Chapter LXVII: Appendix: C

MISCELLANEOUS PROBLEMS FOR SUPPLEMENTARY WORK

CONTROLLING ACCOUNTS

1. From the following data prepare controlling accounts.
Indicate beside each entry its source book. Balance and
close the accounts.

Sales $10,000.
Purchases returns and allowances $200.
Credit given customers for cash received $5,000.
Purchases $16,000.
Sales discount $180.
Notes payable issued to creditors $8,000.
Customers’ notes dishonored $100.
Credit received for cash paid to creditors $4,000.
Notes received from customers $1,000.
Purchase discount $80.
Bad accounts charged off $100.
Freight prepaid on sales $60.

2. Journalize the following transactions:

(a) In our accounts receivable ledger there appears a debit
balance in the account of John Smith amounting to $200,
and in our accounts payable ledger there is a credit
balance to him of $500. We send him a check for the
balance due him, taking into consideration the cash
discount allowed by us of 2%, and that granted by him of
3%. (The general ledger contains controlling accounts
for these two ledgers.)

(b) Henry White owes us on open account $1,000, which is
subject to 5% cash discount. He settles his account
by giving us a note, which has included in its face
interest for six months at 6%.

3. Draw up rough forms of a general journal, sales journal,
sales returns and allowances journal, purchase journal,
purchase returns and allowances journal, cash book, and note
journals, as used in a controlling account system, and make
entries of the following transactions therein:

(a) John Norman dishonors a note for $700 which you left at
the bank for collection. The bank charges $1.50 protest
fees.

(b) Amos Clark returns $50 worth of goods and asks for an
allowance of $30 on goods retained. You accept the
returned goods and grant the allowance.

(c) C. Cohen is both a customer and a creditor but you
desire to carry his account in the creditors ledger
only. You sell him a bill of goods, $350.

(d) An error was made last month in crediting customers’
remittances. James Jones was credited for $40 that
should have been credited to John Jones. Correct the
error.

(e) Settled your account of $800 with D. Flynn, a creditor,
by returning goods $60, an allowance for defective goods
$30, transferring a note you received from D. Morgan
$570, and your check for the balance.

PARTNERSHIP—FORMATION

4. A has $5,000 invested in a business. He sells B a
half-interest for $2,000, and places the money in the
business. Make the entry.

5. X and Y bought merchandise to the amount of $12,000.
X contributed $7,500; Y $4,500. They afterwards sold Z a
one-third interest for $6,000. How much of this amount
should X and Y receive respectively in order to make X, Y,
and Z equal partners, assuming:

(a) Money paid into the business with no good-will.
(b) Money paid into the business with good-will.
(c) Money not paid into the business.

6. A and B carried on business in partnership and divided
profits and losses in proportion to their capital,
three-fifths and two-fifths, respectively. On January 1,
19—, A’s capital was $52,500, and B’s $35,000, as shown by
a balance sheet of that date. They agreed to admit C as a
partner from the same date on the following terms:

1. Assets and liabilities and capital to be taken as
shown in the balance sheet.
2. $12,500 to be added to the assets for good-will.
3. The amount of good-will to be added to A’s and B’s
capital in the proportion in which they divide profits.
4. C to pay to the partnership such a sum as will give
him a one-fifth share in the business.

(a) State what amount of capital C has to
bring in.
(b) Set out the capital accounts of each
partner in the new partnership.
(c) State in what proportions the profits
will be divided in the future, A and B,
as between themselves, sharing in the
same proportion as before.

7. New, Knott, and Moore are partners, sharing profits in
the proportion of their investments. On December 31, 1920,
the balance sheet of the partnership is as follows:

_Assets Liabilities and Capital_
Cash $18,000.00 Accounts Payable $ 1,000.00
Other Current Assets 23,000.00 Moore, Capital 24,000.00
Fixed Assets 20,000.00 New, Capital 24,000.00
Knott, Capital 12,000.00
---------- ----------
$61,000.00 $61,000.00
========== ==========

Moore decides to retire from active business and agrees to
sell his interest to the other two partners for $26,400,
taking $14,400 in cash and the balance in three equal
instalments payable July 2, 1921, January 2, 1922, and July
2, 1922, evidenced by notes payable.

The business is very prosperous, but it becomes increasingly
evident that more capital is required, especially in view
of the approaching maturity of the first note given to
Moore. New and Knott decide to admit John Less as partner
as of date July 1, 1921, at which time the current assets
have increased by $16,000, accounts payable by $10,000, and
the partners’ capital accounts by $6,000. They value the
good-will at $12,000.

Less buys a one-third interest, but stipulates that all he
pays must remain in the business and that the good-will
shall not appear upon the books.

How much must he pay for the one-third interest? Present the
balance sheet of the firm of New, Knott & Less as of July 1,
1921. (Ignore accrued interest on Moore notes.)

PARTNERSHIP—OPERATION

8. A, B, and C are partners. A is to receive a salary of
$2,000 per annum, B $2,500, and C $3,000. The balance of
profits, after payment of salaries, is to be divided as to
the first $20,000, 2/3 to A, and 1/6 each to B and C; and
profits above $20,000 are to be divided equally among the
three. A retires from active business, and gives up his
right to salary for 19—. The profits for the year, before
charging salaries, amount to $35,000. To what extent are A,
B, and C, respectively, affected by A’s concession?

9. A and B, partners, finding themselves in want of further
capital in their business, and both being possessed of real
property, A deposited deed with the bankers of the firm
as security for a loan of $2,000 to the firm. B arranged
on some of his own property a mortgage for $1,500 with a
private friend and paid the proceeds into the firm’s bank
account. The bankers were eventually obliged to realize the
security held by them which produced, after payment of all
expenses, the sum of $2,850.

Prepare entries recording these transactions in the firm’s
books.

10. In making an audit of the books of the partnership of A
and B, you find that the agreed division of profits was to
be on the basis of the capitals and of the time that they
were left in the business.

The books show as follows: A’s account paid in January 1,
$6,000; March 1, $2,000; June 1, $4,000; November 1, $1,000;
withdrew April 1, $3,000; October 1, $2,000.

B’s account, paid in January 1, $4,000; February 1, $1,000;
August 1, $3,000; withdrew May 1, $2,000; December 1, $1,000.

Prepare a statement showing method of arriving at correct
profit distribution.

11. Bull and Bear entered into partnership, Bull
contributing $100,000, and Bear $75,000. Profits and losses
were to be divided, Bull 60% and Bear 40%, and interest was
to be allowed on capital at the rate of 6% per annum. The
profits for the first two years (after charging interest on
capital) were $19,600 for the first year, $22,400 for the
second; and the drawings of the partners in excess of their
salaries were, Bull $1,800 first year, $2,000 second year;
Bear $2,000 first year, $2,400 second year.

At the end of the second year, Peak was admitted to
partnership, and put into the business capital equal to
Bull’s capital at the time, on the same conditions as to
interest. Profits were to be divided on the basis of capital.

The profits for the third year were $30,000, and the
partners’ drawings in excess of salaries were: Bull $2,000,
Bear $2,500, and Peak $1,500.

Set up the capital accounts of the partners for each of
these years, showing balance of each at the end of the third
year.

PARTNERSHIP—DISSOLUTION

12. A, B, and C are in partnership. A invested $11,000;
B invested $5,000 and C invested $1,200. Their agreement
provides that profits or losses shall be divided as follows:
A, ⁴/₉; B, ³/₉; and C, ²/₉.

The partnership has become insolvent and has therefore
decided to dissolve. The cash value of assets is $10,000.
The deficit is, therefore, $7,200. How should the assets be
divided and how much money will each partner receive?

13. A, B, and C engage in business. A contributes $10,000
capital; B contributes $5,000; while C in lieu of any
capital contribution agrees to undertake the active
management at a salary of $3,000 a year, to be paid monthly.

After allowing 5% interest on capital, they are to
divide the net result in the proportions of 5, 3, and 2
respectively.

At the end of eighteen months they ascertain the position
to be unfavorable and decide to wind up. The assets realize
$12,500; there are no liabilities except for capital and
interest thereon and one month’s salary, due to C.

Make up the partners’ accounts showing the amount to be
received by each.

14. Thompson and Murray are partners, sharing profits and
losses equally. The partnership is dissolved December
31, 19—, at which time Thompson’s capital investment is
$20,000, and Murray’s $7,000. Total liabilities are $55,000,
included in which is $5,000 due Wilson on open account, and
$7,000 due Murray on account. The whole of the assets had
been disposed of for $60,000 cash by July 1 of the next
year. Close the partnership books.

CORPORATION BOOKS

15. On June 1, 19—, the Home Manufacturing Company is
incorporated under the laws of the state of New York to
acquire and conduct the business of the firm of R. O.
Browning and H. E. Johnson. The authorized capital stock
of the company is $250,000, par value $100 per share. The
company has agreed to take over the net assets of the
partnership at the following valuation, and to issue in
payment 1,000 shares of stock to each of the two partners:
real estate $120,000; tools and equipment $60,000; raw
materials $20,000. A bill of sale is executed and the stock
duly issued. E. O. Kitchell and R. K. Taylor subscribe
for 100 shares each. On June 10 the stock subscribed for
by Kitchell and Taylor is paid for and issued. On June 14
Browning and Johnson each donate 100 shares of stock to the
company to be sold for the purpose of securing additional
working capital.

