BO O KKEE PI N G E$ E RC I SE S

D E VEL O P I N G TH E P R I N C I P L E S OF D E B I T S A N D C RE D I T S ,

R E C O R D I N G T RA N S A CT I O N S T HE T R I A L B A L A N C E
, ,

B A L A N C E S HE E T S T A T E M E N T O F P R O F I T
,

A N D L O SS A N D L E D G E R C L O S I N G
,

Fo r B e g i n n i n g B o o kke e p i n g Stu de nts

P UB L I S H E D B$

S o u th
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B OO KKEE P IN G AN D A C C O U NTIN G
§ 1 E ac h I n d i v i d u a l req u i res food cl oth i n g ed u cation am u seme n t a n d
.
, , , ,

ma n y other th i n gs n eces s ary for h is com fort a n d e nj oyme n t These n ecessi ties and .

l u x u ries ca n be ob tai n ed w i th mon ey wh ich is the med i u m of exchange Th e i n , .

d ivid u al sec u res money th ro u gh a compe n sation fo r services r e nd ered to ot hers ,

i n com e from i n vestme n t or the profi t res u l ti n g from th e operati o n s o f a b u si ne ss

,
.

Ja me s B ro wn is e m ploye d as sal e s ma n fo r t he C iti z en s M oto r C a r C o ; his i n co me is t he .

sala ry rece ive d fo r t he ser vice s ren d ere d J W S mit h o wn s t he b u ildi n g i n w hich t he C iti z en s . . .

M oto r C a r C o is oper ated ; his i n co me is t he ren t re ce ive d fr o m t he b u ildi n g w hich is his i n ve st m en t

.
, .

W O Wi n k l er o wn s t he C iti z en s M oto r C a r C o ; his i n co me is t he p rofit mad e by se ll i n g a u t o mo

. . .

bil e s at a p r ice gre at er tha n t he cost .

§ 2 A B u s i n e ss The o n e wh o sel ls to t he i nd ivid u al the food cloth i n g

. .
, ,

ed u catio n am u s e me n t o r other th i n gs wh ich he n eeds fo r h is comfort a nd e n j oy

, ,

men t i s said to b e en gage d i n b u si n ess and t he operatio n s i n co nn e ction therewi th

, ,

are re ferred to as a b u si n ess T he operatio n s i n cl u d e t he b u yi n g a nd s e l l i n g o f th e

.

com mod i ties i n wh ich t he b u si ness d e als at a pl ace o f b u si n ess a n d u n d e r a n ame ,

selected by t he ow n e r Th e re a re ma n y ki nds o f b u si n e sses each s u pplyi n g a

.
,

speci fic dema n d ; ther e a re man y b u si n esses o f t he same ki nd eac h u n d e rtaki n g to ,

s u pply the sam e d ema n d .

Joh n Jo ne s o wn s a n d operat e s a d r u g store at 4 0 5 M ai n S t ree t k n o wn a n d adver tise d to t he ,

.

p u blic as T he C en t ral D r u g S tore

“
M r Jo ne s i s a b u sm e ss ma n be ca u se he oper ate s a b u si ne ss
.
$
.

T he op eratio n s of his b u si ne ss i n cl u d e t he b u yi n g a n d se lli n g of me dici ne a n d d r u gs as we ll as t he

other a r ticl e s a d r u g store u s u ally ha n dle s a n d his b u si ne ss is re ferre d to as a d r u g b u si ne ss, .

3 . P u rp ose
B u s i n e s s A b u si n ess is orga n ized a nd operated i n
The of a .

order that t he own e r may ma ke a p r ofit and th u s e n abl e h i m to p u rchas e from

others t he material or servic e s wh i ch h i s b u si n ess does n o t provide The p rofit .

res u l ts from se ll i n g materi al or servi c e at a pri c e greater th a n i ts cost I f the .

materi al o r servi ce wh i ch t he b usi n ess has fo r sal e i s sol d at a price l ow e r tha n i ts

cost to t he b u si n ess t he operati on s hav e res u l ted i n a loss The p u rpose o f a b u si
, .

ness ca n be accom pl ished on l y after t he mat e rial o r servi c e wh i ch i t u ndertakes

to provid e has bee n sold to those who d e ma n d i t ; n o profi t ca n res u l t u n ti l th e
materi a l o r servi ce has bee n sold .

M r Jo ne s t he d r u ggist re ferre d to i n t he ill u st ratio n i n S e ctio n

.
, 2 hop e s to m a k e s u ffi ci en t ,

pr ofit th r o u gh t he O peratio n s of his d r u g b u si ne ss to per m it hi m to p ur chase food clothi n g ed ucation , ,

a n d a m u semen t fo r hi m self a n d fa m ily a n d t he m a n y oth er a rticle s a n d service s w hich a e needed

,
r

i n everyday life To m ak e a p r ofit it is ne ce ssa ry fo r hi m to se ll t he a r ticl e s w hich he offer s fo r sal e

'

.
,

at a p r ice s u ffici en t to cover ( a ) t he cost of t he a r t i cl e ( b ) t he cos t of op er ati n g his b u si ne ss ( ren t , ,

heat light
,
a n d ( c ) t he p r ofit need e d to p r ov i de those thi n gs nece ssa ry fo r t he co m for t a n d
,

enj oy men t of hi m self a n d fa mily .

§ 4 A ss e t s L i a b i l i t i e s a n d Pr op r i e t or sh i p
.
, Property i s a n y obj ect o f
, .

val u e th at a n i n d ivid u al o r b u si n e ss may l awf u l ly acq u i re a nd h old An y o ne ki nd .

o f prop e rty ( mon ey goods p u rchased fo r sal e l a n d b u i ld i n gs e tc ) ow n ed by a b u si

, , , ,
.

n ess i s re ferred to as a n a ss et an d al l t he prop e rty ow n ed by a b u s i n e ss as i ts assets

, ,
.

An ora l or wri tte n agre e me n t t o pay mo n ey at a f u t u re ti m e i s a n obl igation o r

debt ; a n ob l igatio n ow e d by a b u si n e ss i s re fe rre d to as li a bi li ty a nd al l the ,

“
The wo r ds p r i n t e d i n i tali cs a re acco u n ti n g t er m s a n d have a sp e cial mea n i n g w h en u se d i n
$

co nne ctio n with t he disc u ssio n of bookkee pi n g a n d acco u n ti n g I f t he st u d en t doe s n ot u n d er sta nd .

i
t he me a n i n g of th e se t er ms f r o m t he d sc u ssio n n t he t e xt , t he t e ach er w ill giv e f urt h er e xpla n atio ni
u po n re ue st q i
T he b e gi nner s not e xp e cte d to me mo r i z e t he me a n i n g of th e se t er m s , b u t he sho u ld
.

u n der sta n d the i r u se .

6
g BQO IZ KF E P I NG AN D AC CO U NT I N G .

obl igations of a b u si n ess as i ts l i abi l i ties P rop ri etors hi p re fers to the i n teres t of the
, .

own e r I n the b u s me ss ; I t I S th e d i ff ere n ce be twee n t he asse ts an d l iabi l i ties o f the

b u sin ess Stated i n eq u at i o n form assets — li a bi li t i e s : p rO p ri eto rs hi p
.
, ,

M r Jo ne s t he d r uggist fi n ds by act u al co un t t hat o n D e ce m ber 3 1 he o wn s i n co nne ctio n

.
, ,

w ith his d r u g b u si ne ss cash d r ugs medici ne s a n d other mater ial p urchase d fo r sal e
, , , ,

a n d soda fo un tai n e q uip men t a n d sto re fixt ure s He o we s t he ba n k ,

f o r mo ney bo rr o wed fr o m it a n d o ne of t he whol esal e d r u g co mpa n i e s fr o m w hich he b u ys

,

n e d i c i ne Total asse ts m i n u s total liabiliti e s eq u al s p r op r ie tor shi p

Ig
c
, , , ,

§ 5 A B u s i n e ss Tr a n sac t i o n i s a n excha n ge of e q u i val e n t val u es ; tha t

.

i s t he b usi ness rece ives someth i n g o f val u e for the mate r ial o r servi ce wh ich i t
,

s e l ls to others a nd gives some th i n g o f val u e to thos e fro m w hom i t p u rchases

,

material or se rvi ces The va lu e recei v ed m ay be a n asset a n op era ti ng cost o r an

.
. ,

obl igatio n ( l iabi l i ty ) can celed ; t he v a lu e pa rted wi th may be a n asset a s e rvice '

re nde red o r a n obl igati o n ( l iabi l i ty ) created The p u rpo s e O f a b u si ness

, 3) is .

accom pl ished th ro u gh the pe rfo rma n c e O f b u si n ess t ra n sactions .

M r Jo ne s t he d r u ggist pays m o ney fo r d r u gs w hich he e xpe cts to se ll ; t he val ue re ce ived

.
, ,

is t he d ru gs a n d t he val ue pa r te d wi th i s t he m o ne y A r ail r oad rece i ve s

,
i n pay men t fo r a .

tic ke t ; t he val ue re ce ived is t he m o ne y a n d t he val ue pa r te d with i s t he ser vice ren d ere d t he p u r ,

chaser o f t he tic ke t i n t ra n spo r ti n g hi m fr o m o ne place to a n oth er as spe cified i n t he ticke t M r . .

