Mills, Inc. 2,780.00
Miller & Rhoades, Inc. 5,672.00
Newcomb Endicott Co. 3,678.00
Marshall Field & Co. 3,230.00
----------
$25,600.00
==========

Cotten guaranteed the collection of all notes and accounts
outstanding, and the partnership agreement provided that in
case any of the accounts should be judged uncollectible by
agreement among the partners or otherwise, such amount is
to be charged to Cotten’s personal account on the date such
items are found uncollectible.

Wooster’s investment was $20,000 cash, his services and
experience; and Woolsey was admitted as a special partner
investing $50,000 in cash.

The partnership agreement further provided that Cotten was
to be allowed an annual salary of $4,800, Wooster $6,000,
but Woolsey was to receive no salary; and that interest at
the rate of 6% per annum was to be charged on the drawings
in excess of the salary allowed for the fiscal period from
the date such drawings exceeded salary until the date of
closing the books. The drawings of Woolsey were also to be
charged at 6% per annum from the date of draft to the date
of closing the books. Interest at 6% per annum was to be
allowed on capital, and in all cases was to be figured on
the basis of 360 days to the year, 30 days to the month.
Profits and losses were to be shared as follows: Woolsey
20%, Cotten 36%, and Wooster 44%. The fiscal period was to
consist of six months, ending on June 30 and December 31,
respectively.

The partnership agreement also provided that the capital
accounts of the partners were to remain intact and that any
credit balances remaining in the partners’ personal accounts
at the close of the fiscal period were to be transferred
to their loan accounts which were to be treated as current
accounts bearing 6% interest and subject to adjustment of
interest at the close of each fiscal period.

Make the necessary entries in general journal and cash book
to record the respective investment transactions, and post.

_Instructions_

Make a _full_ but _concise_ statement of the
partnership agreement, following the form of opening entry
illustrated on page 166. This opening statement is the first
record in the general journal and should provide all of the
information needed by the bookkeeper for the proper handling
of the partners’ accounts at the close of the fiscal period.

Immediately following this narrative will be the formal
investment entries. On the line just preceding the formal
investment entry for each of the partners, use the
following—or similar—phraseology: “C. Allen Cotten made
the following investment.” A separate investment entry is
made for each partner.

These entries are to be made complete in the general
journal and posted immediately, except the several cash
items, which, included in the totals of the cash book, will
be posted at the end of the month. These cash items will
therefore be checked both in the journal and in the cash
book, where they must be entered in the “General Ledger” and
“Net Cash” columns.

III

Summarized transactions for the month of January were as
follows. Enter these in their respective journals. Posting
of these entries will comprise the next assignment.

Purchases:
American Dry Goods Co., 2/10, n/60, $10,817.50.
Bentley, Gray & Co., 2/10, n/60, $5,694.
Claflins, Inc., 2/10, 1/30, n/60, $12,639.
Carter Dry Goods Co., 2/10, 1/30, n/60, $18,709.48.
U. S. Dry Goods Co., 3/10, 2/15, n/60, $12,104.90.
Miller & Rhoades, Inc., 2/10, 1/30, n/60, $2,689.40.
Wm. Taylor, Son & Co., 3/5, 2/10, n/30, $1,897.42.
Marshall Field & Co., 3/10, 2/15, n/60, $11,744.60.
Cash purchases were $2,564.73.

Sales:
Arnold Sheriff & Co., 2/10, 1/15, n/30, $5,264.80.
Baird Dry Goods Co., 2/10, 1/15, n/30, $4,872.35.
Bostonian Dry Goods Co., 2/10, 1/15, n/30, $3,843.68.
Century Dress Goods Co., 2/10, n/30, $5,492.72.
Childs & Son, 2/10, 1/15, n/30, $4,794.12.
Daniel & Co., 2/10, n/30, $4,683.38.
Eagle Dress Goods Co., 2/10, n/30, $5,978.35.
Emporium Dry Goods Co., 2/10, n/30, $2,461.93.
Falk & Taylor, 2/10, 1/15, n/30, $5,947.60.
Hudson Dry Goods Co., 2/10, 1/15, n/30, $3,678.90.
Macmillian & Co., 2/10, n/30, $4,642.50.
Marquis Dress Goods Co., 2/10, n/30, $4,267.50.
Metropolitan Dry Goods Co., 2/10, n/30, $4,180.
Silk & Dress Goods Exchange, 2/10, n/30, $3,780.40.
Cash sales were $847.56.
Cotten took woolens on January 15, $50.

Journal:
Goods for $500 were returned by Falk & Taylor as unsatisfactory.
Macmillian & Co. was credited with $435 because of goods lost in
transit, for which a claim was filed against the
Central Hudson Railway Co.
Damaged goods were returned to Carter Dry Goods Co., $897.80.
Received 6% 60-day note, due March 28, from Century Dress Co.
for January bill $5,492.72 less a special discount of 5%.

Cash Receipts (excluding those listed above):
Arnold Sheriff & Co., January bill $5,264.80 less 2%.
Bostonian Dry Goods Co., January bill $3,843.68 less 1%.
Falk & Taylor, balance of January bill $5,447.60 less 2%.
Hudson Dry Goods Co., January bill $3,678.90 less 1%.
Atlas Dry Goods Co., December bill $2,283 net.
Century Dress Goods Co., December bill $4,800 net.
Falk & Taylor, December bill $3,400 less 2%.
Rogers & Son, December bill $3,650 less 2%.