From the foregoing data, make: (a) the entries on the books
of the partnership for the sale of the assets; (b) the
opening entry of the new corporation.

16. A corporation is organized with an authorized
capitalization of 5,000 shares at a par value of $100 each.
One-half of the stock is subscribed for at 90 and paid for
in two instalments. R. K. Reymer, in return for 1,000 shares
of stock, transfers to the corporation his shipyard valued
at $80,000. A. R. Paine receives 100 shares of stock for his
services in organizing the corporation.

Make the necessary opening entries on the books of the
corporation for the above.

17. F. H. Cole and R. D. Harris have patented an improved
electric meter and have borrowed $1,500 on their note with
which to complete the invention. They organize a corporation
with a capital of $50,000, shares $100 each. Cole and Harris
each receive $20,000 worth of stock in return for the patent
rights transferred to the corporation. The corporation
also assumes the payment of the $1,500 note. A. G. Emery,
an attorney, is given five shares to pay for services in
fulfilling the incorporation requirements. Cole and Harris
each donate to the company $10,000 worth of stock to be
sold in order to provide working capital; 160 shares of the
donated stock are sold for cash at 50% of the par value.

Make the entries on the corporation books for the
transactions given above.

18. The Bristol Manufacturing Company issued and sold on the
1st of January, 19—, to A and B (50 to each at the same
price), first mortgage bonds of $500 each, bearing interest
at 4% per annum, and received $48,000 in cash.

What records of the transactions should be made and in what
books?

19. A corporation has an authorized capital stock of
$100,000, of which $75,000 is outstanding.

This year’s profit and loss shows a profit of $4,125. The
previous surplus balance is $20,150. They declare and pay an
8% dividend.

Show in journal form the entries covering the above.

20. A corporation’s profits for the year ended December 31,
19—, amount to $451,000. The by-laws require a reserve
equal to 10% of any dividend paid to common stockholders,
and any surplus remaining after such dividend has been paid
is also to be applied to the reserve, until such reserve
account amounts to $250,000. The reserve at December 31,
one year before, was $156,020. The capital is $2,000,000,
one-half cumulative preferred 6%, and one-half common, all
fully paid. On December 31, 19—, the date first mentioned,
the preferred dividend is two and one-half years in arrears.
On December 31, one year before, the Profit and Loss account
was in debt $202,000.

Set out your treatment of the profit for the year between
these dates.

21. On April 1, 19—, the Healey Manufacturing Company
is incorporated with an authorized capital of $100,000
common stock, and $50,000 preferred stock. The preferred
stock is subscribed for and paid in full. One-half of the
common stock is subscribed for, less 10% discount, the
subscribers paying one-half in cash, the balance to be paid
in two months. On June 1, the balance on the common stock
subscribed for on April 1 is paid, and the remainder of the
authorized common stock is sold for cash at 10% premium.

Make the entries required for the above transactions.

22. In auditing the accounts of a corporation for the
current year, it was found that for the previous year the
inventory had been undervalued $2,000; accrued wages $3,150,
and rent receivable earned but not yet due $750, had not
been taken into consideration. The surplus at that time,
$25,000, is increased during the current period to $40,000.
During the current year a piece of real estate owned by the
corporation was sold at a profit of $5,000; a fire resulted
in a loss of $10,000; accounts receivable that had been
charged off as worthless were collected to the amount of
$1,000. Dividends amounting to $15,000 were declared.

Bring the above transactions onto the books.

CASH AND PETTY CASH

23. On June 7, 19—, when balancing cash you found that you
were over $153.75. Part of it was due to the following,
which you corrected:

Duplicated an entry on the credit side for $12 paid for
postage; an error of $10 in addition on the debit side,
decreasing the total.

Not being able to locate any more errors, you make necessary
entry to balance the cash book.

On June 15 you recalled a cash sale of merchandise $14.50
made on June 7 but not recorded.

On July 7 A. B. Potter returned your statement, saying he
paid $75 on account June 7 which you had failed to credit
him with.

Make the necessary adjusting entries.

24. (a) Show by journal entry the proper booking of the
following transactions, indicating any items not to be
posted:

1. Creation of a petty cash fund of $100.

2. Petty cash disbursements summarized:
Office stationery and printing $35.
Stamps and postage $30.
Delivery expense $10.
General expense $5.
Repairs to furniture $15.

3. The petty cash fund is replenished.

(b) Set up the petty cash account in the ledger and show
all postings to it.

25. The following balances are found on the books of a trading
concern at the end of its first fiscal year:

Inventory Merchandise $ 4,312.09
Salaries 4,622.89
Capital Stock 10,000.00
Real Estate, Buildings, and Fixtures 17,500.00
Sales 8,469.10
Notes Payable (Merchandise Creditors) 5,000.00
Mortgage Bonds Issued 15,000.00
Customers’ Accounts 5,423.23
Accounts Payable (Merchandise Creditors) 2,436.28
Notes Payable, Bank 5,000.00

Total merchandise purchases as per invoices on file, less
inventory, show the cost of merchandise sold to be 97% of
sales. The cash at bank and in hand amounted to $1,302.14.

From the foregoing construct Cash account.

NOTES AND DRAFTS

26. Lang is in need of funds. Connelly, an associate of
Lang, induces Moore to accommodate Lang. Accordingly,
Connelly introduces Lang to Moore, for which Lang pays $500.
Moore discounts for Lang a note for $15,000 due in three
months and turns over to him $14,500.

Frame journal entries covering their interest.

27. X, a branch, buys from Y. Y draws on X for $2,000 at
60 days. The draft is accepted and is later discounted 40
days from maturity at 6% per annum. In addition to the above
acceptances, Y holds a total of $15,000 acceptances from
other customers; $12,000 of these are used as collateral for
a loan of $10,000 at the bank.

State all necessary entries.

28. A corporation had discounted $25,000 of notes receivable
that are not due until December 31, 19—. How should this
be dealt with in preparing a balance sheet at November 30,
19—? One of the above notes for $5,000 was not paid at
maturity but was protested, the protest fee amounting to
$15. The company drew its check for the amount to take up
the note.

State the entries required to be made on the books to record
the transactions.

29. Previous to examining the accounts of a corporation
at the end of its first fiscal year, you find that notes
receivable stand in the financial statement prepared for the
banker at $5,500.

Upon investigation it is disclosed that $20,000 of notes
from customers were received during the period, and that
$10,000 of these notes were duly paid in full by the
customers to the company at maturity, and $5,000 of the
notes were discounted at the bank. Of the notes discounted,
a note for $500 given by Brown & Company was not paid when
due, and has been charged back to the Notes Receivable
account. Notes to the amount of $1,500 are not yet due at
the bank.

Partial payments have been made to the company to the extent
of $500 on notes still due, and these payments have been
credited to an account called “Partial Payments on Notes
Receivable.” This item is listed in the financial statement
as a liability.

A customer’s note of $1,000 is found to have been given
as collateral for the payment of a note of the company
discounted at the bank.

A 30-day note given by an officer of the company for $200 is
treated as a cash item. The note is 60 days past due.

You are asked to give the journal entry or entries for
obtaining the proper account or accounts to record the
above facts.

DEPRECIATION

30. An engine installed in a factory December 31, 19—, at
a cost of $1,000, is replaced four years later by one of
larger capacity costing (second-hand) $2,800. The discarded
machine was sold for $900. The cost of making the change
was $200. It has been the practice of the company to charge
off 10% depreciation annually (on the diminishing basis),
carrying the credit to a Depreciation Reserve account.

Make the necessary journal entries.

31. A manufacturing concern has annually for the past six
years made provision at the rate of 10% per annum for
depreciation of its plant and machinery, crediting the
amount of such depreciation to a suitable Reserve account.
During the year an engine which cost originally $5,000, was
replaced by an improved engine costing $6,800. The cost of
the new engine was charged to Machinery account at time of
purchase. $300 was realized from the salvage of the old
engine, this amount being credited to “Scrap Sales,” when
received, and later closed to Profit and Loss.

Draft the adjustment entries which you consider necessary and
explain the principle upon which these entries are based.

MERCHANDISE INVENTORIES

32. The average gross profits on sales of the Blank
Corporation for the past five years have been 50%. During
19— the sales were $60,000. Purchases during the period
were $50,000. In-freight and cartage was $3,000; returned
purchases amounted to $2,500. At the beginning of the year
the inventory was $20,000. It is estimated that current
market prices are 10% above those at time of purchase.

What will be the cost of replacing the amount of stock on
hand at the end of the year?