Jo ne s t he d r u ggist pays t he t el e pho ne co mpa n y

, ,fo r t he u e of his pho ne ; t he val ue re ce ived
'
s

is t he u e of t he pho ne ( operati n g cost ) a n d t he val ue par te d w ith is t he m o ne y A R S mith a

s
’
, . . .
,

f a r mer borro w s
,
f r o m a ba n k ; t he val ue re ce ive d by hi m is t he m o ne y a n d t he val ue pa rt ed ,

w ith is t he obligatio n c re at e d by t he p r o m ise to pay at a f ut ure ti me Wh en M r S mith . .

pays t his obligatio n t he val ue re ce ived by hi m is t he obligatio n ca n ce l ed a n d t he val ue pa rted w ith

, ,

is t he m oney .

6 B o o kk ee p i n g i s t he syste matic reco rd i n g o f t he tra n saction s performed

.

by a b u sin ess Acco u n ti n g is a term u s u al ly u sed wi t h the sam e mea n i n g as book

.

keepi n g ; there i s a d is ti n ction wh ich t he st u d e n t wi l l be tte r u nd e rsta n d a fte r h e

i s mo re fam i l iar wi t h t he s u bj ect of boo kke epi n g .

A bookkeeper re co rds t he t ra n sactio n s perfo rmed by a b u si ne ss ; a n a u di tor ver i f i e s t he book

kee p i n g re co rds ; a n a ccou nta nt i n stalls bookkee p i ng syste ms p re pare s fi n a n cial re po r ts a n d advi ses , ,

t he o wner i n re ga r d to t he i n fo r matio n t hat sho u ld b e O btai ne d f r o m his bookkee p i n g re co rds ; a

c ertifi ed pu bli c a ccou ntan t ( C P A ) is o ne w ho has passe d t he req u i re d gov ern men tal e xa m i n atio n
. . .

a nd has t he a u tho rity to p ractice t he p r ofe ssio n of a ccou nta n cy .

§ 7 Th e P u r p o s e Of B o o k k ee p i n g fo r a b u si n ess is to provid e a record

.

of al l th e tra n saction s perfo rmed by t he b u si ness From th is record the own e r .

,

can de term i n e the val u e o f the assets and l iab i l i ties of the b u si ness the cost o f ,

operati n g i t and th e profi t res u l ti n g f rom i ts ope rations ; th is i n fo rmation wi l l

,

e nabl e h i m t o con trol f u t u re operation s of th e b u si n ess The p u rpose of book .

keepi n g fo r a n i nd ivid u al i s to provid e a record of h is i n come from sala r y a n d

i n vestme n ts and h is exp e n d i t u res Fro m th is record he ca n co n trol f u t u re e x p e nd i .

t u res a n d a v oid co n t racti n g ob l igations w hi ch ca n n o t b e paid f ro m h is i n com e .

M r Jo ne s t he d r u ggist w ishe s to k n ow that t he a m o u n t of mo ne y o wne d by t he b u si ne ss

.
, ,

is co rrect acco rdi n g to t he t r a n sactio n s per fo r me d He re q u i re s a re co r d of all m o ne y rec e ived a n d .

all mo ne y paid ; t he d i ff eren ce be t ween t he total re ce ipts a n d total pay men ts sho u ld co rre spo n d
w i th t he m o ne y o wne d by t he b u si ne ss Rob ert B r o w n who rec e ive s a sala ry of a ye a r .
, ,

w i sh e s to k n o w that his e xp en se s w ill n ot e xc ee d his i n co me He re co rds his e xp en se s ( ren t gas .

, .

coal clothi n g food e tc ) a n d sala r y rece ive d ; t he di fferen ce be t ween t he sala r y a n d t he total expen se s
, , ,
.

is t he exce ss of his i n co me over his cost of livi n g .

§ 8 An A cc o u n t i s a reco rd of al l the tran saction s wi th a n y one asse t

. ,

l iabi l i ty operati n g cost profi t o r l oss col lected u nde r a speci fic head i n g ; th is
, , ,

head i n g i s designated as t he n ame o f th e acco u n t I t req u i res t wo acco u n ts to .

record a tra n saction o n e to record th e val u e rece ived a n d the other the val u e ,

parted wi th Th e record i n a n acc ou n t sho u ld be arranged to d isti n g u ish be twee n

.

val u es rece ived and val u es parted w i th Th u s i f a n acco u n t i s to show a record .

,

o f m oney rece ived and paid by a b u si ness amo u n ts rece ived sho u ld be recorded ,

i n s u ch a way as to d isti ng u ish the m from amo u n ts paid Fo r th is reason i t i s .

 B OO KK E E P I N G AN D A CC O U NT I N G .

c u stomary to provid e a special r u led fo r m fo r the record i n g of t ransactio n s i n a n

acco u n t I l l u stra tio n N o 1 shows o ne fo r m o f r u l i n g ; others wi l l be explai n ed
. .

a n d i l l ust rated late r .

NA ME OF THE A CCO UN T
Va l u es R ecei v ed Va l u es P a rted Wi th
$ ea r
Month D a y A n y speci a l P ag e D olla rs Cent A ny speci al P ag e D olla rs Ce nts
ex pl a n a ti on f or expla n a ti on f or
deemed nec ref er deemed nec ref er
es sa ry . ence essa ry . e n ce

(I) (2 ) (3 ) ( 4) ( 5) (6) (3 ) (4) ( 5) (6)

I l l u st ratio n N o I T h e Acco u n t .
, .

EX PLA NATI O N T he n a me o f t h acco u n t i s wr itten above t h r l e d for m p r ovid e d fo r

. e e u
recor di n g t ra n sact i o n s a ffect i n g t he acco u n t T he do u bl e l i ne i n t he cen t er se pa rat es val ue s rece ived
.

a n d val ue s pa r te d with C ol m n s 1 a n d 2 a e fo r t he dat e a n d col mn s 5 a n d 6 for t he val ue i n

. u r ,
u ,

d ollar s a n d c en ts of e ach t r a n sactio n a ff e cti n g t he acco n t C ol u mn 3 i s u se d w hen sp e c i al i nfo u . r

mat i o n i s ne ce ssa r y a n d col mn 4 w h en t he t r a n sactio n i s reco r d e d se pa r at e f r o m t he acco u n t a n d

, u ,

t r a n sferre d t o i t T he n u m b er s of t he col u m n s o n ei t her sid e a re t he sa me be ca u se t he y a e u se d for

. r

th e sa me p ur pose .

Apply i n g t he d i sc u ssio n of a n acco un t to t he i ll u st rat i o n i n co nne ct i o n wi th § 7 t he mo ney ,

recei ve d by M r Jo ne s t he d r u ggist wo u ld be reco rd e d o n o ne sid e of a n acco u n t t he p ur pose of

.
, , ,

w hich i s to sho w a re co r d of m o ne y re ce ived a n d pa i d a n d t he m o ney paid wo u ld b e re co rd ed o n t he ,

oppos i t e s i d e of t he sa me acco u n t The di ff eren c e b e t ween t he t wo sid e s i s t he cash bala n ce

.

§ 9 The Na m e O f a n A cc ou n t s ho u ld i n d icat e t he nat u r e of t he asse t

.
,

l iab i l i ty operati n g cost profi t o r loss wh i ch i ts balan c e re p rese n ts Tech n i cal

, , , ,
.

n ames sh o u ld be avoided so that a n y o ne wh o ca n u n d e rsta n d what he reads may

be ab l e t o i n terpr e t t he n am e o f t he acco u n t C u stom has estab l ished t he n ames .

o f ma n y acco u n ts Th u s merch a n d is e p u rchased is recorded i n a n acco u n t n amed

.

“ ” “
P u rchases ; mercha n d is e sold i n a n acco u n t n am e d Sales ; money rece ived ,
“
a n d paid by t he b u si n e ss i n a n acco u n t n am e d Cash ; t ra n sactio n s wi th a n
,

i n d ivid u al i n a n acco u n t wi th h is n am e T he n am e s of t he vario u s acco u n ts n eeded

, .

i n co n n ectio n wi th t he r e cord i n g o f tra n sactio n s for a b u si ness a n d t he p u rpose

of each wi l l be d isc u ssed i n s u bs e q u e n t chapters .

10 Deb i t a n d Cr e d i t a re acco u n ti n g terms wh ich appl y to the two

.

“ ” “ ”
sides Of an acco u n t d eb i t r e f e rri n g to the left sid e a nd c red i t to t he righ t s id e
,
.

Whe n a tra n sactio n i s perform e d t he val u e rec e ived is recorded o n t he d e bi t sid e o f ,

the acco u n t a ff e cted a n d t he val u e parted wi th o n t he cred i t sid e o f t he acco u n t

,
“ ”
a ffe cted V al u es recorded on t he d ebi t side of a n acco u n t a re refer re d to as d e b i ts
.
,
“ ”
a n d thos e recorded on t he cred i t sid e of a n acco u n t as cre d i ts ,
.