Cash Disbursements (excluding those listed above):
Shelving, partitions, counters, etc., for store $3,800.
Desks, tables, mimeograph, and typewriters for office $1,250.
A new Pierce motor truck $5,000.
Deposit with the Westchester Lighting Co. $50.
Salesmen’s salaries $2,000.
Salesmen’s traveling expenses $997.84.
Wages of chauffeurs and shipping clerks $500.
Garage rent $125.
Repairs to cars $50.
Licenses for trucks $50.
Oil and gasoline $50.
Boxes, crates, nails, paint, etc., for shipping $297.13.
Advertising according to contract with
Baten Advertising Co. $5,000
Freight and haulage $312.49.
Insurance on stock $250.
Lighting and heating service cost $502.60.
Office salaries $990.
Stationery, pads, pencils, envelopes, etc., $193.97.
Telephone and telegraph $422.
Postage and special messenger service $237.84.
Wages of cleaners, watchman, repairs to elevator $594.70.
Check to American Red Cross $100.
Semiannual dues to the Merchants’ Association $50.
Rent for January $1,250.
Cotten drew $400; Wooster $500.
Associated Dry Goods Co., December bill $3,950 less 2%.
Claflins, Inc., December bill $6,290 less 2%.
Wico Mills, Inc., December bill $2,780 net.
Newcomb Endicott Co., December bill $3,678 less 2%.
Marshall Field & Co., December bill $3,230 less 2%;
and January bill $11,744.60 less 2%.
Carter Dry Goods Co., balance of January bill
$17,811.68 less 2%.
U. S. Dry Goods Co., January bill $12,104.90 less 3%.
American Dry Goods Co., January bill $10,817.50 less 2%.
Cash was short $3.16.
Rent for February $1,250.

_Instructions_

All cash transactions are to be entered in the cash book
whether listed under “Cash” above or not. In recording a
cash sale or cash purchase in the cash book, extend the
amount into the “General Ledger” and “Net Cash” columns only.

Be sure to classify and post all items correctly, inasmuch
as a wrong classification or posting may necessitate many
correction entries.

The claim against the railroad company will be charged to
Sales Returns and Allowances until a settlement is effected.
Such items are often charged to a Freight Claims account,
with suitable adjustment to Sales Returns and Allowances
when settlement is made for less than the amount claimed.

The word “balance,” as in the phrase, “Falk & Taylor,
balance of January bill $5,447.60 less 2%,” calls attention
to an adjustment of some sort—returns or allowance—which
has been or is to be considered in determining the amount
still due.

Charge the freight and haulage to In-Freight and Cartage.

Great care must be exercised in the general journal entries
affecting individual customers’ and creditors’ accounts,
since these also affect their respective controlling
accounts. Inasmuch as the general journal does not provide
the customary analytic columns, it will be necessary, when
making every such entry, to indicate the controlling account
affected and, when posting, to post the item both to the
individual account and to the control account. The following
illustrations should be followed in making entries of this
kind:

(1) Sales Returns and Allowances 12 500.00
Falk & Taylor (Accounts Receivable) 26/1 500.00
(2) Carter Dry Goods Co. (Accounts Payable) 33/6 897.80
Purchases Returns and Allowances 18 897.80
(3) Notes Receivable 1 5,218.08
Sales Discount 20 274.64
Century Dress Co. (Accounts Receivable) 25/1 5,492.72

Note particularly the way in which the ledger folios are shown
for both accounts.

IV

Summarize the sales, purchase, and cash journals; balance
the cash book.

In summarizing the sales journal, first total each column
and draw a horizontal line under these amounts. On the next
line record the summary entry, entering the amounts to be
debited in the first money column and those to be credited
in the second. The total of the partners’ withdrawals should
not be posted, for they have already been transferred to
the general ledger accounts at the time they occurred. The
amount will therefore be checked in the summary entry. The
total cash sales will also be checked, inasmuch as these
have already been recorded in the cash book. The summary
entry for the sales journal will appear as follows:

Accounts Receivable, Dr. ........
Partners’ Personal, Dr. ✔ ........
Cash, Dr. ✔ ........
Sales, Cr. ........

The purchase journal should be summarized somewhat similarly
but the total purchases are to be debited to “Purchases,”
the purchases on account credited to “Accounts Payable,” and
the cash purchases are to be checked. The summary entry of
this journal will be:

Purchases, Dr.
Accounts Payable, Cr. ........
Cash, Cr. ✔ ........

In summarizing the cash journals, pencil-foot all columns of both
journals. Then formally foot the columns on both sides, using the
same line on both sides, i.e., the totals must appear on one
line extending across both pages of the book. This may leave
blank lines on either side according as one has had more
entries than the other. Underline the totals. Make summary
entries somewhat as follows:

In the receipts journal:
Cash
Sales Discount
Accounts Receivable
General ✔

In the disbursements journal:
General ✔
Accounts Payable
Purchase Discount ........
Cash ........

Use the first two money columns on either side for the entry
of the amounts. Underline these entries through the four
money columns. When posting these summary entries, the items
“General” on either side will be checked as the details
composing them have already been posted.

On the next line write in the Explanation columns on either
side, “Net Cash as above,” and extend the total amounts
of cash receipts and cash disbursements into the Net Cash
columns on their respective sides. Balance the cash book
by entering “Balance” on the disbursements journal and
extending the amount in the Net Cash column. Show totals at
the same level on both sides and draw double lines through
all columns on both sides except the Explanation columns.
Bring the cash balance down in the receipts journal.