33. In examining a business for the two years ending
December 31, 19—, it is found that an item amounting to
$750 had been omitted from the initial inventory of the
first year; that an error had been made in the footing
of the final inventory of that same year, by which that
inventory was overstated to the amount of $1,250; and that
in pricing the final inventory of the second year, an error
was made by which that inventory was understated to the
amount of $1,500.

State fully the effect of these errors on the profit of each
of the two years.

34. A certain trading corporation desires to prepare its
financial statement as of September 30, 19—, but takes
no inventory at that date. It has no perpetual inventory
records, but the management states that the ratio of gross
profit to net sales has remained substantially the same for
many years, namely, 25%, and that the rate will remain the
same for 19—.

The following information is given and you are asked to
prepare a statement showing estimated inventory on hand
September 30, 19—:

Inventory January 1, 19—, $6,100.
Purchases $28,450.
Freight-in $985.
Freight-out $1,200.
Allowances on sales $2,360.
Sales $44,500.
Discounts on purchases $960.
Buying expenses $2,500.
Sales salaries $3,000.
General office expenses $4,000.

35. The ledger accounts of Henry James on December 31,
19—, showed: Accounts Payable $16,125; Accounts Receivable
$13,188; Expense $2,450; Debit Balance Merchandise account
$15,187. He started in business January 1, 19—, investing
$45,000 cash. His total loss for the year was $8,074.50.

Prepare a statement of assets and liabilities and the profit
and loss.

CONSIGNMENTS AND JOINT VENTURE

36. Indicate by journal entries how the following
transactions should be recorded upon (a) the books of the
consignor, and (b) the books of the consignee:

1. Shipment of goods costing $12,000 which are expected to
be sold for $16,000.
2. Sale of three-fourths of such goods to sundry customers
for a total of $15,000, only $5,000 of which is received
in cash.
3. Return by customers of $55 of goods sold as defective
in quality.
4. Advance of $4,000 to consignor by consignee, and payment
of $100 freight, and $150 warehouse expense by the latter.
5. Settlement of all customers’ accounts except items
totaling $200, which are written off as uncollectible.
6. Remittance to cover balance due consignor after consignee
has deducted commission at the rate of 3% on the selling
price of goods sold. (Account sales is rendered only when
consignment is sold.)

37. On April 30, 1921, St. John & Company and Carpel
Brothers enter into a joint venture agreement. They each
contribute $4,000, with which they pay for goods that are
shipped on May 1 to John Doe of San Francisco. St. John
& Company advance $400 to defray freight and incidental
expenses. John Doe, the consignee, is allowed 10% on the
cost of the goods and is to sell them at whatever price he
can obtain for them.

On June 1, 1922, on the strength of a report sent by wire,
Carpel Brothers draw at sight on John Doe for $4,000 to the
order of Carl Peter of New York. On July 1, 1922, St. John
& Company receive from the consignee a check for $11,200,
all the goods being sold; on the same day St. John & Company
settle with Carpel Brothers. Interest at 6% is allowed on
all transactions affecting the partners in the venture.

Prepare all the ledger accounts brought about by the above
on the books of St. John & Company, including a joint
venture account. (Construct your ledger accounts in such a
manner that they will explain fully what took place and make
a cross-reference possible.)

SINGLE ENTRY

38. The books of the Butter, Egg & Cheese Company, with an
authorized and outstanding capital stock issue of $25,000,
are kept by single entry.

It annually inventories all its assets and liabilities and
from such inventory prepares a financial statement. At
December 31, 19—, this inventory is as follows:

Office, Cash $ 1,584
Balance, Bank A 10,824
Accounts Receivable 29,521
10 shares in competing company 1,000
Plant and Equipment 64,938
Merchandise Inventory 21,737
Prepaid Expenses 5,081
Overdraft, Bank B 5,003
Accounts Payable 19,747
Mortgage Payable 25,000
Notes Payable 20,000

From a comparison of the financial statements at the
beginning and the end of the year, you find that the item of
“Plant and Equipment” is stated in an amount less by $11,460
than it was at the beginning of the year, plus additions
during the year.

The financial statement for the beginning of the year showed
a surplus of $35,703.

From your analysis of the disbursements and unpaid accounts
at the beginning and end of the year, you find total
purchases amounting to $661,910, and expenses for salaries,
wages, supplies, repairs, etc., amounting to $120,115.

The purchases, however, included $450 paid out for John
Smith, an employee, for which he has not reimbursed the
company; and the total expense of $120,115 included $250 in
the hands of a buyer as a working fund.

The inventory of merchandise at the beginning of the year
was $18,125 and of prepaid expense was $2,653.

There was canceled on the customers ledger during the year
$3,206 of uncollectible accounts.

There was paid for interest and discount on notes payable
$1,061, and for interest on mortgage $1,500.

A 10% dividend was declared but not paid.

From the foregoing prepare: (a) a balance sheet as at
December 31, 19—; (b) a profit and loss statement
exhibiting net sales, cost of sales, and gross and net
profit for the year.

INTEREST, DISCOUNT, AND PROPORTION

39. What single rate of discount is equivalent to the series
20%, 20%, and 15%? 50%, 25%, and 15%?

40. An invoice amounting to $1,000 reads: “Less 30%, 10%,
and 5%. Terms 2/10, n/30.” It is dated January 19, 19— and
paid January 28, 19—.

Explain and distinguish between these reductions of the list
price. Give the amount of the check sent in payment of the
invoice.

41. Keene owed Sharpe $2,000. Sharpe offered a discount of
5% cash. Not having the ready money, Keene discounted his
note at the bank for 60 days at the rate of 6%, the note
producing the sum required to discount Sharpe’s claim.

Calculate the amount of this note and make the necessary
journal entries to take care of the entire transaction.

42. Equate the following account and find the cash balance
due October 1, money being worth 7% per annum, 30 days to
the month.

CHARLES L. BROWN
=================================+==================================
19— | 19—
Apr. 6 Mdse., 60 days 2,850.00 | Apr. 14 Cash 800.00
15 ” 90 days 1,475.00 | Returned Mdse. 125.00
28 ” 30 days 3,000.00 | July 6 Cash 1,000.00
| 17 Note, 30 days 1,000.00

43. A note for $2,500 dated September 15, 1920, bearing
interest at 6%, had payments indorsed as follows: November
28, 1920, $750; May 6, 1921, $500; August 12, 1921, $300;
January 18, 1922, $600.

Find the amount due May 8, 1922.

44. In a manufacturing concern the total value of property
subject to insurance was $500,000, distributed as follows:
assembling station $100,000; finished goods warehouse
$200,000; raw materials warehouse $100,000; and the
remainder on building. The annual insurance premium amounts
to $18,890 per year.

Find the insurance burden chargeable to each department
if the assembling room rate is 2½ times the raw materials
warehouse rate; the finished goods warehouse, 80% of the
rate of the assembling room and the manufacturing building
rate, three times the assembling room rate.