Applyi n g t he ill u st ratio n s u nd er 7 a nd 8 t he val ue s rece ive d i n each case wo u ld be reco r ded ,

o n t he d ebit sid e a n d t he val ue s pa r ted with o n t he c redi t sid e Th u s M r Jo ne s t he d r uggist

, , . .
,

w o u ld e xpe ct all t he m o ne y re ce ive d to b e re co r d e d o n t he d e bit s i d e of t he acco u n t w it h mo ney ,

a n d all t he m o ne y paid o n t he c redit sid e .

11 The Ba l a n c e o f a n A cc ou n t is t he d i fferen c e b e twee n the total deb i ts

.

and t he total cred i ts o f t he acco u n t T he balan ce o f an acco u n t shows the v a l u e .

o f a n asset o r a l i ab il i ty or the amo u n t o f a profi t o r a loss I f t he d e b i t sid e of an

* -

, .

“
acco u n t i s th e l arger t he bal an c e is re ferred t o as a debi t bala n c e ; i f t he cred i t
,
“ ”
sid e i s t he l arge r as a cred i t balan ce D eb i t bal a n ces a re assets or l osses and
, .
,
”
cred i t bala n ces a re l iab i l i ti es o r profits T he te rm l oss a s u sed h ere i n cl u des th e .

operati ng cos t o f th e b u si n ess as wel l as d irect l osses res u l ti n g f rom tran saction s .

“ ”
A n acco u n t i s ope n wh e n the total o f o ne sid e i s greater tha n t he total o f
“ ” “ ”
the other sid e and is cl osed o r i n balan ce whe n the totals o f both sides are
,

eq u al I f t he balan ce of a n acco u n t s h ows t he val u e of an asse t or a l iabi l i ty i t i s

.
,

som e ti me s re fe rred to as a rea l acco u n t and i f i t s hows a profi t or a loss as a n omi na l , ,

acco u n t .

N eg at i ve acco u n ts a n d other exce ptio n s

*
w ill be disc u ssed later .
 B OO KK E E P I N G AN D AC CO U NT I N G .

Q U E STI O NS
Wo u ld i t be advisabl e fo r a person who receives a sal ary fo r h i s services to
keep a reco rd of the transactio n s wh i ch h e performs i n co n n ectio n wi th h i s
affai rs ? Why ?
N am e some o f the t ransactio n s w hi ch th e i n d ivid u al wo u l d perfo r m i n co n
ne c t i o n wi th h is a ffairs .

Wo u ld y o u th i n k i t advisabl e fo r a person who rece ives a sal ary to appropriate

fixed amo u n ts fo r l ivi n g expen ses cloth i n g chari ty a n d savi ngs ? S tate
, , ,

reason s fo r a n swe r .

Wo u ld i t be ad visabl e for the ow n er of a n apartmen t b u i ld i n g wi th six apart

me n ts to keep a record o f t he transaction s performed i n con n ectio n w i th
th e op e ration o f th e b u i ld i n g ? Why ?
N ame som e o f th e tran saction s wh ic h t he ow n e r of th e apartm e n t b u i ld i n g
wo u ld perform .

How wo u ld he asce rtai n whe th er t he ow n ersh i p o f t he apartme n ts was a p ro fit

abl e i n vestme n t ?
Wo u ld y o u con side r a con tractor who u nd e rtakes t o b u i ld h o u ses roads , ,

s idewal ks e tc a b u si n ess ma n ? Why ?

, .
,

Name some o f t he t ransaction s wh i ch he wo u l d perform i n con n ection w i th

the O peration s o f h is b u si n ess .

I s t he payme n t o f stre e t c a r fa re by the i n d ivid u al w ho rides o n the car a

b u si n ess transactio n from t he stand poi n t of the street ca r compan y ?
Name som e o f th e assets w hi c h wo u ld be n eed ed a n d som e o f t he l iab i l i ties
wh i ch migh t be i n c u rred i n con n e ction wi th t he ope ratio n of a rai l road .

Nam e som e of t he assets a n d l iab il i ties i n con nection wi th t he O perati o n o f a

‘

groce ry b u si ness .

Name some o f th e assets o f a d ry goods store .

Wo u ld y o u co n sid er i t advisabl e for those i n charge of a ci ty govern me n t to

ma ke a record o f the tran saction s compl e ted i n co n n ection wi th i ts oper
a ti ons ? W hy ?
Nam e som e of the transaction s wh i ch wo u ld be recorded i n con n ecti o n wi th
the operation s o f a ci ty gover n m en t .

I s a n a u tomob i l e tr u ck ow n ed and u sed by the grocer for d el iveri ng groceries

, ,

o n e o f the assets o f hi s b u si n ess ?

’

Na m e som e of th e operati n g costs i n con nection wi th the ope rati on s of a

steame r wh i ch ca rri es freigh t and passe ngers .

N ame som e o f the assets wh i ch wo u ld be n eeded and th e l i ab il i ties i n c u rred

i n con n ectio n wi t h t he O peration s o f th is steame r .

Name some of the operati n g costs i n con nection wi th the p ub l i catio n of a

dai l y n ewspaper .

Name some of the assets a nd l iabi l i ties i n co n n ecti on wi th the O pe ration s of a

n ewspaper .

Wo u ld the farmer be regard ed as a b u sin ess man ?

Name some of the tran saction s wh i ch wo u ld occ u r i n con nectio n wi th th e
operation s of a farm .

Name some o f the assets n eeded by the farmer a n d some o f the l iabi l i ties h e
m i gh t i n c u r i n con nectio n wi th th e operations o f h i s farm .

Name some o f the ope rati n g expe n ses wh ich i t wo u ld be necessary fo r the
farme r to pay i n con n ect i o n wi th the operatio n s o f h is farm .

Name some o f th e transaction s wh ich a phys ician w o u ld perform i n con n ection

wi th h i s practice .

Name th ree b u si nesses of the same ki nd N ame th ree b u s m e ss e s of d i fferen t

.

ki nds
.
 C hap t e r II
RE C O RD IN G T R A N SA C T I O N S
12 . Th e P u rp os e
A cc o u n t i n g ( boo kk eepi n g ) is to provide the own er
of
wi th t he i n fo rmatio n wh i ch wil l e nabl e h i m to kn ow the res u l ts o f the operation s
o f h is b u si n ess a n d to co n trol f u t u re ope ration s Th is i n format io n ca n be obtai n ed
.

on l y by record i n g each tran saction a s i t occ u rs .

13 M e t ho d o f Re c or d i n g T r a n sa c t i o n s The bookkeeper records the

. .

transacti on s as they occ u r and i n th e order o f thei r occ u rre n ce E ach transacti o n .

i nvolves a val u e rece ived and a val u e parted wi th he n ce a record i n two acco u n ts , .

E ach transacti o n may b e recorded d i rect i n the acco u n ts a ffected by i t o r i n a

separate record an d transferred to the acco u n ts For the p u rpos e of i nstr u ctio n .
,

both me thods are i l l u strated b u t i n practice transactio n s are always recorded

, ,

s eparat e from t he acco u n t and t ransferred to i t T he reco rd i ng o f transaction s .

i n volves t he u s e of books o f acco u n t beca u s e transactions can no t b reco rded .

‘

wi t ho u t paper o n wh i ch to record th e m .

14 . A cc o u n t are bo u nd o r loose leaf and r u led t o mee t parti c u lar

B oo k s of -

need s Th e vario u s books o f acco u n t u sed i n con n ectio n wi th the record i n g of

.

transaction s wi l l be explai ned a n d i l l u strated as they are i n trod u ced i n con nection
w i th exercises i n th is text I n the fi rst th ree exercises the led ger i s the on l y book
.
, .

of acco u n t req u i red .

15 . L e d g e r is a bo un d book loos e leaf book or cards wi th r u l i ng to

Th e ,
-

con tai n a record o f t ra n sactio n s i n acco u n ts T he n am e of the acco u n t is wri tte n

.

at the to p of t he page a n d each t ra n sactio n recor ded o n a horizo n tal b l u e l i n e o n

the opposi t e sides o f two acco u n ts I f a n e n ti r e page is no t n eed ed i n co n n ecti on
.

wi th record i n g t he tran sactio n s for a n acco u n t the n am e o f th e acco u n t may be ,

w ri tte n across t he pag e i n a plac e other than t he top I f more than o ne acco u n t .

i s wri tte n o n a pag e i t is c u stomary to i nd icat e the n ame of a n ew acco u n t by

,

d rawi n g do u b l e red l i n e s e i the r al l the way across the page as i n I l l u stration N o .

3 or be n eath t he name o f t he acco u n t

, I ll u stratio n No 2 shows on e form of ru l i n g
. .

for a l ed ge r page .

T he n u mbe r of acco u n ts i n t he ledg e r d epe nds e n ti rely on t he n at u r e of the

operation s o f t he b u si n ess a n d t he ext e n t o f thes e operati ons T he vario u s acco u n ts .

that a re u s u al ly fo u nd i n t he l edge r wi l l be d isc u ssed as th ey are needed i n co n n ection

wi th the e xpl an atio n o f t he acco u n ts and exercises req u i ri n g t he record i n g of tran s
acti on s i n the m Acco u n ts wi th Cash P u rchases an d Sal es a re d i sc u ssed and th e
.
, ,

record i n g o f transactions a ff ecti n g them i l l u strated i n th is chapte r .