Post completely all books of original entry. When posting
the general journal, be very careful to post to the
indicated controlling accounts. See Assignment III,
Instructions, for the method to be followed.

Take a trial balance of your general ledger and record
it under date of January 31, beginning on page 16 of the
journal blank. Write “Trial Balances, 19—” at the top of
the page and in the small space over the money columns
“January 31.” From the general ledger, copy the names of
all accounts, whether or not there are as yet any entries
in them, in the order there shown. Do not include the
individual customers’ and creditors’ accounts in the above
list, for these are taken care of by the inclusion of their
controlling accounts. Be careful to write the account name
at the extreme left of the explanation space, close to the
date column. Leave one line at the bottom of page 16 and at
the top of page of 22 for “Totals” and “Totals Forward.”

Since one page is not sufficient to complete the record,
continue it on page 22, there recording the rest of the
accounts and heading the page and columns as on page 16. The
intervening pages will be used as shown in Assignment VI.

Prove the controlling accounts against their subsidiary
accounts. To make this proof, at the top of page 30 of the
general journal, write “Balances of Accounts Receivable,
19—” and list the names of all customers’ accounts, writing
the account name to the extreme left of the explanation
space, close to the “Date” column. Place the words “January
31” in the small space over the first money column, in which
the balances of accounts receivable for January will be
recorded. Do not use the second money column on this page;
this will be used for February balances.

Beginning on page 34, make a similar list of creditors’
accounts. The instructions covering the listing of accounts
receivable apply here also, with the exception that the
words “Accounts Payable” are to be substituted for “Accounts
Receivable.”

List the individual account balances of customers’ and
creditors’ accounts for each month, as described above,
and record the total of each list in their respective
columns. These totals must agree with the balances shown
in the corresponding controlling accounts, i.e., the total
of customers’ accounts outstanding for January must be
equal to the balance of the controlling account, “Accounts
Receivable,” shown in the general ledger. A discrepancy
between a controlling account and its subsidiary accounts
must always be located and corrected.

V

Summarized transactions for February were:

Purchases:
American Dry Goods Co., 2/10, 1/30, n/60, $13,487.92.
Associated Dry Goods Co., 2/10, n/60, $13,562.70.
Claflins, Inc., 2/10, 1/30, n/60, $10,897.80.
U. S. Dry Goods Co., 3/10, 2/15, n/60, $12,247.80.
Marshall Field & Co., 3/10, 2/15, n/60, $17,792.90.
Cash purchases $2,987.50.

Sales:

Arnold Sheriff & Co., 2/10, 1/15, n/30, $5,287.45.
Atlas Dry Goods Co., 2/10, n/30, $5,794.32.
Baird Dry Goods Co., 2/10, 1/15, n/30, $4,618.73.
Burrows Dry Goods Co., 2/10, n/30, $3,289.49.
Bostonian Dry Goods Co., 2/10, 1/15, n/30, $6,642.
Century Dress Goods Co., 2/10, n/30, $4,497.35.
Eagle Dress Goods Co., 2/10, n/30, $4,127.49.
Emporium Dry Goods Co., 2/10, n/30, $4,793.80.
Henry Miller, 2/10, n/30, $5,008.34.
Melrose Dry Goods Co., 2/10, 1/15, n/30, $4,278.18
New York Silk Co., 2/10, 1/15, n/30, $3,874.70.
Southern Dry Goods Co., 2/10, n/30, $5,087.92.
Public Bargain Store, 2/10, n/30, $4,972.
Cash sales $2,989.90.
Cotten took woolens, February 28, $50.

Journal:
Goods were returned by Century Dress Goods Co. $340, and
Southern Dry Goods Co. $845, as unsatisfactory.
Made Public Bargain Store an allowance of $85.
Analysis of the January freight bill showed that $147.60
was paid for freight on sales.
Returns to American Dry Goods Co. $978.

Cash Receipts:
Baird Dry Goods Co., January bill $4,872.35 less 2%.
Burrows Dry Goods Co., December bill $1,000 on account.
Childs & Son January bill $4,794.12 less 1%.
Daniel & Co., January bill $4,683.38 net.
Eagle Dress Goods Co., January bill $5,978.35 net.
Emporium Dry Goods Co., $1,000 on account.
Arnold Sheriff & Co., February bill $5,287.45 less 2%.
Atlas Dry Goods Co., February bill $5,794.32 less 2%.
Bostonian Dry Goods Co., February bill $6,642 less 2%.
Century Dress Goods Co., balance February bill $4,157.35 less 2%.
Henry Miller, February bill $5,008.34 less 2%.
Public Bargain Store, balance February bill $4,887 net.
Cash was over $1.21.
The note of Baird Dry Goods Co. for $1,500 was paid February 1
with interest, amounting to $15.
The note of Childs & Son was paid, $1,000.
Sold miscellaneous ends, $48.50.

Cash Disbursements:
Bentley, Gray & Co., January bill $5,694 less 2%.
Claflins, Inc., January bill $12,639 less 2%.
Miller & Rhoades, Inc., December bill $5,672 net.
Wm. Taylor, Son & Co., January bill $1,897.42 less 2%.
Salesmen’s salaries $2,000.
Salesmen’s railroad fares, hotel bills, etc., $1,013.48.
Chauffeurs’ wages $240.
Garage rent $125.
Shipping clerks $210.
Gasoline and oil $75.60.
Fine for stopping car in front of hydrant $10.
Paper, wrapping supplies, crates, $308.30.
Wooster withdrew $500 February 15.
Advertising as per schedule $3,000.
Freight and haulage bills $257.80.
Rent for March $1,250.
Lighting and heating bills $497.58.
Office manager’s and clerks’ salaries $998.
Stationery, mimeograph supplies, etc., $214.40.
Wages of cleaners, watchman, repairs to windows and new steps
at door, $874.50.
Telephone and telegraph $175.80.
Messengers $128.
Bought five $1,000 U. S. Liberty bonds at 95½, with
accrued interest of $59.88.
Cotten drew $400; Wooster $500.
U. S. Dry Goods Co., February bill $12,247.80 less 3%.