INDEX

A
ACCEPTANCE (See “Trade Acceptance”)
ACCOUNTING,
Function of, 4
Fundamentals, 7
Place of, in business, 3
Purpose of, 5
Relation to economics, 6
Relation to law, 7
Terms, 7
ACCOUNTS, 67-84
(See also “Classification of Accounts,” and special kinds,
as “Controlling Accounts,” “Customers’ Accounts,”
“Notes Receivable Account,” etc.)
Analysis of, 477
Form, 478
Necessary to determine values, 40
Arrangement in ledger, 220
Asset, balance of account, 73
Averaging, 486
Balancing, 72, 107-110, 477-484
Capital stock, 338 (See also “Capital Stock, Account”)
Chart, 75, 217-220
Current, 468-476
Form, 470
Adjustment, 469-471, 473, 476
Form, 470
Bank account as, 472-476
Date of value, 469
Defined, 468
Entries, 469-472
Interest charges on, 468, 469
Partnership, 469
Liability,
Balance of account, 73
Mechanism of, 69
Mixed, 97-105, 215
Adjustment of, 237
Nominal, 216
Number of, 71
Real, 216
Sections, 69
Statement of, 190
Surplus, 338 (See also “Surplus Account”)
“T” account, 528
Title of, 68, 72
Transferring, 110
Form, 112
ACCOUNTS PAYABLE,
Controlling account, 269, 276
Debit and credit of, 89
Liability, 14
Relation to purchases and cash, 61
Summary, under controlling account system, 276
ACCOUNTS RECEIVABLE,
Asset, 12
Balance sheet items, 26
Controlling account, 264, 276
Customers’ account as, 264
Debit and credit, 85
Ratio to sales, 65
Relation to sales and cash, 61
Summary, under controlling account system, 276
Valuation, 409
ACCRUED EXPENSES (See “Expenses”)
ACCRUED INCOME (See “Income, Accrued”)
ACCURACY, PROOF OF,
Preliminary to closing entries, 221
ADJUNCT ACCOUNT,
Defined, 103
ADJUSTMENTS, 115-131 (See also “Summarization”)
Accounts current, 473, 476
Book entries, 237-244
Accrued expenses, 242
Accrued income, 241
Bad and doubtful accounts, 240
Deferred expenses, 241
Deferred income, 243
Depreciation, 240
Illustration, 245
Inventories, 238
Preliminary work, 221
Work sheet methods, 223, 224-230
Corporate, 359-365
Made in journal previous to ledger, 237
Trial balance, 483
ADMINISTRATION, 3
ADVENTURE ACCOUNTS, 460-467
Joint, 460
Accounting, 461-467
Interest charges, 468
Relation of parties, 460
Single, 460
ADVERTISING,
Expenses, 47
AGENCY LAW, APPLIED TO CONSIGNMENT, 447
AGENT, 448
ALLOWANCES GRANTED TO CUSTOMERS, 45
Credits and returned goods invoices, 188
Debit and credit, 87
Journal, 253
Sales analysis of, 435
ANALYSIS,
Account marked for,
Form, 478
Ledger, 477-483
Procedure, 478
Sheet, 479
Form, 480
ANALYSIS PAPER,
Used for work sheet, 221
ANALYTICAL JOURNALS, 163, 251-257
Form, 164
APPRAISAL (See also “Estimates,” “Valuation”)
Defined, 103
Single-entry bookkeeping, 500
APPROVAL SALES, 442-444
ASSETS,
Account, 213, 214
Adjusted at close of fiscal period, 215
Analysis of, 123
Balance of account, 73
Chart, 217
Debit and credit applied to, 85-90
Fixed assets, debit and credit to, 88
Classified, 11-13
Comparison, 34
Current,
Balance sheet items, 26
Ratio of, to current liabilities, 27
Valuation, 407
Decrease covered by credit entry, 82
Described, 11-13
Fixed,
Balance sheet items, 27
Capital and revenue expenditures, 104
Comparison, 35
Debit and credit to account of, 88
Depreciation account, 102, 123
Valuation, 124, 408, 413
Increase covered by debit entry, 82
Increase in value of, 94
Not subject to depreciation,
Valuation, 413
Sale of in liquidation, 324
Subject to depreciation,
Valuation of, 414
Valuation, 29, 407-419
ASSETS AND LIABILITIES,
Balance sheet arrangement, 25
Changes in value of, 57, 77
AVERAGING OF ACCOUNTS, 486
Cash balance, 490
Compound equation, 489

B
BAD DEBTS,
Adjustment of entries, 240
Expense account for, 125
Expense item, 47
Handling of, 125
Valuation, 410
BAILMENT, DEFINED, 447
BALANCE SHEET, 22-37, 589 (See also “Trial Balance”)
Forms, 23, 230, 232
Accounts receivable items, 26
Accrued expense item, 27
Arrangement, 24
Assets and liabilities, 25-30
Capital stock items, 344
Cash items, 25
Comparative, 32-37
Content and form, 35
Confusion of items, 58
Content, 22, 29
Corporation proprietorship, 20
Current assets, 25
Current liabilities, 26
Deferred charges item, 27
Equation of, 74-76
Fixed assets, 27
Information on, 24
Information lacking in, 39
Interrelation of, and profit and loss statement, 60-64
Investment items, 26
Not a part of books, 230
Notes receivable items, 26
Partnership proprietorship, 20
Preliminary to closing entries, 221
Problems, 403
Proprietorship, 8-10, 19, 40-43
Purpose, 22
Ratio of items, 64
Single-entry bookkeeping, 500
Statement of profit and loss, 41
(For other references see under “Statement of Profit and Loss”)
Terminology, 23
Treasury stock on, 354
Valuation, 403-419
Based on correct analysis of accounts, 404
Rules, 407-409
BALANCING METHODS, 72, 73, 107-110, 477-484
Form, 109
Cash book, 151
Check figures in posting, 482
Errors, 482
Ledger analysis, 477-483
Form, 478, 480
Sheet, 479
Postings, 481
Red ink for, 108
Rulings, 108
Trial balance, 477
BANK,
Account,
Handling of, 370, 472-476
Interest on, 491
Opening of, 192
Agent for C. O. D. shipments, 190
Cash records, 366
Check book, 192, 194, 371
Deposit ticket,
Form, 193
Discount,
Calculation of, 492
Defined, 392
Draft, 180
Loans, 195
Methods, 192-198
Pass-book, 192, 194
BANKRUPTCY, CAUSE OF DISSOLUTION, 322
BETTERMENT, VALUATION, 416
BILL OF EXCHANGE, FOREIGN DRAFT, 181
BILL OF LADING, 188
C. O. D. shipments, 190
BINDINGS, LEDGER, 263
BONDS,
Accounting, 355-357
Discount and premium, 355, 356
Interest payments, 356
Maturity, 356
Payable, liability, 15
Sale of, 355
Sinking funds, 357
Valuation, 412
BOOKKEEPING,
Double-entry, 78
Single-entry, 495-512
Accrued and deferred items, 500
Balance sheet, 500
Books required, 496
Cash book, 497
Change to double, 502
Compared with double, 501
Debits and credits, 498
Inventory and appraisal, 500
Journal, 496
Ledger, 497
Net profit, 511
Opening entries, 504-511
Profit and loss statement, 499
Profits, 501
Proof of posting, 499
Proprietorship accounts, 498
Use of, 497
BOOKS (See “Journal,” “Ledger”)
BRANCHES,
Cash,372
Sales to,
Handling of, 437
BROKER, DEFINED, 448
BUILDINGS, ASSET, 13
BUSINESS ORGANIZATION, 2, 16
BUSINESS PAPERS, DEFINED, 185
BUSINESS TRANSACTION,
Accounting classification for, 216
Analysis of, 80, 98, 132, 251
Defined as to debit and credit, 79
BUYING (See “Purchases”)