I l l u stration NO . 2, O n e Form of R u l i n g for a Ledger

10 CASH PU R C H AS E S A N D SAL E S AC C OU N T S
, ,

C A S H A C C O U NT
16 . Th e P u rp o s e
A cc o u n t i s to show a record of al l the t ra n s a c
of t hi s
“ ”
tion s i n wh ich cash is receiv ed a n d paid Cash is a term appl i ed t o mon ey o r an y .

c omm erci a l p a p er w hi ch the ba n k wi l l accep t at i ts fa ce val u e as mon e y The .

vario u s forms o f comme rcial paper wh i c h a re rega rded as cas h wi l l be expl ai n ed an d

i l l u strated l at e r
D ebi t the Ca s h A ccou n t: Credi t the Ca sh A ccou n t:
1T1 . For cash re ce ived if 2 Fo r cash paid
. . .

if3 The B a la n c e of the Ca s h A ccou n t sh ows th e amo u n t o f cash wh i ch

.

bel o n gs to t he b u si n ess as a res u l t of th e cas h t ra nsactio n s com ple ted ; i t i s on e of

th e a s sets o f th e b u si ness Th is cash may be i n th e s af e i n th e ba n k for safe
.
,

keepi n g O r a part i n each place

, .

jl 4 P rov i n g Ca s h Si n ce th e Cash acco u n t i s a record of a l l the cash received

. .

a n d paid th e balan c e sh o u ld be t he same as the cas h be l o n gi n g to t he b u si n ess I f

,
.

th ere has be en a n error i n maki n g c ha n ge o r a transacti on a ff e cti n g cash has no t ,

bee n re corded i t i s obvi o u s tha t t he bala n c e o f the acco u n t wi l l n o t be the sa m e

,

as the cash o n ha n d I t i s c u stomary i n b u si n ess to prove the cash reco rd wi th

.

th e cash o n hand a t the e n d o f each b u si n ess day Th is proof i s e ff ected b y ,

co u n ti ng the cash and com pari n g th e a m o u n t wi th the balan ce o f t he Cash acco u n t .

P U R C HAS E S A C C O U NT
17 Th e P u r p o s e o f t h i s Acc o u n t i s to sh ow th e n et cost o f al l the m e r
.

c ha n d i s e p u rc hased fo r sal e M e rc ha n d ise is a ge n eral term appl ied to good s

.

bo u gh t a n d sold i n t he trad i ng b u si ness s u ch as groceries cl oth i n g sh oes hats , , , , .

hardwar e d ru gs m ti s i c a l i nstr u me n ts j ewel ry etc

, , , , .

D ebi t the P u rcha s es A ccou n t: Credi t the P u rcha s es A cco u n t:

‘
J 1 . Fo r the cost mercha nd ise
of II 2 . For th e cost pri ce of m e rcha n
p u r c ha s e d a nd t he transporta d ise re t u r n ed t o the sel l e
‘

r
, ,

tion ( f reig ht express and post

, , an d al lowan ces gran ted by
age ) d rayage a n d storage
, , him .

cost o f the same .

if 3 . The B a la n ce shows the n e t cost of m e rch a n d ise

o f the P u rc ha s es A cc o u n t
p u rchased d u ri n g th e period fo r wh ich the record is k ept Th is bala n c e wi l l no t .
,

as a r u l e represen t the val u e o f the mercha n d i se ow n ed by th e b u si n ess beca u se

,

th e me rch a n d ise was p u rchased fo r sal e and a part o f i t h as probab ly bee n sold .

SAL E S A C C O UNT
18 Th e P u r p o s e o f t h i s A cc o u n t i s to sh ow the n et ret u rn s f ro m t he
. .

sal es o f mercha n d ise I t i s a record o f th e transac tio n s affec ti n g the sal es o f those
.

articl es p u rchased fo r sal e th e co s t of wh ich i s cha rged to t he P u rchases acco u n t

,
.

D ebi t the S al es A ccou n t: Credi t the S a les A ccou n t:

if 1 . Fo r the sel l i n g pri ce o f m e rcha n If 2 . For t he sel l i n g pri ce of m e rchan

d ise ret u rn ed by the c u stome r , d ise sold .

and al lowances gra n ted to h i m .

if 3 . The B a la nce o f the S a les A ccou nt shows the n e t ret u r n s from t he sales
of m erchand ise d u ri n g th e period fo r wh ich th e reco rd is ke pt .
 R E CO RD I N G T RA NSA C T I O NS . I I

RE C O RD I N G T R A N S A C TI O N S D I RE C T I N T HE L E DG E R
19 . T r a n s ac t i o n s Ma y
Re c or d e d d i rect i n t he led ge r o r i n a separate
Be
book a n d t ra ns felr re d t o t he l edge r as explai n ed i n § 1 3 Whe n th e tra n sactio n s
,
.

are r e corded d i rect i n th e l edge r the date o f each transactio n a n d th e amo u n t

,

are recorded o n t he deb i t side of t he acco u n t wh i c h shows the val u e received a n d ,

the date a n d the amo u n t o n t he cred i t sid e o f t he acco u n t wh ich shows t he val u e
,

parted wi th ; each tra n sacti o n is reco rded at th e ti m e i t occ u rs .

T he fol lowi n g tra n sactio n s a ff e cti n g t he p u rchas e s a n d sal es of m e rc ha n d ise

fo r cash perfo r med by t he sod a fo u n tai n departme n t o f the Ce n tral D r u g C 0
,
.

d u ri n g the wee k b egi n n i n g J u l y 2 a re show n recorded d i rect i n the Cash P u rchase s

, , ,

and Sales acco u n ts i n I l l u stratio n No 3 . .

J u l y 2 Cas h sal es fo r t he d ay per cash registe r

.
,

3 B o u gh t syr u ps and extracts

. Coca Col a ice c ream
,
-

, ,

Cash sales fo r the day p e r cash registe r ,

( Conclu ded on p a g e 1 2 )

M
f
J é t .

x “

I l l u stration N o 3 A Led ger C on tai n i n g Thre e Acco un ts

'
.
, .

EX PLANAT I O N By co mpa ri n g t he t ra n sactio n s w i th t he reco r d i n t he l edger i t will b e

'

.
,

obser ve d t hat cash is t he val ue re ce i ve d i n t he fi r st t r a n sactio n hen c e t he date J u ly 2 a n d t he , , ,

a mo u n t,
a r e re co r d e d o n t he d e bit s i d e of t he C ash acco u n t ; sal e s ( mer cha n dise sold ) i s
t he val u e pa r t e d w ith h en c e t he dat e J u ly 2 a n d t he a m o u n t
, , , a re re co r d e d o n t he c re di t
,

S I de o f t he S al e s acco u n t I n t he se co n d t r a n sactio n p ur chase s ( mer cha n dise bo u ght ) i s t he val ue

.
,

recei ved hen c e t he dat e J u ly 3 a n d t he a mo u n t a r e re co r d e d o n t he d e bit s i d e of t he P u r

o

, , , ,

chase s acco u n t ; cash is t he val ue pa r te d w ith h en c e t he date J u ly 3 a n d t he a mo u n t

, , a re , ,

recor d e d o n t he c red i t sid e of t he C ash acco u n t The other t ra n sactio n s a e record e d i n t he sa me

.
'

r
ma nner . T he w ri ti n g a n d la r ge fig ure s a r e w r i t t en w i t h black i n k a n d t he s mall fig ure s ( total s )
W i th a sha r p p en cil .
12 T R I A L BALAN C E .

5 . Re t u rn ed on e gal lon of i ce cream p u rch as ed o n the 3 d a nd rece ived ,

th e cost pri ce for the sam e .

B o u gh t sandwi ch es fl avo r i n g
, i ce cream , ,

6 . Cash sal es fo r the d ay pe r cash registe r ,

7 . Gav e J ames S mi th fo r o ne hal f gal lo n of ice cream wh i ch he

-
re

t u rned beca use i t was rece ived i n bad cond i tio n .

Cas h sal es fo r the day per cash registe r ,

20 A T r i a l B a l a n c e i s a l i st of the ope n acco u n ts i n the ledger wi th the

.

bal a n ce or t he total d eb i ts a n d total cre d i ts se t O pposi te t he n am e o f each acco u n t .

The Trial B alan ce i s u s u al ly prepared o n pape r wi th two mon e y col u m n s r u led at

the righ t so that debi t totals o r deb i t bala n ces may be e n te red i n o ne col u m n a nd
,

cred i t totals or cred i t bal a n ces i n t he othe r I f t he total d e b i ts e q u al the total .

cred i ts th e Tri a l B alan c e is said to be i n bal a n ce a nd proves that the debi ts and
,

cred i ts recorded i n the acco u n ts are eq u al .

When both sid e s of t he acco u n ts a e u se d i n t he T r ial B ala n ce it is so me t i me s re ferre d to as a

r ,

Tr ial B ala n c e of totals a n d w h en t he bala n ce s of t he acco u nts a re u se d as a Tr ial Bala n ce o f

, ,
“

ba la n ce s A co m pl e t e d isc u ssio n of t he met hod of d e t e cti n g err or s w h en t he Tr ial Bala n c e doe s

$

n ot bala n ce w ill be given lat er I t i s q

.

u it e e vid en t to t he st u d en t that
. i f t he ledger is n ot i n bal ,

a n c e as i n dicated by t he Tr ial Bala n c e it is ne ce ssa ry to che ck t he t ra n sact i o n s re cor d e d i n t he

,

l edger to d ete ct t he erro rs .