Notice has been received that a receiver has been appointed for
Wilson Williams Co.

_Instructions_

In making general journal entries affecting customers’ or
creditors’ accounts, be sure to indicate the posting to the
corresponding controlling accounts.

At the time the freight bills are paid, the total amount is
charged to In-Freight and Cartage. They are analyzed later
into freight paid on sales and in-freight, and the amount
paid on sales is transferred to the proper account by means
of a journal entry.

Record the sale of miscellaneous ends and the like in the
cash receipts journal and post to Miscellaneous Sales.

Charge the $10 fine to Delivery Expense.

Be careful to charge the accrued interest on Liberty bonds
to the proper account.

VI

Summarize the special journals. In summarizing the cash
receipts journal for February and the following months,
do not underline the totals of the General and Net Cash
columns, as instructed in Assignment IV. Deduct the balance
as of the first of the month from the totals shown in both
columns, indicating, in the explanation column, the nature
of this amount. (See page 282 for illustration.) Underline
these amounts and write the summary entry for the cash
receipts journal as previously explained, taking care that
the Cash account is debited only with the receipts of the
current month.

Post completely, being particularly careful in handling
items affecting controlling accounts, especially when
posting the general journal.

Take a trial balance of the general ledger as of February
28. In making record of this and succeeding trial balances,
to obviate the necessity of rewriting account titles, fold
back the two money columns on page 17 so that they “face
up” on page 18, thus providing four money columns. This
shortened leaf may now be used for recording trial balances
for February and March. Similarly with succeeding leaves.

Do not fail to record the balances of customers’ and
creditors’ accounts in the proper places, and prove the
totals against their respective controlling accounts.

VII

Summarized transactions for March were:

Purchases:
Wm. Taylor, Son & Co., 3/5, 2/10, n/30, $8,942.50.
Newcomb Endicott Co., 2/15, n/60, $7,414.
U. S. Dry Goods Co., 3/10, 2/15, n/60, $7,609.40.
Wico Mills, Inc., 2/10, 1/30, n/60, $8,337.80.
Carter Dry Goods Co., 2/10, 1/30, n/60, $8,790.
Bentley, Gray & Co., 2/10, n/60, $10,890.45.
Marshall Field & Co., 3/10, 2/15, n/60, $10,219.
Cash purchases $3,390.

Sales:
Young, Smith, Field Co., 2/10, n/30, $6,874.32.
Thompson Hudson Co., 2/10, n/30, $4,732.46.
Rogers & Son, 2/10, n/30, $3,146.34.
Public Bargain Store, 2/10, n/30, $3,590.70.
National Dress Co., 2/10, n/30, $4,346.90.
New York Silk Co., 2/10, 1/15, n/30, $6,784.50.
Melrose Dry Goods Co., 2/10, 1/15, n/30, $7,894.80.
T. H. Miller, 2/10, n/30, $6,237.40.
Macmillian & Co., 2/10, n/30, $2,476.50.
Hudson Dry Goods Co., 2/10, 1/15, n/30, $4,475.
Falk & Taylor, 2/10, 1/15, n/30, $4,790.
Eagle Dress Goods Co., 2/10, n/30, $3,105.
Daniel & Co., 2/10, n/30, $3,490.70.
Childs & Son, 2/10, 1/15, n/30, $4,789.40.
Arnold Sheriff & Co., 2/10, 1/15, n/30, $3,980.40.
Cash sales $2,462.75.
Wooster drew merchandise $100.

Journal:
Gave Marshall Field & Co. our 60-day 6% note due May 15,
for their bill of February, $17,792.90 less 3%.
Received merchandise returned by Melrose Dry Goods Co. $1,487.90.
Returned goods to Associated Dry Goods Co. $416.90.
Received a credit memo for $162.40 from Claflins, Inc.
for spoiled goods.
Macmillian & Co. gave us their 60-day 6% note, due May 25,
for balance of January bill $4,207.50.
Marquis Dress Goods Co. was allowed $485 for delay in transit.
Out-freight for February was $139.86.
Metropolitan Dry Goods Co. issued their 30-day 6% note,
due April 15, for January bill $4,180.

Cash Receipts:
Century Dress Goods Co. paid their note due March 28
with interest.
Baird Dry Goods Co., February bill $4,618.73 less 2%.
Burrows Dry Goods Co., February bill $3,289.49 net.
Eagle Dress Goods Co., February bill $4,127.49 less 2%.
Emporium Dry Goods Co., January bill $1,461.93 net.
Marquis Dress Goods Co., December bill $2,795 net.
Melrose Dry Goods Co., February bill $4,278.18 less 1%.
T. H. Miller, December bill, $1,000 on account.
National Dress Co., December bill, $1,000 on account.
Southern Dry Goods Co., balance of February bill,
$4,242.92 less 2%.
Young, Smith, Field Co., March bill $6,874.32 less 2%.
Thompson Hudson Co., March bill $4,732.46 less 2%.
New York Silk Co., March bill $6,784.50 less 1%.
Hudson Dry Goods Co., March bill $4,475 less 2%.
Daniel & Co., March bill $3,490.70 less 2%.
Childs & Son, March bill $4,789.40 less 2%.
Arnold Sheriff & Co., March bill $3,980.40 less 2%.
Rogers & Son, March bill $3,146.34 net.
The receivers for Wilson Williams Co. declared March 15
an initial liquidating dividend of 35%,
which was received.