C
CAPITAL,
Account, changes in, 93
Balance sheet, 19
Borrowed, account, 303
Defined, 15
Expenditures, 104
Invested, 15
Changes in, 93
Partnership,
Accretions through profit, 301
Adjustments of, 297-300
Agreements concerning, 297, 558
Averaging investment, 292, 301
Interest on partners’, 294, 297-300, 316
Loans as distinguished from, 302, 317
Profit-sharing basis, 292
Sources, 297
Working defined, 26
CAPITAL STOCK,
Account, 338-348
Certificate book, 337
Common, 338
Entries for, 346
Defined, 15
Discount and premium,
Balance sheet item, 345
Entries for, 343
Donated (See “Treasury Stock”)
Entries,
Discount and premium, 343
On balance sheet, 344
On journal, 340
No-par value, 339
Entries for, 347
Preferred, 338
Dividends, 339
Entries for, 346
Subscriptions,
Book and ledger, 336
Entries, 338-348
Instalment payments, 345
Payment by property, 348
Transfer book, 337
Treasury stock, 352-355
Valuation, 412
CAPITALIZATION, PARTNERSHIP, 297-304
CARD LEDGER, 263
CASH,
Account,
Cash journal replaces, 150
Debit and credit, 85
Asset, 11
Balance sheet item, 22
Bank account handling, 370
Branch funds, 372
Discount,
Form, 400
Accounting, 156, 396-402
Defined, 392, 537
Elements of, 395
Entries, 398
Handling, 156, 396-402
Journal entries, 155
Trade acceptance and, 402
Handling of, 366-375
Internal control, 373
Paid for merchandise, determination of, 61
Payments compared to draft, 178
Petty cash account, handling of, 367
Petty cash book, 368
Form, 369
Received from customers, determination of, 61
Record,
Bank, 366
Double, 366
Safeguarding, 373
Sales, handling, 436
Short and over, 151
Statement, 375
Total available balance, determination of, 473-476
Valuation, 409
CASH DISBURSEMENTS JOURNAL, 148
Form, 159
Analysis, 154
Columnar analysis, 161
CASH JOURNAL, 138, 147-161
Form, 149, 158, 159
Analysis, 154
Analytic, 255
Balancing, 151
Cash discounts, 155
Cash purchase and sales, 152
Cash short and over, 151
Check entries, 371
Posting from, 150
Replaces cash account, 150
Ruling, 151
Single-entry bookkeeping, 497
Summary, Form, 281
Under controlling account system, 280
CASH RECEIPTS JOURNAL, 147
Analysis, 154
Illustration of, 157-160
Posting from, 200
CERTIFICATE OF INCORPORATION, 332
CERTIFICATES OF STOCK, 337
CHARGE ACCOUNT,
Handling of, 437, 444
Sales tickets, 187, 444
CHARTER, CORPORATE, 332
CHARTS, ACCOUNTS, 15
CHECK BOOK, 192, 194, 371
CHECK FIGURES IN POSTING, 482
CHECKS,
Cash book entries, 371
Cashing of, 372
Classified as cash, 11
Described, 181
Handling of, 370
Spoiled, 371
CLASSIFICATION OF ACCOUNTS, 213-220
Assignment of account, 216
Basis of, 214
Business transaction, classified, 216
Chart, 217-220
Detailed, 217
Divisions, 213
Fundamentals of, 215
Purpose, 214
Three-group, 213, 216
Two group, 216
CLOSING
Entries,
Accuracy of proof preliminary to, 221
After adjusting, 245-250
Consignment sales, 456
Corporate, 359-365
Illustration, 247
Preliminary work to, 221
Profit and loss account, 249
Summarizing, 117-123, 214, 221
Work sheet, 221-230
Journal, 163
Journal entries, 167
Ledger accounting, 129-131
Merchandise records, 116, 121
C. O. D. SALES, 442
C. O. D. SHIPMENTS, 189
COLLATERAL, NOTES RECEIVABLE AS, 390
COLUMNAR,
Adjustments, work sheet, 228
Cash books,
Forms, 158, 159
Analysis, 154-161
Errors, 483
Journal,
Form, 164
Analytic, 163, 251-263
Summary entries, 278
Form, 279
Purchase journal, 253
Sales journal, 251
Sales records, 434
COMMERCIAL DISCOUNT, DEFINED, 392
COMMERCIAL DRAFT, 180
COMMERCIAL PAPER (See “Negotiable Instruments”)
COMMISSION AGENTS, 448
COMMISSION MERCHANT (See “Factor”)
COMMISSIONS,
Expense item, 47
Income from, 46
Salesmen’s, 445
COMMON STOCK, 338
Entries, 346
COMPARATIVE BALANCE SHEET, 32-37
Content and form, 35
COMPENSATION, PARTNERS,
Out of net profit, 313
COMPOUND INTEREST, 485
CONDITION OF BUSINESS,
Balance sheet, 25
Statements showing, 48
CONSIGNEE,
Defined, 447
Inventory by, 456
CONSIGNMENT,
Account,
Account sales, 450
Closing of books, 456
Entries, 452-459
Expenses charged against, 450
Profit and loss, 453
Separate from others, 438, 449
Accounts by factor, collecting of, 452
Advantages, 452
Defined, 447
Goods in or out on, 431
Handling by,
Broker, 448
Factor, 448-459
Inventory,
Consignee’s, 456
Consignor’s, 454
Law, 447
Lien against, 450
CONSIGNOR,
Defined, 447
Inventory by, 454
CONSOLIDATION, PARTNERSHIP, 310-312
CONTROL OF BUSINESS BY ACCOUNTING, 38
CONTROLLING ACCOUNT,
Accounts payable, 269, 561
Summary, 276
Accounts receivable summary, 276, 561
Advantage of, 264
Cash journal summary, 280
Forms, 281
Credits, 268
Customers or accounts receivable, 265
Debits, 266
Defined, 264
Equilibrium of ledger changed by, 265
Errors, 483
Introduction of, into a system, 272
Journal summaries, 276-280
Forms, 279, 282
Note journal summary, 277
Posting, 270
Purchase journal summary, 276
Sales journal summary, 273, 278
Form, 279
Subsidiary ledger accounts, 282
Summaries, 265, 273-280
Forms, 278, 282
Withdrawals of stock-in-trade, 273
CORPORATIONS,
Accounting,
Closing books, 359-365
Current records, 351
Opening entries, 340-344
Advantages, 331
Bonds, 355-357
Books, 337
Minute book, 337
Stock certificate book and ledger, 337
Stock transfer book, 337
Subscription book and ledger, 336
Capital Stock,
Account, 338
Common, 338
No-par value, 339
Preferred, 338
Certificate of incorporation or charter, 332
Closing of books, 359-365
Control by stockholders, 359
Defined, 330
Directors, 334
Disadvantages, 331
Dividends, 339
Growth of, 330
Incorporation, 332
Liability of stockholders, 351
Officers, 335
Opening entries, 340-344
Organization, 18, 331-336
Organization expense,
Entries for, 340, 343
Partnership changed to, 348-350
Proprietorship, 335, 338
Balance sheet, 20
Surplus account, 338
Treasury stock, 352
Accounting, 353
CORRECTIONS, HOW MADE IN BOOKS, 243
COST OF GOODS SOLD,
Analysis of, 436
Determining, 40-43, 117
Ledger adjustments, 117
Listed on statement of profit and loss, 50
COST VALUe, 404
CREDIT (See also “Debit and Credit”)
Cash discount for goods sold on, 395
Returned goods as, 188
CURRENT ASSETS (See “Assets”)
CURRENT LIABILITIES (See “Liabilities”)
CUSTOMERS’ ACCOUNTS,
Accounts receivable as, 264
Controlling account, 264
Debit and credit, 86, 266-269
Ledger, 265
Proving, 269
CYCLE OF OPERATIONS, 25

D
DATA, LEDGER, 132-135
DATE DRAFT, 180
DATE DUE, AVERAGE, 486
DATE OF VALUE, 469
DEBIT AND CREDIT, 78
Accounts receivable, 85
Allowances granted to customers, 87
Asset account, 85-90
Cash disbursements journal, 148
Cash receipts journal, 147
Controlling account, 266-269
Customers’ accounts, 86, 266-269
Discount, 87
Fixed asset accounts, 88
Illustrations determining, 82-84
Journal entry, 134
Liability account, 85-90
Merchandise account, 87, 99
Mixed account, 97-105
Notes, 384
Notes payable account, 89
Posting from journals, 200
Principle of, 81
Proprietorship accounts, 91-96
Schedule, 82
Single entry bookkeeping, 498
Use of, 81
Work sheet adjustments, 221-230
DEBTS (See also “Bad Debts”)
Listed on balance sheet, 25
DEFERRED CHARGES,
Adjustment of entries, 241
Asset, 12
Balance sheet items, 27
Estimates of, 126
Single-entry bookkeeping, 500
Valuation, 408, 413
DEFICIT, PARTNERSHIP DISTRIBUTION, 318
“DEL CREDERE” AGENCY, 452
DELIVERY,
Goods for future, 432
Accounting for sales at, 441
Goods ready for, 432
DELIVERY EQUIPMENT, ASSET, 13
DEMURRAGE COST, 550, 569
DEPARTMENT STORES,
Approval sales, 442-444
Charge system, 444
Sales, 442
DEPARTMENTS, BUSINESS, 2
DEPLETION, 413
DEPRECIATION,
Account,
Fixed assets, 102, 123
Reserves, 103, 123
Adjustment of entries, 240
Assets not subject to, valuation, 413
Assets subject to, valuation, 414
Calculation of, 414
Expense item, 47
DIRECTORS, CORPORATE, 334
DISCOUNT,
Bank,
Calculation of, 492
Defined, 392
Cash,
Form, 400
Accounting, 156, 396-402
Defined, 392, 537
Elements, 395
Entries, 398
Handling of, 156, 396-402
Trade acceptance and, 402
Cash journal entries, 155
Commercial defined, 392
Debit and credit of, 87
Defined, 392
Expense item, 47
Income from, 46
Note,
Face value, 215, 382
Loan through, 195
Notes receivable, 384-387
Trade,
Defined, 392
Methods, 393-395
Not recorded, 393
DISCOUNT AND PREMIUM,
Bonds, 355, 356
Capital stock, balance sheet item, 345
Capital stock sold at, entries for, 343
DISSOLUTION, PARTNERSHIP, 321-329
(See also “Partnership”)
DIVIDENDS, 339
Declaration of, 359
Liquidating, 567
Paid out of profits, 360
DOUBTFUL ACCOUNTS,
Adjustment of entries for, 240
Estimate of, 124
Handling of, 125
Reserve for, handling, 410
Valuation, 410
DRAFT,
Accepted discounted, 384-387
Bank, 180
C. O. D. shipment, 190
Commercial, 180
Compared with cash payments, 178
Date, 180
Defined, 175
Domestic, 180
Foreign, 180
Handling of, 176-179
Kinds of, 179
Sight, 179
Time, 180