I l l u stratio n N o 4 A Trial B al a n ce o f Totals

.
,
.

EX PL A NATI O N This Tr ial Bala n ce is p re pa re d f ro m t he l edger i n I ll u st ratio n N o 3

. . .

The n a me of e ach acco u n t is wr itt en at t he l e ft a n d t he total d e bits a n d total c re dits i n t he t w o

mo ney co lu mn s at t he r ight T he n a me of each acco u n t t he a m o u n t a n d t he total s of t he col u mn s
.
, ,

a e wr i tt en i n blac k i n k ;
r if t he Tr ial Bala n ce i s foote d be fo re it i s r u le d t he totals a re en t ere d i n ,

s m all pen c i l fig ure s i n t he sa me m a nner as t he totals i n I ll u st r atio n No 3 B y co m pa r i n g I ll ust ratio n . .

No 4 with I ll u st ratio n No 3 t he st u d en t w ill observe that i t is ne c e ssa r y to add t he acco u nts i n t he

. .
,

l edger a n d writ e t he totals i n s mall pen cil fig u re s b efo re p re pa r i n g t he T rial Bala nc e .

I l l u stra tion N o 5 A Trial B ala nce of B ala n ces

.
,
.

EX PL A N A T I O N I t is c usto m a ry w h e n ta k i n g a T r ial Bala n ce of bala n ces to wr it e t he

.
, ,

bala n c e i n t he expla n atio n col u mn o n t he la rger sid e of t he acc un t The se b a la n ce s a re n ot sho wn o .

i n I ll u st ratio n No 3 be ca u se th e y a e n ot ne ce ssa r y i n taki n g a Tr ial Bala n ce of totals

. r .
 R E CO R D I N G TRAN SACT I ON S I N T HE LE DGE R . 13

E x e r c i s e No 1 , R e c o r d i n g T r a n s a c t i o n s D i r e c t i n t h e L e d g e r
. .

Record o n l edger pape r ( pape r wi t h t he same r u l i n g as I l l u stratio n N o 2 ) th e

*
.

fol lowi n g transacti o n s perfo r med d u ri n g t he mo n th o f J a n u ary by J W Mc C o r . .

mick a dealer i n m u sical i n str u me n ts I t wi l l req u i re fo u rtee n l i n es for re cord i n g

, .

the t ransactio n s i n t he Cash acco u n t e igh t l i n es fo r t hos e i n the P u rchases acco u n t , ,

and twelv e l i nes fo r those i n t he Sa les acco u n t I f one shee t o f ledge r pape r i s u sed .
'

fo r the th ree acco u n ts separate them by re d l i n e s as i n I l l u stratio n N o 3 bei n g

, .
,

s u re to al l ow the n u mbe r o f l i n es n ecessary fo r record i ng the transactions a s i n ,

d i c a te d .

J an . ISold fo r cash o ne p ian o

.
,

2 B o u gh t fo r cash o ne h u n d red V i ctrol a records

.
,

5 Sold fo r cash o ne V i ct rola

. re co rds , ,

E nter as o ne a m o u n t i n t he sa me m a nner as t he t ra n sactio n of J u ly 3 recorded i n

I ll u st ratio n No 3 . .

7 Sol d fo r cash o n e pi a n o
.
,

10 Sold fo r cash on e player pian o

. r ol ls -

, ,

12 B o u gh t for cash th ree V ictrolas

. paid fr e igh t o n the same , ,

14 Sold fo r cash o n e V i ct rola

. r e cords , ,

17 Gave J O Smi th $ 1 5 0 for a damaged record wh i ch he p u rchased o n th e

. . . .

1 4 th and ret u r n ed .

18 Sol d for cash o n e V i ctrola

. records , ,

20 B o u gh t fo r cash o ne pian o
. paid freigh t an d d rayage o n t he ,

sa m e ,

23 Sen t t he damaged record ret u rn ed to u s o n t he 1 7 th t o the d istrib u ti n g

.

age n t o f t he records a nd re c e iv e d 90 C for t he sam e .

27 Sold for cash on e V i ctrol a

. records , ,

B o u gh t fo r cash o ne pian o pai d fr e igh t o n t he sam e , ,

30 Received . from the rai l road compan y to pay for overcha rg e on

freigh t paid o n t he 2 ot h .

31 Sold for cash o ne pian o

.
,

When these transactio n s have be e n re corded i n the th ree acco u n ts add the ,

debi t side a nd t he cred i t sid e o f each acco u n t e n ter the total s i n smal l p e n ci l fig u res ,

as i n I l l u stration No 2 and prov e the eq u al i ty o f the debi ts a n d cred i ts by a Trial

.
,

Bal a n ce of totals as i n I l l u stration N o 4 . .

E x e r c i s e No 2, R e c o r d i n g
. L e d g er Tr a n s a c t i o n s D i r e c t i n t he .

”
Record o n l ed ge r paper t he fol lowi n g transactions performed d u ri n g the week
$

begi n n i ng M ay 2 8 by C harles Smi t h a b u tch e r Al low spac e fo r the acco u n ts as , .

fol l ows :Cash te n l i n es ; P u rchases e igh t l i n es ; Sal e s n i ne l i n es

, , ,
.

M ay 2 8 Cash sal es for t he day pe r cash register

.
,

29 B o u gh t meat for cash

.
,

Cash sal es fo r the day per cash register ,

30 Paid t he express compan y

. o f wh ich was fo r a C O D . . .

sh ip m e n t of l ard and fo r express charges o n t he same .

Cash sales fo r the day per cash register ,

31 Gave M rs R K Pol k
. cash for a steak w h i ch sh e re t u r ned beca u se
. . .

i t was n o t satisfactory .

un e I B o u gh t meat for cash

.
,

Cash sal es for th e day per cash registe r ,

( Con clu ded on pa g e I 4 )

NOT E T he exer cise s i n t he t ext a re n ot t o“ be re co r d ed i n t he books of acco u n t p r ovid ed
*
.

fo r t h e p n less spec i al bla n k s ma rk ed F or E xer cises i n t he Text a re p r ovid ed t he

”
'

ra c t 1c e s e t U .
, , ,

st ud en t sho u ld u se loose shee ts of r u le d paper U n l e ss oth er w ise i n st r u cte d t he st u d e n t w ill presen t

.
,

to t he i n st r u cto r f o r app r oval each exer cise as it is co m plet e d .

14 B OO KS O F O RI G I N AL E NT R $

( Conti nu ed f rom pa g e I
E x erci s e N o . 2—

J u ne 2 Rece ived
. from the Ce n tral Provi sio n C O for l a rd wh ic h we ret u rn ed .

as per agree me n t .

B o u gh t meat for cas h ,

Cash sal es fo r th e d ay p e r cash registe r ,

Whe n these transaction s have bee n recorded i n the t hre e acco u n ts add the ,

d ebi t sid e and the cred i t side o f eac h acco u n t e n t e r th e total s i n smal l pe n c i l fig u res , ,

and prove th e eq u al i ty o f the d eb i ts a nd cred i ts by a Tria l B ala n ce of totals a s i n

I l l u strati o n N o 4 . .

E x e r c i s e No 3 , R e c o r d i n g
. Tr a n s a c t i o n s D i r e c t i n t he L e d g er .

Reco rd o n ledge r pape r t he fol lowi n g t ra n sacti o n s perfo r med d u ri n g the we ek

begi n n i n g Septembe r 1 5 b y G S J oh n so n who cond u cts t he C en t ral C afeteri a
. .
, .

Al low space fo r the acco u n ts as fol lows :Cash el eve n l i n es ; P u rchases n i n e l i n es ; , ,

Sales te n l i nes
, .

Sept 1 5 Paid c ash for meat

. . bread , ,

Recei ved for cash sales ,

16 Paid cash fo r vegeta b les

.
,

Received fo r cash sal es ,

17 Paid cash for can ned goods

. meat b read $ 5 5 0 , , ,
.

Rece ived fo r cas h sales ,

18 R e ce i ved cash
. fo r ca nn ed goods ret u rn e d by u s as pe r agre e me n t
, .

Re ce ived fo r cash sale s ,

19 Paid ca sh fo r meat
. bread , ,

Re ce ived for cash sal es ,

20 Pa id cash for vege tabl e s

. bread b u tter , , ,

Rec e ived fo r cas h s ales ,

Whe n these transactio ns have bee n recorded i n the t hree acco u n ts foot the ,

deb i t and cred i t sid e of each acco u n t w hich has more tha n o ne amo u n t recorded
on i t ; en te r t he bal an ce wi th smal l pe n ci l fig u res i n t he e xplan atio n col u”m n o n
the large r side a n d tak e a Trial B alan ce of balan ces as i n I l l u stration No 5
, . .

21 A B oo k of O r i g i n a l E n t ry
. As expl ai n ed i n § 1 3 tran sactio n s may .
,

be recorded d i re ct i n t he ledger or i n a s e parat e book of acco u n t and tra n sf e rred to

the l edge r A book o f origi n al e n t ry i s a book o f acco u n t u sed fo r record i n g tran s
.

action s separate from the l edge r Whe n transactio n s are recorded se parate from .

the l edge r t he facts sh ow n by th is record m u st b e tra n sfe rred to the l edge r beca u se
,

the i n formatio n req u i red by t he ow n er i s obtai n ed from th e acco u n ts i n t he l edger .