Cash Disbursements:
Salesmen’s salaries $2,000.
Salesmen’s traveling expenses $1,896.42.
Chauffeurs’ and shipping clerks’ wages $435.
Garage rent $125.
Gasoline, oil, and minor parts, $116.84.
Crates, boxes, and packing materials, $412.80.
Advertising as per schedule $3,000.
Rent for April $1,250.
Insurance policies, elevator, fire, plate glass, burglary, $550.
Lighting and heating $512.90.
Office salaries $1,872.
Books, stationery, $226.40.
Telephone and telegraph, postage, $896.40.
Changing partitions $280.
Wages of cleaners and watchman $490.
Painting of partitions $28.
New bell on elevator $18.75.
Contribution to Salvation Army Drive $100.
Cotten drew $400; Wooster $500.
Cash was short $12.92.
Freight bill $262.90.
American Dry Goods Co., balance of February bill
$12,509.92 less 2%.
Associated Dry Goods Co., balance of February bill
$13,145.80 less 2%.
Claflins, Inc., balance of February bill $10,735.40 less 2%.
Miller & Rhoades, January bill $2,689.40 net.
Marshall Field & Co., March bill $10,219 less 2%.
Paid Marshall Field & Co. and American Dry Goods Co.
December notes with interest.
Lent $5,000 to Woolsey, in return for which he issued
to the order of the firm his six months’ 6% note
for a similar amount.

_Instructions_

Record the interest received on notes receivable in the
General Ledger column of the cash receipts journal.

Enter the Woolsey note in the proper account.

A liquidating dividend represents the amounts disbursed by a
receiver to the creditors of the bankrupt.

VIII

Summarize the subsidiary journals.
Post completely.
Take a trial balance of the general ledger as of March 31.
Prove the totals of the subsidiary accounts against the
totals of their respective controlling accounts.

IX

Summarized transactions for April were:

Purchases:
American Dry Goods Co., 2/10, n/60, $8,292.50.
Associated Dry Goods Co., 2/10, n/60, $7,784.90.
Claflins, Inc., 2/10, 1/30, n/60, $10,467.70.
Miller & Rhoades, Inc., 2/10, 1/30, n/60, $6,742.80.
U. S. Dry Goods Co., 3/10, 2/15, n/60, $8,276.40.
Marshall Field & Co., 3/10, 2/15, n/60, $28,450.
Wico Mills, Inc., 2/10, 1/30, n/60, $4,970.80.
Cash purchases $1,988.75.

Sales:
Arnold Sheriff & Co., 2/10, 1/15, n/30, $7,145.90.
Atlas Dry Goods Co., 2/10, n/30, $6,890.70.
Baird Dry Goods Co., 2/10, 1/15, n/30, $7,294.60.
Bostonian Dry Goods Co., 2/10, 1/15, n/30, $9,874.50.
Century Dress Goods Co., 2/10, n/30, $4,927.90.
Daniel & Co., 2/10, n/30, $7,847.40.
Hudson Dry Goods Co., 2/10, 1/15, n/30, $8,475.90.
Henry Miller, 2/10, n/30, $5,982.90.
Rogers & Son, 2/10, n/30, $7,826.90.
Southern Dry Goods Co., 2/10, n/30, $7,495.80.
Thompson Hudson Co., 2/10, n/30, $6,475.80.
Young, Smith, Field Co., 2/10, n/30, $5,162.70.
Cash sales $1,920.80.

Journal:
Returned to Marshall Field & Co., $1,250 worth of merchandise
of the February purchase, cash adjustment effective as of
April 15 to be made at time of paying note.
Returned goods to Miller & Rhoades, Inc., $650.
Transferred a desk costing $125 from the office to the sales
department of store.
Received returned goods from Bostonian Dry Goods Co.,
$1,090; and from Henry Miller $785.
Received a 30-day 6% note from the Silk & Dress Goods Exchange
for January bill $3,780.40, due May 23.
Out-freight for March was $152.90.
The failure to book a payment of $10 for repairs on an
annunciator partly explained the cash shortage in March.

Cash Receipts:
Note of Metropolitan Dry Goods Co. for $4,180 was paid
April 15, with interest.
Burrows Dry Goods Co., balance of December bill, $1,000.
Eagle Dress Goods Co., March bill $3,105 less 2%.
Emporium Dry Goods Co., February bill $4,793.80 net.
Falk & Taylor, March bill $4,790 less 2%.
Macmillian & Co., March bill $2,476.50 less 2%.
Marquis Dress Goods Co., balance of January bill $3,782.50 net.
T. H. Miller, March bill $6,237.40 less 2%.
Melrose Dry Goods Co., balance March bill $6,406.90 less 1%.
New York Silk Co., February bill $3,874.70 net.
National Dress Co., on account, December bill, $1,000.
Arnold Sheriff & Co., April bill $7,145.90 less 2%.
Baird Dry Goods Co., April bill $7,294.60 less 2%.
Hudson Dry Goods Co., April bill, $8,475.90 less 2%.
Southern Dry Goods Co., April bill $7,495.80 less 2%.
Thompson Hudson Co., April bill $6,475.80 less 2%.
Young, Smith, Field Co., April bill $5,162.70 less 2%.
The firm discounted its 90-day 6% note, due July 15,
at the Merchants National Bank for $5,000.
The receivers for Wilson Williams Co. declared another
liquidating dividend of 15%.
Received from the railroad $25, an overcharge on demurrage.