E
ECONOMICS,
RELATION TO ACCOUNTING, 6
EMPLOYMENT DEPARTMENT, 3
ENTRIES,
Accounts current, 469
Adjustment, 237-244
Basis of, 116
Illustration, 245
Merchandise records, 115-123
Necessity of, 115
Capital stock, 340-348
Cash discount, 155, 398
Cash receipts journal, 147
Closing, 116, 221-250 (See also “Closing Entries”)
Illustration, 247
Consignments, 452-459
Corrections, 243
Cross-indexing for posting, 201
Form, 202
Draft, 177
Journal, 133
Adjusting, 167-172
Closing, 167-172, 359-365
Opening, 165, 340-344
Memorandum, 340, 341
Note journals, 379-383
Opening,
Corporate, 340-344
Single system, 504-511
Purchase journal, 139-144
Sales journal, 144-146
Single, 495-512
EQUATING ACCOUNTS (See “Averaging of Accounts”)
EQUATION,
Balance sheet, 74-76
Ledger account, 74-76
Proprietorship, 8-10, 74
ERRORS,
Cash short and over, 151
Columnar books and controlling accounts, 483
Corrected when discovered, 237
Posting, 200, 481
Transplacements, 211
Transposition of numbers, 209
Trial balance, 205-212
ESTIMATES
(See also “Appraisal,” “Inventories,” “Valuation”)
Depreciation reserve, 103
Doubtful accounts, 124
Prepaid and accrued expenses and income, 126
EXPENDITURES,
Capital, 104
From petty cash fund, 367
Revenue, 104
Writing off, 407
EXPENSE ACCOUNT,
Bad debts, 125
Chart, 219
Debit and credit to, 92-94
Proprietorship, 92
Treated as purchases, 254
EXPENSE BILL,
Freight, 189
EXPENSE INVOICE,
Entry and posting, 254
EXPENSES,
Accrued,
Adjustment of entries, 242
Balance sheet items, 27
Estimates of, 126
Liability, 14
Advertising, 47
Bad debts, 47
Classification of items, 58
Deferred,
Adjustment of entries, 241
Estimates handling of, 126
Depreciation, 47
Discounts, 47
Incurred and unpaid,
Handled as purchases, 254
Kinds of, 46
Liquidating, 324
Maintenance and repairs, 47
Non-operating, 46
Listed on statement of profit and loss, 52
Operating, 46, 94
Chart of accounts, 219
List on statement of profit and loss, 51
Organization, entries for, 340
Prepaid, handling estimates of, 126
Purchasing, 47
Rent, 47
Salaries, 46
Traveling, 46
Unpaid (See above under “Accrued”)
EXPRESS MONEY ORDERS, 182

F
FACE VALUE,
Notes, 215, 382
FACTOR,
Accounting, 448-459
Collecting of accounts by, 452
Compensation of, 452
Defined, 448
Duties, 449
Expenses, 450
Lien on consigned goods, 450
FEES,
Income from, 46
FINANCE, 3
Purchasing and, 421
FINANCIAL STATEMENTS (See also “Balance Sheet”)
Fiscal period for making, 48
Periodic, value of, 230, 236
Summary of results, 214
FISCAL PERIOD,
Accounts at end of, 214
Financial statements, 48
FIXED ASSETS (See “Assets, Fixed”)
FIXED LIABILITIES (See “Liabilities, Fixed”)
FIXTURES,
Asset, 13
FOOL-PROOF BALANCE, 477
FREIGHT BILL, 189
FREIGHT CLAIMS, 560
FREIGHT CHARGES, 565
Apportioning, 493
FREIGHT NOTICE, 189
FUNDS (See “Sinking Funds”)
FURNITURE,
Asset, 13
FUTURE DELIVERY,
Accounting for goods sold at, 441
Inventory of goods sold at, 432

G
GOOD-WILL,
Dissolution of partnership, 328
Valuation, 418
GOODS (See “Merchandise”)
GROSS PROFIT,
Listed on statement of profit and loss, 50

H
HORIZONTAL RULINGS, 434

I
INCOME,
Account, proprietorship, 92
Accrued,
Adjustment of entries, 241
Single-entry bookkeeping, 500
Valuation, 413
Classification of items, 58
Deferred,
Adjustment of entries, 243
Defined, 44
Estimates of, handling, 126
Kinds of, 44
Non-operating, 45
Listed on statement of profit and loss, 52
Operating, 44
Sources of,
Commissions, 46
Discounts, 46
Fees, 46
Interest, 46, 127
Rentals, 46, 127
Sales, 45, 61
INCORPORATION (See “Organization”)
INDEXING,
Posting, 201, 552
Form, 202
Work sheet entries, 224
INDORSEMENT,
Negotiable instruments, 183
INK,
Use of red, 108
INSTALMENTS,
Accounting, 439-441
Capital stock subscriptions,
Entries for, 345
Contracts, 439
Distribution of proceeds by, during liquidation, 327
Sales on, 439-441
INSURANCE,
Paid and deferred expenses, 126
INTEREST,
Account, 128, 129, 383
Average due date, 486
Averaging of accounts, 486-490
Cash balance, 490
Compound equation, 489
100% method, 488
Balance sheet item, 26
Bank balances, 491
Bank discount, 492
Calculation, 195-198
Compound, 485
Cost, separate account for, 129
Date of value basis, 469
During construction period,
Charged to assets, 407
Expense item, 47
Income from, 46, 127
Nature of, 485
On accounts current, 468, 469
On bonds, payment of, 356
On notes, 382
On partial payments, 491
On partners’ investment, 294, 297-300, 316
Partners’ loan, 317
Rate on partnership investment, 314
Simple, 485
INTERNAL CHECK, 373
INTERSTATE COMMERCE COMMISSION,
Bill of lading, 188
INVENTORIES (See also “Estimates”)
Consignee’s, 456
Consignor’s, 454
Entries,
Adjustment, 238
Transferred to purchase account, 239
Goods for future delivery, 432
Goods in or out on consignment, 431
Goods in transit, 430
Goods ready for current delivery, 432
Goods received but not yet booked, 431
Mark-on, 425
Methods, 424
Perpetual formula, 424
Records for, 48
Retail system, 424
Single-entry bookkeeping, 500
Stock control card, 429
Form, 430
Valuation, 411
Methods, 239
INVESTMENTS, 550, 558
Asset, 12
Balance sheet items, 26
Partners’ interest on, 294, 298
Valuation, 294
INVOICE,
Charge and cash sales, 187
Credit for returned goods, 188
Defined, 185
Expense, 254
Purchase, 186
Purchasing procedure, 422
Sales, 187
Charge account, 444
Statement of account, 190

J
JOINT VENTURE, 460-467
JOINT-STOCK COMPANY, 288
JOURNAL,
Form, 135
Analysis in, depends upon classification in ledger, 434
Analytic, 163, 251, 256
Form, 164
Cash, 138, 147-161 (See also “Cash Journal”)
Closing, 163
Columnar records, 163, 251, 278
Form, 279
Defined, 133
Entries,
Adjustment, 167-172, 237
Capital stock, 338-348
Cash discount, 398
Form, 400
Closing, 167-172
Debit and credit, 134
Opening, 165
Explanations, 163
Nature of, 133, 162
Note, 111, 255
Form, 113
Opening entries, 165, 340-344
Posting from, 163, 199-203 (see “Ledger, Posting”)
Purchase, 138, 139-144 (See also “Purchase Journals”)
Rulings, 251-257
Sales, 138, 144-146 (See also “Sales Journal”)
Single-entry bookkeeping, 496
Special, 137
Subdivisions, 136-138
Subsidiary, 138, 144-146, 200, 251
Summary entries,
Form, 279
Columnar books, 278
Use of, 162

L
LAND ASSET, 13
LAW,
Principal and agent, 447
Relation of accountancy to, 7
LEDGER,
Accounts,
Form, 70, 112, 113
Accounts payable, 269
Accounts receivable, 265
Arrangement of, 220
Classification, 213-220
(See also “Classification of Accounts”)
Construction of, 74
Controlling, 264-271
Customers’, 265-271
Defined, 68
Equation of, 74-76
Subdivision, 257
“T” account, 528
Adjustment of current entries, 115-131
Analysis, 257, 477-484
Analysis sheet, 479
Form, 480
Balancing, 107-110, 477-484
Bindings, 263
Capital stock subscription, 336
Card, 263
Cash account, cash book replaces, 150
Changes in assets and liabilities recorded, 77
Closing, 129-131
Cost of goods sold, 117
Data, sources of, 132-135
Defined, 67
Entries, 111
Adjustment of, 237
Loose-leaf, 263
Open account, 204
Periodic work on, 106-131
Posting, 133, 199-203, 560
Form, 202
Cash journal, 150, 200
Check figures, 482
Controlling account, 266, 270
Cross-indexing, 201, 552
Errors in, 200
Expense invoices, 254
Explanatory matter, 203
Profit and loss account, 249
Proof by slip or reverse method, 481
Proof, in single-entry bookkeeping, 499
Purchase journal, 143, 200
Sales journal, 145, 200
Time for, 199
Profit and loss account, 129
Record,
Insufficiency of, 132
Original or first, 132
Trial balance usage, 204
Rulings, 108, 111, 261
Form, 258-260, 262
Sales account,
Posting, 160
Rulings, 434
Single-entry bookkeeping, 497
Subsidiary, 257
For controlling accounts, 283
Self-balancing of, 271
Trial balance, 106 (See also “Trial Balance”)
Transferring accounts, 110
Form, 112
True financial condition reflected after adjusting entries, 244
LIABILITIES (See also “Assets and Liabilities”)
Accounts, 213, 214
Balance of account, 73
Chart, 218
Debit and credit, 85-90
Classified, 14
Comparison, 34
Contingent, transfer of note, 384
Current,
Balance sheet items, 26
Ratio of, to current assets, 27
Decrease covered by debit entry, 82
Described, 14
Fixed defined, 28
Increase covered by credit entry, 82
Note discounted as, 215
Valuation, 29, 419
LIEN,
Factor’s on consigned goods, 450
LIQUIDATION,
Partnership, 321-329 (See also “Partnership, Dissolution”)
Value, 404
LIQUIDATOR, 324
LOANS,
Accounts, partners’, 302
Bank, 195
Borrowed capital, 303
Capital accretions as, 302
Partners, 302, 317
LONG-TERM LIABILITIES (See “Liabilities, Fixed”)
LOOSE-LEAF LEDGER, 263
LOSSES,
Distributing a deficit, 318
Distribution of in partnership dissolution, 325