There are m an y ki nd s o f books o f origi n al e n try each o f wh ich wi l l be expl a i n ed as ,

i t is n eeded i n con n ection wi th record i n g t he tra n saction s i n th e exe rcises At .

pre se n t the j o u rn al i s th e on l y book of origi n al e n try u sed fo r re cord i ng transact i o n s .

22 Th e J o u r n a l i s a book of origi n a l e n try ( bo u n d or l oose leaf ) r u l ed to

.
-

provid e fo r the record in g of b u s i n ess tran sacti o n s I f i t i s th e o n ly book o f origi n al .

e n try al l th e tran sactions a re record ed i n i t ; i f other books o f ori gi n al e n t ry are

,

u sed i t con tai n s on l y th ose tran saction s wh i ch a re n o t r ecorded i n the oth e r books
,
.

The r u l i n g i n th e j o u rn al provides space fo r th e d ate o f the transactio n the n ame ,

of t he acco u n t debi ted a n d th e amo u n t the n ame o f th e acco u n t cred i ted and th e
-

a m o u n t a n d a n explanatio n of th e tran saction I l l u stra tion No 6 shows on e fo m i

,
. .

o f r u l i ng for the j o u rn al ; others wi l l be expl ai ned and i l l u strated later .

ll 1 J o u rnal izi n g i s i n d i cati ng th e n a m e s of the acco u n ts debi ted and cred i ted
.

i n a transactio n before record i ng i t i n a book of origi nal e n try ; i f wri tte n th e n ame s ,

o f the acco u n ts d e b i ted a n d cred i ted a nd the amo u n ts are ar ra n ged i n j o u r n al form

a s i n I l l u stratio n N o 7 . .
 R E CO R D I N G T RA N SACT I ON S I N T HE J OU RN AL . 15

I l l u s tratio n N o 6 1R u l i n g for a P age i n t he J o u r n al

.
, .

EX PLA N AT I O N The dat e of t he fi rst t r a n sactio n reco rd ed o n t he page is wr itten o n t he

.

bl ue li ne at t he top a n d t he dat e of s u cceed i n g t r a n sactio n s o n t he bl ue li ne i m me diat e ly b e lo w t he

,

last t ra n sactio n re co r d e d T he n a me of t he acco un t d e bit ed is wr itten at t he l e ft a n d t he a mo un t

.
,

i n t he fi r st m one y col u m n o n t he sa me li ne w ith it ; t he n a me of t he acco u n t c re dit e d i s wr itt en o n

t he li ne b e lo w o n e half i n ch to t he r ight of t he n a me of t he acco un t d e b i t e d a n d t he a m o u n t i n
,
-

t he s e co n d m o ne y col u m n o n t he sa me li ne w it h it The e xpla n atio n is b e g u n o n t he li ne b e lo w t he

.

n a me of t he acco u n t c redite d a n d ma y occ u py one o r m ore li ne s d e pen di n g o n t he n at ure of t he,

t ra n sactio n The spac e be t ween t he t wo e d li ne s at t he l e ft is fo r t he page of t he acco u n t i n t he

. r

l edger T he n a me of t he acco u n t cre dite d is wr itt en to t he r ight of t he n a me of t he acco un t d e bit ed

.

so as to disti n g u ish b et ween t he t w o acco un ts a ff e cte d by t he t r a n sactio n .

RE C O RD IN G T RAN SA C TI O N S IN THE J O UR N AL
§ 23 Tr a n sa c t i on s Ar e R e c or d e d i n t h e J ou r n a l i n th e order i n wh i ch
.
’

they occ u r A com plet e record o f a transactio n i n the j o u rn al m u st s how the date
.

o f the tran saction the n am e of the acco u n t debi ted a n d t he amo u n t th e n ame o f
, ,

th e acco u n t cred i ted a n d t he amo u n t an d the explanation Th i s explan atio n i s , .

for t he i n formation o f t he bookkeeper or an y person who may h ave occasio n to

exam i n e th e record .

T he fol l owi n g transaction s a ff ecti n g the p u rchases an d sales o f merch andi se

for cash performed by th e sod a fo u n tai n d epart m en t of the Cen tral D r u g C O d u ri n g
, .

th e week begi n n i n g J u l y 2 are show n record ed i n th e j o u r n al i n I l l u str atio n N o 7

, . .

These transactio n s are the same a s thos e begi n n i n g o n page 9 .

J u l y 2 Cash sales fo r t he day pe r cash register

.
,

3 .B o u gh t syr u ps an d extracts Coca Col a , ice cream

-

, ,

Cash sal es for the day per cash register ,

5 .Ret u r n ed on e gal l on o f i ce cream p u rchased o n the 3 d and recei ved ,

t he cost pri ce fo r t he sam e ,

.

B o u gh t sandwi ches flavori n g , i ce cream , ,

6 .Cash sal es for the day per cash register $ 2 1 5 0 , . .

T
’
Gav e J ames Sm i th for o n e —hal f gal lon of ice cream wh i ch he re
t u rn ed b e ca u se i t was receiv e d i n bad co n d i tion .

Cash sales for the day p e r cash regi ste r $ 62 5 0 , . .

16 T HE J OU R NAL .

3 4
7 0

M d J é f f

t z é yf

4 ?

J o .

—
/ J fl

4 2 45 0

(
’

Z o a

I l l u s tration N o .
7, A J o u rn al Page wi th Tra n sactio n s Record ed on I t .

EX PL A NAT IO N A co m pa riso n of this ill u st ratio n w i th t he t ra n sactio n s o n page 1 5 a n d

.

w ith t he e xpla n atio n of I ll u st ratio n No 6 is all t he e xpla n atio n that is need e d fo r thi s ill u st ration
. .
 POST I N G F ROM T HE J OU RN AL . 17

24 . Pos ti n g fr om t he J ou r n a l is
t ra n sferri n g the amo u n ts from the
j o u rn al to the acco u n ts i n the l edge r E ach
amo u n t i n the deb i t col u m n is posted
.

to the deb i t side of t he acco u n t wri tten o n the same l i n e wi th i t E ac h amo u n t .

i n the cred i t col u m n i s posted to th e cred i t side o f the acco u n t wri tte n o n th e same
“ ”
l i n e wi th i t T he page i n the j o u rn al an d the l ette r J are e n tered i n the fol io
.

col u m n i n the ledger for refere n ce ; the page o f the acco u n t i n t he ledger i s wri tte n
i n th e fol io col u m n i n the j o u rn al to i nd i cate t he posti ng These amo u n ts a re .

posted to th e ledge r i n the same order as th ey a re recorded i n the j o u r n al Th e .

p u rpose o f posti n g i s to p rovid e a record o f the tran saction s i n acco u n t fo rm .

Th e tran saction s record ed i n I ll u stration N o 7 w h e n posted to t he l edge r

.
,

acco u n ts wi l l app ear as i n I l l u stration N o 8 and a Tri al B al an ce from th ese l ed ge r

,
.
,

acco u n ts wi l l app ear as i n I l l u stration No 4 o r N o 5 . . .

/L g
x .
0

I l l u stra tio n N o 8 A Ledger wi th Th re e Acco u n ts Res u l ti n g fro Posti n g

.
, m .

EX PLANATI O N B y co m pa ri n g thi s ill u st ratio n w ith I ll u st ratio n No 7 i t w ill be observed

. .
,

that e ach a m o u n t wri tt en i n t he fi r st col u mn i n t he j o u rn al i s t ra n sferre d to t he d e bit sid e of t he

acco u n t wr itt en o n t he sa me li ne wit h it a n d e ach a mo u n t written i n t he seco n d col um n i n t he j o u rn al
,

i s t r a n sferre d to t he c re dit sid e of t he“ acco u n t wr i tt en o n t he sa me li ne w ith i t T he post i n g is

.

i n dicate d by wr it i n g t he j o urn al page 1 “i n t he folio col u mn ( see col u mn 4 I ll u st ratio n No 1 ) i n

”
,
.

t e l e dger a n d by wr it i n g t he l e dger page i n t he fol i o col umn of t he j o urn al ( se e expla n at i o n of

”
h ,
1
I ll u st r atio n NO . U n l e ss t he posti n g is i n d i cat e d by th e s e n u m b er s as e ach t ra n sact i o n i s post e d
t he boo k k ee p er m i ght post t he sa m e a m o u n t aga i n e sp e c i ally i f t h ere sho u ld b e a n i n t err u ptio n i n
,

his wor k whil e he wa s post i n g .

A co mpar iso n of I ll u st r at i o n NO 8 w i th I ll u s t r at i o n No 3 shows that t he facts a re t he sa me

. .

excep t that t he folio col um n i s u sed i n t he former b eca u se t he a mo u n ts a re t ra n sferred fro m a boo k
of o rigi n al en t ry w h i l e it i s n ot u se d i n t he latter b e ca u se t he t ra n sactio n s were re co rd e d di re ct i n
,

t he l edger h en c e n o re feren c e s were nee d e d

,
18 R E C O R D I N G T RAN SACT I O N S I N T HE J OU RNAL .