Cash Disbursements:
Sales salaries $2,975.
Salesmen’s traveling expense $2,243.60.
Delivery expense $763.87.
Packing supplies $513.90.
Advertising for April $3,000, and for May $3,000,
less $250 as discount for prepayment.
Freight bills $297.60.
Light and heating $212.50.
Office salaries $2,140.
Office supplies $365.70.
Office expense $988.95.
General expense $897.12.
Rent for May $1,250.
Bentley, Gray & Co., March bill $10,890.45 less 2%.
Wico Mills, Inc., March bill $8,337.80 less 2%.
U. S. Dry Goods Co., March bill $7,609.40 less 2%.
Wm. Taylor, Son & Co., March bill $8,942.50 less 2%.
American Dry Goods Co., April bill $8,292.50 less 2%.
Claflins, Inc., April bill $10,467.70 less 2%.
Newcomb Endicott Co., March bill $7,414 less 2%.
Miller & Rhoades, Inc., balance of April bill, $6,092.80 less 2%.
Woolsey withdrew April 30 $500; Cotten, $400; and Wooster $500.
New adding machine and desks for office $500.
Paid taxes $190.

_Instructions_

Include the discount received on advertising with the
purchase discounts. The charge to Advertising will,
therefore, be gross.

Be sure to make the purchase discount adjustment
necessitated by the returned goods transaction with Marshall
Field & Co. Though this and the returned goods are to be
taken into consideration when the note is paid, do not enter
them now in the Notes Payable account, that adjustment being
made at time of payment of note. Enter them in the Marshall
Field & Co. account.

Disregard the depreciation adjustment on the desk
transferred to the sales department.

Record the face of the discounted note in the General
Ledger column, the amount of discount in the Sales Discount
column with an (X) mark, and the net amount in the Net Cash
column. In summarizing the cash book, this discount should
be segregated from the total to be posted to Sales Discount,
inasmuch as the former will be posted to Interest Cost.

Credit the overcharge on demurrage to In-Freight and Cartage.

X

Summarize the journals. In summarizing the debit side of
the cash book previous to posting, remember that included
in the Sales Discount column is an item of bank discount
on the firm’s $5,000 note, which must be shown separately
and charged to Interest Cost. Be sure you show this in the
summary entries, in addition to the Sales Discount summary.
To accomplish this the total of the Sales Discount column is
best shown in two portions, the Sales Discount total on the
one line, and the Interest Cost item on the next line.

Post completely.

Take a trial balance of the general ledger as of April 30.

Prove the subsidiary accounts against their respective
controlling accounts.

XI

1. Summarized transactions for May were:

Purchases:
Bentley, Gray & Co., 2/10, n/60, $9,764.90.
Carter Dry Goods Co., 2/10, 1/30, n/60, $29,417.70.
Newcomb Endicott Co., 2/15, n/60, $10,846.40.
Wm. Taylor, Son & Co., 3/5, 2/10, n/30, $9,497.50.
Marshall Field & Co., 3/10, 2/15, n/60, $11,145.80.
Cash purchases $1,872.45.
Sales:
Arnold Sheriff & Co., 2/10, 1/15, n/30, $9,465.80.
Baird Dry Goods Co., 2/10, 1/15, n/30, $8,467.90.
Century Dress Goods Co., 2/10, n/30, $9,748.80.
Daniel & Co., 2/10, n/30, $7,492.40.
Hudson Dry Goods Co., 2/10, 1/15, n/30, $9,948.30.
New York Silk Co., 2/10, 1/15, n/30, $9,742.50.
Silk & Dress Goods Exchange, 2/10, n/30, $9,865.80.
Southern Dry Goods Co., 2/10, n/30, $10,480.
Thompson Hudson Co., 2/10, n/30, $8,942.75.
Young, Smith, Field Co., 3/10, n/30, $16,290.
Cash sales $1,694.90.

Journal:
Young, Smith, Field Co. returned $1,985 worth of merchandise;
and Century Dress Goods Co., $625 worth.
Out-freight for April was $147.42.
Received from the National Dress Co., a 60-day acceptance drawn
on the United Textile Co. in favor of the firm, due July 15,
for $5,000.
Returned to Newcomb Endicott Co. $2,200 of merchandise.
Gave Associated Dry Goods Co. our 90-day note dated May 15,
non-interest-bearing, but with 90 days’ interest, $114.43,
included in the face, for their bill of April $7,784.90
less 2% cash discount.
Marshall Field & Co. note adjusted.
Final settlement of Wilson Williams Co. was effected May 15.
(See “Cash Receipts.”)
Due to temporary embarrassment of the Silk & Dress Goods
Exchange, their note was extended one month.