M
MAINTENANCE EXPENSE ITEM, 47, 405
MARK DOWN, 425
MARK-ON, 425
MARK-UP, 425
MARKETING, 3
MEMORANDUM ENTRY, 340, 341
MERCHANDISE,
Account,
Adjustments, 115, 123
Analysis of, 100, 117
Assets subject to depreciation, 102
Content and significance, 87
Debit and credit, 87, 99
Mixed, 97-105
Summarization, 117-123
Adjustment of inventory entries, 238
Asset, 12
Average stock to be carried, 426
Cash paid for, determination of, 61
Control, 424, 426
Goods for future delivery, 432
Goods in or out on consignment, 431
Goods in transit, 430
Goods ready for current delivery, 432
Goods received but not yet booked, 431
On hand, balance sheet item, 26
Stock control card, 429
Form, 430
Valuation, 411
Withdrawal, entered in sales journal, 273
MERCHANDISE TRADING ACCOUNT, 364
MINING PARTNERSHIP, 289
MINUTE BOOK, 337
MIXED ACCOUNTS, 97-105, 215
Adjustment of, 237
MONEY (See “Cash”)
MONEY ORDERS, 182
MORTGAGES, PAYABLE, LIABILITY, 14

N
NAME OF FIRM,
On balance sheet, 24
On statement of profit and loss, 49
NEGOTIABLE INSTRUMENTS, 173-184
(See also “Notes Payable”, “Notes Receivable”)
Checks, 181
Draft, 175-181
Indorsements, 183
Kinds, 175
Money orders, 182
Trade acceptance, 181
Uses and requisites, 174
Warehouse receipts, 182
Writing of, 183
NET PROFIT,
Determination of, 55
Under single-entry system, 511
Distribution of, 53
NET WORTH (See also “Proprietorship”)
Balance sheet expansion, 40
Comparison, 32, 40
Shown under single-entry system, 500
NOMINAL ACCOUNT, 216
NO-PAR-VALUE STOCK, 339
Entries for, 347
NOTE JOURNALS, 111, 255, 379
Form, 113, 380
Entries, 379-383
Summary, under controlling account system, 277
NOTES,
Accounting of, 379-391
Contingent liability incurred by, 384
Discounting, 384-387
Face value, 215, 382
Loan through, 195
Dishonored, 387-390
Face value, always entered at, 382
History of, 376
Interest on, 382
Liquidity of, 378
Relation of open account to, 377
Renewal, 390
NOTES PAYABLE,
Account,
Form, 113
Debit and credit, 89
Posting, 203
Rulings and entries, 111
Credits record, 384
Defined, 377
Liability, 14
Partner’s, 302
NOTES RECEIVABLE,
Accepted draft, entries, 177
Account,
Debit and credit, 85
Posting, 203
Rulings and entries, 111
As collateral, 390
Asset, 11
Balance sheet item, 26
Classification of, 390
Credits record, 384
Defined, 377
Discounted, 384-387
Dishonored, 387-390
Partial payments, 390
Use of, 173
Valuation, 409

O
OBSOLESCENCE, 414
OFFICERS, CORPORATE, 335
OFFSET ACCOUNT, DEFINED, 103
100% METHOD, AVERAGING ACCOUNTS, 488
OPEN ACCOUNT, 204 (See also “Accounts, Current”)
Liquidity of, 378
Relation of note to, 377
OPEN-TO-BUY ESTIMATE, 427
OPENING,
Corporate books, 338-350
Entries under single-entry system, 504-511
Journal entries, 165
ORDERS, PURCHASE, 422
ORGANIZATION, 2
Corporation, 17
Expenses,
Entries for, 340
Sale of stock charged to account, 343
Writing off, 406
Partnership, 17
Single proprietorship, 16
Types of, 16

P
PARCELS POST, C. O. D. SHIPMENTS, 190
PARTIAL PAYMENTS, INTEREST ON, 491
PARTNERS,
Compensation out of net profit, 313
Deceased, 323
Liability, 284, 287
Loans, 302, 317
New, admission of, 295, 305-310, 320
Nominal, 289
Notes payable, 302
Ostensible, 289
Profits, closing of, 318
Salaries, 316
Secret, 289
Silent, 289
Withdrawing, 319
Liability of, 321
PARTNERSHIP, 17
Accounts current, 469
Bankrupt, dissolution of, 322
Capital,
Accretions through profit, 301
Adjustments of, 297-300
Averaging investments, 292, 301
Interest on partners’, 294, 297-300, 316
Interest rate on, 314
Investment, original, 294, 550, 558
Valuation of original investment, 294, 550, 558
Capitalization, 297-304
Consolidation, 310-312
Defined, 284
Dissolution, 321-329
By liquidation, 323
By mutual consent, 322
Causes of, 321
Deceased partner, 323
Distribution by instalments, 327
Distribution of losses, 325-327
Distribution of proceeds, 324
Good-will, treatment of, 328
Liquidation expenses, 324
Methods of, 323
On account of war, 322
Problems of, 322
Withdrawal of partner to admit new, 321
Illegal, dissolution of, 322
Incorporation, 348-350
Interest of new partner, 295
Joint adventure accounts, 460-467
Limited, dissolution of, 322
Liquidation (See above under “Dissolution”)
Loans,
Distinguished from capital, 302, 317
Interest on, 317
Mining, 289
New partners, methods of admitting, 295, 305-310
Organization,
Characteristics of, 285
Classification of, 287
Contract, 286
Joint-stock company, 288
Nature of, 284
Partner’s loans accounts, 302, 316
Profit and loss account, 314-316
Profit-sharing, 290-294
Closing to partners’ accounts, 318
Distributing a deficit, 318
Interest on partners’ investment, 294
Investment average as a basis for, 292
Principles governing, 290
Ratio, 292, 301
Profits, 290-294, 313-320
Defined, 314
Determination upon admitting new partner, 320
Net, 314
Reserved, 317
Proprietorship, balance sheet, 20
Sale or transfer of, 322
Special, 287
Profit-sharing basis, 292
PERSONAL ACCOUNT,
Changes in, 93
Posting, 203
Rulings and entries, 111
Form, 113
PERSONNEL DEPARTMENT, 3
PETTY CASH,
Account,
Handling of, 367
Vouchers, 367
Book, 368
Form, 369
P. M.’S, 446
POSTAGE, EXPENSE ITEM, 47
POSTAL MONEY ORDERS, 182
POSTAL SERVICE, C. O. D. SHIPMENTS, 190
POSTING (See “Ledger,” “Journal”)
PREFERRED STOCK, 338
Dividends, 339
Entries, 346
PREMIUM (See “Discount and Premium”)
PRINCIPAL AND AGENT, 447
PRODUCTION, 3
PROFIT (See also “Gross Profit,” “Net Profit”)
As reserves, 360
Capital accretions through, 301
Corporate, handling of, 360
Defined, 313
Determined by single-entry system, 501
Dividends declared before distribution, 359
Dividends paid out of, 360
Net, 314
Net operating, 52
Partnership, 290-294, 313-320
Closing to partners’ account, 318
Defined, 314
Determination upon admitting new partner, 320
Distributing deficit, 318
Reserved profit, 317
Reserved, 317
Surplus, retained in the business, 301
Undivided, defined, 16
PROFIT AND LOSS (See also “Statement of Profit and Loss”)
Account,
Appropriation section, 318
Closing, 249
Closing profits to partners’ accounts, 318
Consignments, 453
Opening, 129
Partnership, 314-316
Posting, 203
Transfer of reserve profit, 317
Determination, 38-56
Liquidating partnership, 324-327
Relation to financial element, 57
Summary, 44-56
PROFIT-SHARING,
Average investment as a basis for, 292
Partnership, 290-294
Ratio, 292, 301
PROMISSORY NOTES
(See “Draft,” “Negotiable Instruments,” “Notes,”
“Notes Payable,” “Notes Receivable”)
PROOF,
Postings, 481
Single-entry bookkeeping, 499
PROPERTY ASSET, 13
PROPORTION, 492-494
PROPRIETORSHIP (See also “Net Worth”)
Accounts, 213, 214
Capital account, 93
Chart, 218
Debit and credit, 91-96
Defined, 91
Expense, 92-94
Income, 92
Ledger adjustments, 129
Personal account, 93
Single-entry bookkeeping, 498
Temporary, 129, 214
Vested, 93, 214
Balance sheet, 8-10, 19, 40-43
Corporations, 335, 338
Double-entry bookkeeping, 78
Equation, 8-10, 74
Kinds of, 15
Single, 16
Temporary records, 40, 42, 57
Valuation, 419
PURCHASE ACCOUNT,
Adjustment of, 239
Transfer of inventory to, 239
PURCHASE DISCOUNT, 395
PURCHASE INVOICE, 186
PURCHASE JOURNAL, 138, 139-144
Analytic, 253
Expenses handled through, 254
Posting from, 143, 200
Summary, under controlling account system, 273
PURCHASES,
Analysis of, 436
Buying,
Average stock to be carried, 426
Buying quota, 427
Control methods, 426
Department, 421
Estimates, 426
“Open-to-buy,” 427
Financing, 421
Function, of buying, 420
Orders, 422
Policies, 426
Procedure, 422
Records, use of, 426
Requisition, 421
Returned, 436
Stock control card, 429
Form, 430
Successful buying, elements of, 423
Cash disbursements, journal, 152, 154
Cash paid for, 61
Expense item, 47
Transaction, analysis of, 139
PURCHASING AGENT, 422