E x e r c i s e No . 4, Re c o r d i n g Tr a n s a c t i o n s i n t he J o u rn a l an d Post i n g .

Record o n j o u rn al pape r ( pape r wi t h th e same ru l i n g as I l l u stration N o 6) *

.

the fol lowi n g tran saction s pe rformed d u ri n g th e mon th O f M arch by Robert Smi th ,

a d eal e r i n u sed a u tomob i les :

Ma rch Sold A L Lott a u sed Ch and ler for
1 . . cash . .

3 B o u gh t a u sed Ford f ro m W H Rol and fo r

. cash . . .

8 Sold W W J on es a u sed 1 92 0 Fran kl i n fo r

. . cash . .

15 B o u gh t a u sed Packard from Robe rt Ma c Fa rla n d fo r

. cash .

19 Sold D avi s B ros th e u sed Packard p u rchased on th e 1 5 th for

. .
,

cash .

25 B o u gh t a u sed H u dson f rom D avid B rown i n g a t D an vil le fo r

.

cas h ; paid C ha rl i e S m i th fo r d el ive ri n g th is car .

31 Sold B M M orri s th e u sed H u dson p u rchased on th e 2 5 t h for

. . .
,

cash .

Whe n the above tran sacti on s h av e bee n reco rded i n th e j o u r n al as i n str u cted ,

ope n acco u n ts o n a s hee t of led ge r pape r wi th C ash P u rchases a n d Sal es

al l owi n g fo r each acco u n t the n u mbe r o f l i n es i nd i cated by t he n u mber give n
i n pare n thesi s afte r t he n ame of t he acco u n t ; pos t the tran sactio n s and prove the ,

posti n g by a Trial B alan ce of totals Use loos e paper u n less oth erwise i nstr u cted . .

E x er c i s e NO 5 , R e co r d i n g . Tr a n s ac t i on s i n t he J ou r n a l an d Po st i n g .

Record on j o u rn al p ape r the fol l owi n g cash tra n sacti o n s performed by th e *

H F Ri tter
. . E l e ctri c Co d u ri n g th e mon th o f A u g u st : .

Au g . 1 . Sold M N Stewart a N O 9 e l ectri c washer

. . .
,

2 . Sold A L Graham th ree Sol vay el ectri c fan s

. .
,

5 . B o u gh t th ree el ectri c l am ps fro m th e Ge n e ral E l ectri c C o .

,

9 . Rece ived from th e D owel l Con str u cti on Co i n paymen t fo r .

,

o n e N o 1 0 el ectri c washe r . .

12 . B o u gh t two el ectri c washe rs from t he G e n eral E lectri c C o .

,

16 . Sold M rs J M Taylo r o n e e l ectri c i ro n

. . .
,

18 . Sold M rs A L D ay o ne el ectri c l am p
. . .
,

21 . Gave H L J on es . fo r a n el ectric i ron wh i ch h e p u rchased fo r ca s h

.

a n d re t u rn ed per agreeme n t .

25 . Sold D r C C D oyl e o ne N o 5 el ectri c pad

. . . o n e N o 6 V i ole t .
,
.

Ray mach i n e ,

28 . R ece ived from t he Ge n eral E l ectri c Co fo r a lam p wh i ch we .

p u rchased from the m o n th e st h b u t ret u rn ed beca u se i t was n ot th e ,

ki nd ord ered .

Whe n th e above transaction s h ave bee n record ed i n th e j o u rn al a s i nstr u cted ,

ope n acco u n ts o n a shee t o f l ed ge r pape r wi th Cash P u rchases and Sales

al lowi n g fo r eac h acco u n t th e n u mbe r of l i n es i nd i cated ; pos t th e t ra ns a c
ti on s and prove th e posti n g by a Tri al B al an ce o f totals
, .

E x e r c i s e NO 6 R e c o r d i n g T r a n s a c t i o n s i n t h e J o u r n a l
.
, an d P ost i n g
Record o n j o u r n al paper th e fol lowi n g tran sacti on s performed d u ri n g th e *

mon th o f M arch by M a rti n R D al e y a re tai l f u rn i t u re d ealer .

,

M arc h 1 Sold for cash on e bed room s u i te

. o ne d i n i n g room s u i te , ,

( Con cluded on pa g e
*
Se e n ote at t he botto m of page 1 3 .
 QU E ST I O NS O N R E CO R D I N G T RAN SACT I O N S .

I f the d eb i ts and cred i ts o n th e Tri al B ala n ce are no t eq u al h ow d oes the book

,

kee pe r w ho ha s record ed th e tran sactio n s se parate from th e l ed ge r asce rtai n

, ,

the error ?
Why i s i t ad visabl e to give a n expl anatio n of each e n try i n the j o u rnal ?
If cash i s rece ived fo r m e rch and i se sold and record ed i n th e j o u r n al a s
Cash D r
, .
, a n d Sales C r
, .
, w ha t e ffect w i l l th is h ave o n th e
Trial B al an c e i f the e n try i s posted as record ed ?
Wha t d oes a tel eph o n e com pa n y sel l ?
Wo u ld these sal es be record ed i n a Sales acco u n t ?
Wo u l d t he bookkeepe r for a ci ty gove r n me n t h ave a Sales acco u n t i n h i s
l ed ge r ?
Wo u ld the farme r wh o kee ps a record of the tran sactio n s h e pe rforms have a
Sales acco u n t i n h is led ge r ?
I f a me rcha n t d isco n ti n u es b u si n ess a nd sel ls a l l the me rchand ise wh i ch h e
ow n s what wi l l the balan ce o f the Sal es acco u n t S how ?
,

U nd e r the cond i ti on s me n ti on ed i n Q u esti o n N o 2 3 what wo u ld t he bal a n ce

.
,

of th e P u rchases acco u n t sh ow ?
I f a g roce r b u ys a n a u tomob i l e tr u ck to b e u sed i n d el iv e ri n g me rchand ise ,

wo u ld t he val u e o f th is tr u ck be d ebi ted to the P u rchases acco u n t ? G i ve

reaso n s for yo u r an swe r .
 C hap t e r I II
R E C O RD I N G T R A N —
SAC TI ONS C on t i n u e d
§ 25 P u r c ha s e s a n d S a l e s o f Me r c h a n d i s e o n A cc o u n t
. I t is no t .

always possibl e fo r the own er of a b u si n ess to pay cash at the ti m e m e rcha n d ise
is p u rchased o r to d e mand cash at t he t i m e m e rchand ise is sold Whe n th e own e r
,
.

of the b u si n ess does n ot pay cas h fo r merchand is e at the ti m e p u rc hased th e ,

sel ler exte n ds cred i t to the b u si ness ; th at is he accepts the ow n er s prom ise to ,
’

pay at a f u t u r e date as the val u e rec e ived i n th e transaction The own er of th e .

b u si ness to wh i ch cred i t is exte n ded regards h is prom is e t o pay at a f u t u re date

for me rchand ise p u rch ased as a val u e parted wi th i n a tran saction i n wh ich mer
c ha n d i se is p u rchased o n acco u n t Whe n t he l iab i l i ty is paid the can cel lati o n
.
,

o f t he o b l igatio n i s t he val u e rece ived .

Whe n the own e r of the b u si ness d oes n o t re ce iv e cas h fo r me rchand ise a t the
ti me i t i s sold he exte nds cred i t t o the c u stomer ; that is he accepts the c u stome r s ’

, ,

prom ise to pay a t a f u t u re date as t he val u e rece ived i n t he transacti o n Whe n .

the c u stome r pays the amo u n t h e owes t he b u si n ess the ca n ce l latio n o f h i s d e b t i s ,

regarded as t he val u e parted wi th .

The o ne w ho exte n ds cred i t t o a b u si n ess is re fe rred to as a cred i tor an d t he ,

“ ”
o ne to wh om the b u si n ess extends cred i t as a d eb to r ; the te rm c u stomer appl i es
,

t o o ne to whom the b u si ness se l l s e i the r fo r cash o r o n acco u n t

,
.

I f no speci fic ti m e o f payme n t is m e n ti on e d i t is u n d e rs tood that col lectio n is ,

to be mad e o n the fi rs t of the fol l owi n g mon th ; i f a speci fi c ti me i s me n ti o n ed the n ,

pay m e n t i s d u e o n that d ate .

M r Jone s w ho operate s t he d r u g b u si ne ss at 40 5 M ai n S t ree t wish e s to p ur chase a q u a n tity

.
, ,

of d r ugs f r o m a w hole sale ho u se b u t doe s n ot have s uffic i en t cash with wh i ch to pay for t he m B y
,
.

agree men t he i s allowe d th i r ty days i n wh i ch t o pay fo r t he d r u gs The whol e sal e d ru g ho u se wh i ch

e xt en ds th i s c re dit b e co me s o ne of h i s c re di t o r s a n d he o ne of its d e b t o r s :
.
,

Ja me s S mith a n e m ployee of a local ba n k re ce i ve s h i s sala ry m o n thly He is i n nee d of

, ,
.

d ru gs b ut has n ot s ufficien t mo ney to pay fo r the m M r Jo ne s agree s to se ll hi m t he d ru gs a n d

, . .

allo w hi m to pay for the m a t t he ti me he re ce ive s his sala ry M r S mi th b e co me s o ne of t he d e bt o rs

. .

of t he b u s i ne ss a n d M r Jo ne s o ne of M r S mi th s c redito r s
, . .
’
.