Cash Receipts:
Arnold Sheriff & Co., May bill $9,465.80 less 2%.
Atlas Dry Goods Co., April bill, $3,000 on account.
Baird Dry Goods Co., May bill $8,467.90 less 2%.
Bostonian Dry Goods Co., balance of April bill,
$8,784.50 less 2%.
Century Dress Goods Co., April bill, $2,500 on account.
Daniel & Co., April bill, $5,000 on account.
Hudson Dry Goods Co., May bill $9,948.30 less 2%.
New York Silk Co., May bill $9,742.50 less 2%.
Public Bargain Store, March bill, $2,500 on account.
Southern Dry Goods Co., May bill $10,480 less 2%.
Young, Smith, Field Co., balance May bill, $14,305 less 2%.
Interest on Liberty bonds due May 15, $119.75.
Cash was over $42.65.
For use of one of the motor trucks for the week,
$100 was received.
Sold packing materials, $80.75.
Macmillian & Co., paid their note with interest May 25.
Received $275 from the Central Hudson Railway Co. on our claim
made in January.
The receivers for Wilson Williams Co. paid a final liquidating
dividend of 10%.

Cash Disbursements:
Salesmen’s salaries $2,985.
Salesmen’s traveling expenses $2,213.72.
Delivery expenses $886.94.
Shipping and packing materials and supplies $516.70.
Advertising for June $3,000 less $250 discount for prepayment.
Rent for June $1,250.
Freight and haulage $467.90.
Lighting and heating $186.40.
Office salaries $2,040.
Office supplies $240.60.
Office expense $1,167.70.
General expense $912.67.
A contribution of $250 was made to the State University fund.
Paid Marshall Field & Co. note May 15 with interest
and adjustment.
Newcomb Endicott Co. balance of May bill, $8,646.40 less 2%.
Cotten withdrew May 15, $400; Wooster $500; and Woolsey $1,000.
Carter Dry Goods Co., March bill $8,790 net.
Wico Mills, Inc., April bill $4,970.80 less 1%.
U. S. Dry Goods Co., April bill $8,276.40 less 2%.
Wm. Taylor, Son & Co., May bill $9,497.50 less 3%.
Marshall Field & Co., May bill $11,145.80 less 2%.

2. The Acorn Manufacturing Company, a corporation, is
organized with a capitalization of $250,000 of which
$150,000 is common stock and the remainder preferred. The
company buys the plant of Brown & Towne, whose balance sheet
appears below, issuing therefor $75,000 of common stock and
$25,000 of preferred stock. The partners transfer all assets
except cash and the vendee assumes the liabilities.

BALANCE SHEET OF BROWN & TOWNE
July 1, 19—

_Assets Liabilities_
Cash $ 10,000.00 Notes Payable $ 2,000.00
Notes Receivable 30,000.00 Accounts Payable 1,000.00
Accounts Receivable 20,000.00 Mortgage Payable 5,000.00
Inventory 30,000.00 Brown, Capital 46,000.00
Plant and Machinery 10,000.00 Towne, Capital 46,000.00
----------- -----------
$100,000.00 $100,000.00
=========== ===========
July
5. The remainder of the preferred stock is subscribed for
at 90 and paid in cash.
12. Subscriptions to common stock for $25,000 at 110 are
received and paid in cash.

20. The remaining common stock is subscribed for at 90 to be
paid for in four equal instalments at intervals of
one month.
Dec.
1. All calls were met as due. Paid the organization tax and
filing fees in cash $250.

Prepare journal entries for the above on the books of the
Acorn Manufacturing Company.

3. The A B Corporation is formed with a capital stock of
$100,000, consisting of 1,000 shares par value $100 each.
A subscribes for 500 shares, B for 200, C for 200, and D for
100. B, C, and D pay cash for their subscriptions. A pays
in full for his subscription by turning over a business he
has been conducting. The corporation acquires the assets and
assumes the liabilities of A’s business as follows:

A’S BALANCE SHEET

_Assets Liabilities_

Merchandise $15,000.00 Accounts Payable $ 6,000.00
Accounts Receivable 19,000.00 A, Capital 40,000.00
Notes Receivable 12,000.00
---------- ----------
$46,000.00 $46,000.00
========== ==========

(a) Make the necessary entries to open the books of the
corporation.
(b) Make the necessary entries to close the books of A.

_Instructions_

Transfer the net claim against Marshall Field & Co.,
appearing in their account, to Notes Payable through the
general journal. The balance of the note remaining in the
latter account will be offset by the debit to be posted from
the cash disbursements journal. In calculating the interest
to be paid on the above note, take cognizance of an interest
adjustment dating from April 15.

Transfer a sufficient amount from the Wilson Williams Co.
account to the Reserve for Doubtful Accounts so that the
balance of the latter account will be wiped out. The balance
in the Wilson Williams Co. account is to be charged in
accordance with the partnership agreement.

Credit the amount received for the use of the delivery truck
to Delivery Expense.

The payment made by the railroad company should be credited
to Sales Returns and Allowances to offset the debit made
previously.

Problems 2 and 3 are, of course, separate problems not to be
recorded in the books of Cotten, Wooster & Co.

XII

1. (a) Summarize the subsidiary journals.
(b) Post completely.
(c) Take a trial balance of the general ledger as of May 31.
(d) Prove the subsidiary accounts against their respective
controlling accounts.

2. At the end of the year net profits amount to $15,000,
with a previous surplus balance of $50,000. Preferred
stock amounts to $100,000, of which $20,000 is treasury
stock; common amounts to $150,000, of which $50,000 has not
been issued. The directors declare an 8% dividend on the
preferred, and a 10% on the common, and appropriate $5,000
to a sinking fund reserve. Later the above dividends are
paid. Make the entries needed to bring the above onto the
books.