R
RATIO,
Accounts receivable to sales, 65
Balance sheet and profit and loss statement, 64
Profit-sharing of special partnership, 292
Proportion, 492
Turnover, 64
REAL ACCOUNT, 216
RECEIPTS AND DISBURSEMENTS, STATEMENT OF, 375
RECONCILIATION OF BANK BALANCE, 472-476
RECORDS,
Functions, 1
Kinds of, 39
RENEWALS, 405, 416
RENT,
Expense item, 47
Income from, 46
Paid and deferred, 127
REPAIRS,
Expense item, 47
Valuation, 405, 416
REPLACEMENTS,
Defined, 405
Valuation, 416
REQUISITIONS, PURCHASES, 422
RESERVE,
Account,
Depreciation, 103, 123
Doubtful accounts, 125
Created from profits distinguished from
valuation accounts, 318
Defined, 16
Depreciation, 103, 123
Doubtful accounts, handling, 410
Out of profits, 360
Reserve profits, 317
Sinking fund, 358
RETAIL TRADE, INVENTORY SYSTEM, 424
RETURNED GOODS, 45
Analysis of, in sales, 435
Crediting of, 188
Debit and credit of, 87
Journal, 253
Purchases, 436
REVENUE EXPENDITURES, 104
REVERSE POSTING, 481
RULINGS,
Balancing an account, 108
Cash book, 151
Cash journal, 157-160
Form, 158, 159
Horizontal and vertical, 434
Journals, 251-257
Ledger, 261
Forms, 258-260, 262
Note accounts, 111
Form, 113
Personal Account, 111
Form, 113

S
SAFEGUARDS, 373
SALARIES,
Expenses, 46
Partners, 316
SALE VALUE, 404
SALES,
Account posting from journal, 160
Analysis, 98, 434
Allowances, 435
Cash sales, 436
Consignments, 438
Instalment sales, 439
Returned goods, 435
Sales to branches, 437
Use of ticket in, 435
Approval, 442-444
Branches, 437
Cash,
Handling of, 436
Receipts journal, 152, 154
Charge accounts, handling of, 437
Classification, 433
C. O. D., 442
Consignment, 438, 447-459
(See also “Consignment”)
Department, 433
Department stores, 441
Discount, 155, 395
Income from, 45, 61
Future delivery, 441
Instalment, 439-441
Quota, 424, 427
Ratio of, to accounts receivable, 65
Returned goods, analysis, 435, 560
Ticket (See also “Invoice”)
Charge and cash sales, 187, 444
Use of, in analysis, 435
SALES JOURNAL, 138, 144-146
Columnar analysis, 160, 252
Methods of recording, 252
Posting from, 145, 200
To customers’ accounts, 266
Returns and allowance journal, 253
Rulings, 434
Summary,
Form, 279
Under controlling account system, 273, 278
Withdrawal of stock-in-trade, entered in, 273
SALES LEDGER, RULINGS, 434
SALES PRICE, TRADE DISCOUNT, 392, 393-395
SALESMEN,
Commission, 445
Records, 446
SCHEDULES,
Balance sheet, 577
Profit and loss, 589
Cost of goods sold, 590
SECURITIES, VALUATION, 412
SELF-BALANCING LEDGER, 270
SHIPMENT OF GOODS,
Bill of lading, 188
C. O. D., 189
Freight notice, 189
Freight or expense bill, 189
Traffic department, 190
SIGHT DRAFT, 179
SIMPLE INTEREST, 485
SINGLE-ENTRY BOOKKEEPING, 495-512
(See also “Bookkeeping”)
SINGLE VENTURE, 460
SINKING FUNDS, ACCOUNTING, 357
SLIP OR REVERSE POSTING SYSTEM, 481
SOLVENCY, HOW JUDGED, 27
“SPIFS,” 446
STATEMENT, FINANCIAL (See “Balance Sheet”)
STATEMENT OF ACCOUNT, 190
STATEMENT OF PROFIT AND LOSS, 41, 44-56, 589
Forms, 49, 231, 234
Arrangement, 50
Operating expense section, 51
Trading section, 50
Confusion of items, 58
Content, 50
Equation, 52
Interrelation of, and comparative balance sheet, 60-64
Not a part of books, 230
Preliminary to closing entries, 221
Ratio of items, 64
Single-entry bookkeeping, 499
Title, 49
When drawn up, 229
STATEMENT OF RECEIPTS AND DISBURSEMENTS, 375
STATIONERY, EXPENSE ITEM, 47
STOCK (See “Capital Stock”)
STOCKHOLDERS,
Control by, 359
Liability of, 351
STOCK-IN-TRADE (See “Inventories,” “Merchandise”)
SUBSCRIPTION BOOK, CAPITAL STOCK, 336
SUBSCRIPTION LEDGER, CAPITAL STOCK, 336
SUMMARIZATION (See also “Adjustments,” “Closing”)
Accounts receivable and payable,
Under controlling account system, 276
Book entries, 244-250
Cash journal,
Form, 281
Under controlling account system, 280
Columnar books, 278
Form, 279
Merchandise records, 117-123
Note journals,
Under controlling account system, 277
Preliminary to closing books, 221
Purchase Journal,
Under controlling account system, 273
Purpose of, 214, 244
Sales Journal,
Form, 279
Under controlling accounts system, 273, 278
Work sheet for, 221
SURPLUS,
Account, 338
Defined, 16
Donated (treasury stock), 352-355

T
TELEPHONE AND TELEGRAPH, EXPENSE ITEM, 47
TEMPORARY PROPRIETORSHIP RECORDS, 40, 42, 57
TERMS, 7 (See also “Discount, Cash”)
TICKLER FILE, APPROVAL SALE, 443
TIME DRAFT, 180
TITLE, ACCOUNT, 68, 72
TRADE ACCEPTANCE, 181
Compared to cash discount, 402
Distinguished from notes, 377
TRADE DISCOUNT,
Defined, 392
Methods, 393-395
Not recorded, 393
TRADING ACCOUNT, 364
TRAFFIC DEPARTMENT, DUTIES, 190
TRANSFER OF STOCK, BOOK, 337
TRANSFERRING AN ACCOUNT, 110
Form, 112
TRANSPLACEMENTS, ERRORS IN, 211
TRANSPOSITION OF NUMBERS, ERRORS OF, 209
TRAVELING EXPENSES, 46
TREASURY STOCK, 352
Accounting, 353
Purchase and sale, 353
TRIAL BALANCE, 106
Adjustment account, 483
Arrangement for work sheet, 224
Basis for balance sheet, 221
Classified, 220
Errors, 205-212
“Fool-proof,” 477
Methods, 204-212
Post-closing, 250
Work preliminary to, 107
TURNOVER,
Rate, 64, 420

U
UNPAID EXPENSES (See “Expenses, Accrued”)

V
VALUATION,
Account defined, 103
Accounts receivable, 409
Assets, 407-419
Subject to cost, 413
Subject to depreciation, 414
Bad debts, 410
Balance sheet, 403-419
Rules, 407-409
Betterments, 416
Bonds, 412
Cash, 409
Current assets, 407
Deferred charges, 408, 413
Doubtful accounts, 410
Fixed assets, 124, 408, 413
Good-will, 418
Income accrued, 413
Liabilities, 419
Merchandise or inventory, 411
Notes receivable, 409
Proprietorship, 419
Repairs and replacements, 416
Securities, 412
Stock, 412
VALUE,
Cost, 404
Liquidation, 404
Sale, 404
VERTICAL RULINGS, 434
VESTED PROPRIETORSHIP ACCOUNT, 93
VOLUME OF BUSINESS,
Records necessary to show, 39
VOUCHER SYSTEM, 254
VOUCHERS, PETTY CASH, 367

W
WAGES,
Expenses, 46
Paid and deferred expenses, 127
WAR,
As a means of dissolving partnership, 322
WAREHOUSE RECEIPTS, 182
WORK SHEET, 221-230, 576
Adjustment entries, 223, 224-230
Analysis paper for, 221
Columnar adjustment, 228
Defined, 221
Illustration, 222-224
Indexing, 224
WORKING CAPITAL,
Defined, 26
Turnover, 65