3. A corporation authorizes a $250,000 bond issue, of which
$150,000 are traded for a plant, and $50,000 are sold
on the open market at 102. The bonds bear 6% interest,
payable semiannually. Show how you would handle the above
transactions. Show your treatment at the time of the first
interest payment, assuming the bonds to mature in 25 years.

_Instructions_

Problem 1 refers to the Cotten, Wooster & Co. problem.

Problems 2 and 3 do not relate to Cotten, Wooster & Co.

XIII

Summarized transactions for June were:

Purchases:
American Dry Goods Co., 2/10, n/60, $16,145.75.
Associated Dry Goods Co., 2/10, n/60, $15,927.80.
Claflins, Inc., 2/10, 1/30, n/60, $17,894.60.
Wico Mills, Inc., 2/10, 1/30, n/60, $4,792.45.
U. S. Dry Goods Co., 3/10, 2/15, n/60, $15,867.42.
Miller & Rhoades, Inc., 2/10, 1/30, n/60, $16,279.80.
Newcomb Endicott Co., 2/15, n/60, $15,318.40.
Wm. Taylor, Son & Co., 3/5, 2/10, n/30, $5,728.
Marshall Field & Co., 3/10, 2/15, n/60, $6,716.90.
Cash purchases $1,813.40.

Sales:
Arnold Sheriff & Co., 2/10, 1/15, n/30, $8,465.90.
Baird Dry Goods Co., 2/10, 1/15, n/30, $7,964.60.
Burrows Dry Goods Co., 2/10, n/30, $6,279.45.
Bostonian Dry Goods Co., 2/10, 1/15, n/30, $9,763.80.
Childs & Son, 2/10, 1/15, n/30, $7,942.45.
Eagle Dress Goods Co., 2/10, n/30, $8,246.70.
Emporium Dry Goods Co., 2/10, n/30, $7,847.65.
Falk & Taylor, 2/10, 1/15, n/30, $8,972.70.
Hudson Dry Goods Co., 2/10, 1/15, n/30, $7,432.80.
Macmillian & Co., 2/10, n/30, $6,972.50.
Marquis Dress Goods Co., 2/10, n/30, $8,414.
Metropolitan Dry Goods Co., 2/10, n/30, $3,985.
Melrose Dry Goods Co., 2/10, 1/15, n/30, $8,945.
New York Silk Co., 2/10, 1/15, n/30, $7,987.50.
Southern Dry Goods Co., 2/10, n/30, $9,475.65.
Cash sales $1,472.60.

Journal:
Out-freight for May was $157.90.
Returned goods received from Daniel & Co., $1,875;
and Thompson Hudson Co., $935.
Received from Rogers & Son, Charles L. Sutton & Co.’s 90-day
6% note for $5,000, dated May 5, with 40 days’ interest
accrued, in payment of their April bill, the balance of
the payment in cash.
Returned $967.50 of merchandise to Miller & Rhoades, Inc.;
and $614.75 to Wico Mills, Inc.
Cash over of May was partly accounted for by failure to book
sale of old crates and supplies for $35.
The note of the Silk & Dress Goods Exchange, extended to and
due June 23, was not paid, as the firm was still in
difficulties.
A mortgage for $25,000 was given to complete the purchase
of the building. (See “Cash Disbursements.”)

Cash Receipts:
Arnold Sheriff & Co., June bill $8,465.90 less 2%
Atlas Dry Goods Co., balance of April bill $3,890.70.
Century Dress Goods, balance of April bill $1,802.90.
Daniel & Co., on account $5,000.
Henry Miller, on account $2,500.
National Dress Goods Co., balance March bill $238.90.
Public Bargain Store, on account $500
Rogers & Son, balance April bill $2,793.57.
Thompson Hudson & Co., balance May bill $8,007.75 less 2%.
Bostonian Dry Goods Co., June bill $9,763.80 less 2%.
Southern Dry Goods Co., June bill $9,475.65 less 2%.
Macmillian & Co., June bill $6,972.50 less 2%.

Cash Disbursements:
Salesmen’s salaries $5,340.
Salesmen’s traveling expenses $2,917.94.
Delivery expenses $978.42.
Shipping supplies $523.80.
Advertising for July $3,000, less $250 for prepayment.
Freight and haulage $569.70.
Rent for July $1,250.
Insurance on auto trucks $250.
Lighting and heating $92.70.
Office salaries $2,465.
Office supplies $369.74.
Office expenses $1,254.60.
General expenses $1,219.62.
Cotten withdrew June 15 $400; Wooster $500.
Bentley, Gray & Co., May bill $9,764.90 less 2%.
Wm. Taylor, Son & Co., June bill $5,728 less 2%.
Semiannual dues to the Merchants’ Association $50.
Purchased a lot and building for $35,000, paying
$10,000 in cash and the balance remaining on mortgage.

_Instructions_

Charge the Silk & Dress Goods Exchange note to their account.

Additional data on the mortgage transaction are given
under “Cash Disbursements.” In the general journal entry
make explanation of the entire transaction, including the
cash portion, which will of course be entered formally
only in the cash book. In the cash book entry, by way of
explanation, give cross-reference to the general journal
explanation.

XIV

Summarize the subsidiary journals.
Post completely.
Take a trial balance of the general ledger as of June 30.
Prove the totals of the subsidiary accounts against their
respective controlling accounts.

XV

Prepare a work sheet, as of June 30, 19—, for the
six months, taking account of the following adjustments
and inventories. Follow carefully the form shown in