A C C O U NT S WIT H P E RS ON S

§ 26 A cc ou n t s W i t h P e r s on s are thos e req u i red whe n cred i t i s exte nded

.

to the b u si n e ss th ro u gh the p u rchas e o f merchand ise o r whe n the b u si n ess exte n ds ,

cred i t to i ts c u stomers th ro u gh t he sal e of m e rchand is e Acco u n ts wi th perso n s .

a re d ivided i n to two classes :on e ( acco u n ts wi th c u stomers ) sh ows t he r es u l t o f

tran saction s wi th t he p e rson s to wh om t he b u si n ess sel l s merchan d is e or oth er

“
assets o n acco u n t u s u al ly re fe rred to as acco u n ts rece ivable ; a n d t he other
,

( acco u n ts wi th cred i tors ) sh ows th e res u l t o f transacti on s wi th thos e from whom

mercha n d is e o r oth e r asse ts a re p u rchased o n acco u n t u s u al ly re fe r red to as a c ,
”
co u n ts payabl e .

A C C O U NT S RE C E I VA BL E

27 Th e P u r p o s e o f a n A cc o u n t wi t h
. a C u s t o m er is to show a record
of t he transaction s i n whi ch t he b u si ne ss se ll s
m e rcha n d ise o r som e oth e r asse t
to h i m o n acco u n t Wh e n a c u stom e r pays cash fo r m e rch and is e i t i s no t ne c
.
,

essary to record th e tran saction s i n a n acco u n t wi th h i m ; bu t whe n he b u ys a nd

22 AC COU NTS R E C E I V AB L E AN D PA $ AB L E .

does n o t pay cash i t i s n ecessary to reco rd the d ate a n d amo u n t o f the sal e i n a n
,

acco u n t wi th h i m so that the ow n er may k n ow th e amo u n t th e c u stomer owes

h i m w he n settleme n t i s desi red A separate acco u n t is ke pt wi th e ach c u stomer
.

beca u se th e ow n e r o f th e b u si ness sh o u ld k n ow t he amo u n t d ue from each c u stome r

t o whom he sel ls o n acco u n t as wel l as the total amo u n t d u e from al l c u stome rs .

D ebi t the A ccou nt of Credi t the A ccou n t of

E a ch Cu s tom er . E a ch Cu s tomer :
if 1 . For t he sel l i n g pri ce of mercha n For the cash o r ot he r assets re
d ise o r other assets sold to hi m c e i v e d from h i m to apply o n a c

o n acco u n t a nd fo r tra nspor , co u n t and for the amo u n t o f

,

t a t i o n i f t he terms of sale d o a n y al lowan c e o r d ed u ctio n

not i n cl u d e d el ivery . gra n t e d to h i m P a rtial Pay .

me n ts are i ndi cated as ex

pl ai ned i n fl 5 .

if 3 The B a la n ce of a n A cco u n t R ecei va bl e show s the amo u n t the c u stome r

.

owes th e b u si ness I t is o ne of the assets o f the b u si n ess T he debi t side wi l l be

. .

t he larg e r u n less the c u stomer sho u ld pay fo r mor e tha n he has p u rchased Whe n .

the two sides are eq u al hi s acco u n t is said to be i n bala n ce ; th is i nd i cates that he

,

h as paid the b u si n ess for al l t he assets p u r c hased o n acco u n t .

if 4 . R u li ng an A ccou n t R ecei va ble

Whe n the acco u n t wi th a c u stome r i s
.

i n balan ce i t sho u ld be r u led wi th a red l i n e as i n the acco u n t wi th Wal te r Rogers

,

i n I l l u s tration N o 9 I f there are a n u mbe r o f d eb i ts o r cred i ts th e t wo s id es sh o u ld

. .
,

be footed to prove that they are eq u al be fore r u l i n g Wh e n possi bl e the red l i n e .

,

sho u ld be r u led on the sam e b lue l i n e o n each side of t he acco u n t so that t he c u s

t o m e r s ob l igatio n to t he b u si n ess and h is s e ttlem e n t o f i t w i l l b e be twee n paral le l
’

l i n es T he u se o f red i n k fo r r u l i n g is n o t arb i trary b u t i s i t c u stoma ry fo r book

.

keepers to u se i t he n c e i ts u s e i n t he i l l u stratio n s
, .

if 5 P a rti a l P a ymen ts A d e b tor ha s the r igh t by law t o i n d icate o n what

. .
, ,

i te m h is payme n t shal l be appl i e d Th u s i f he owes s ev e ral amo u n ts and wishes.

the payme n t to be appl ied to a n y o ne pa r tic u lar amo u n t a nd i n d icates t his the , ,

cred i t m u s t be appl ied o n that amo u n t I n cases of th is ki n d t he bookkeeper .

sho u ld i nd i cate the amo u n t on wh ich the cred i t is appl ied by placi n g a le tte r at
th e left o f t he amo u n t o f th e i tem o n the deb i t side and placi n g the same letter to ,
“ ”
the left of each payme n t o n the cred i t sid e I t i s b e st to begi n wi th a a nd con ti n u e .

wi th as many le tters as may be req u i red fo r payme n ts o n d i ffere n t charges The .

le tters are n ot n ecessary whe n a n i tem i s paid i n f u l l by o ne payme n t a n d the a c ,

co u n t i s r u led I f t he payme n ts are i nd i cated by the letter as explai n ed the book

.

keeper ca n ascertai n the amo u n t d u e fo r an y on e sale wi tho u t referri n g to a book

o f origi nal e n try .

A C C O U NT S PA $ A B L E
28 . The Pu rp o se
A cc o u n t w i t h a C r e d i t o r i s to sh ow a record o f
of a n
the t ran sactio n s i n wh ich the b u si n ess b u ys me rchand ise or some othe r asse t from
h i m o n acco u n t Wh e n mercha n d is e is p u rchased for cash n o acco u n t wi th the o n e
.
,

from whom i t i s p u rchased i s necessary beca u se the transaction i s compl eted ; b u t

whe n th e b u si n ess b u ys o n acco u n t i t i s n ecessary to kee p a record o f s u ch tran s
,

actions i n order that the owne r may k n ow the amo u n t he owes at the ti me settle
me n t i s mad e A separate acco u n t i s ke pt wi th each cred i to r beca u se the own e r of
.
 R E CO R D I N G T RANSACT I ON S I N T HE L E DG E R . 23

the b u si n ess s ho u ld know the am o u n t h e owes each cred i to r as wel l as the total
a mo u n t d ue al l cred i tors .

D ebi t the A ccou n t of Credi t the A ccou nt of

E a ch Credi tor: E a ch Credi tor :
{I 1 . Fo r cash o r othe r assets of the )
I
x
Fo r t he cost o f merchand ise o r
b u si ness give n h i m to a ppl y o the r asse ts p u rchased from
o n acco u n t a nd fo r a n y a l, h i m o n acco u n t a n d fo r tra n s
,

l owa n c e o r ded u cti o n gra n ted p o r ta t i o n i f t he terms o f p u r

to the b u si n ess by h i m Partial .
chase d o no t i n cl ud e d el ivery .

payme n ts are i n d i cated as

explai n ed i n 2 7 if 5 , .

ii 3 .
f a n A ccou nt P a ya ble shows the amo u n t the b u si ness
The B a la n ce o

owes c red i tor Th e c red i t sid e wi l l be the large r u n l ess the b u si n ess sho u ld pay
t he .

a cred i to r more tha n i t owes h i m Th e balan ce d u e a cred i tor i s o ne of the ve rbal .

obl igati o n s o f t he b u si ness he n ce a l iab i l i ty ,

.

1T4 R u li ng a n A ccou nt P a ya bl e Th e acco u n t wi t h a cred i to r is r u led i n

. .

the same man n e r as a n acco u n t wi th a c u s tome r a s descri bed i n 2 7 if 4 , , .

1T5 P a rti a l P a yments sho u ld b e i n d i cated by le tte r as explai n ed i n

. 27 ,

1T5 Th is e n a b l e s t he bookke e p e r to asc e r tai n t he bala n c e d u e o n a n y o ne p u rc hase

.

wi tho u t refe rri n g to a book of origi nal e n t ry .

R E C O RD IN G TR A N SA C TI O N S D I R E C T I N T HE L E D G E R
29 . Tr a n sa c t i on s wi th c u stomers
acco u n t and wi th cred i tors may be on ,

r ecorded d i r e ct i n the l edge r i n t he sam e ma n n e r as cas h tran sactions Whe n .

c red i t i s extended to a c u stom e r o f the b u si ness hi s p rom ise to pay t he amo u n t o f ,

t he sal e i s recorded o n t he deb i t s id e of h is acco u n t as t he va l u e rece ived an d the ,

val ue o f the me r c ha n d is e sol d o n t he cred i t sid e o f t he Sales acco u n t i n the sam e

,

ma nn e r as a cash sal e Whe n cred i t is e xt e nded to t he b u si n ess t he cost o f th e

.
,

me r chand is e p u rchased i s recorded o n the debi t sid e of t he P u rchases acco u n t i n

the sam e ma n n e r as a cas h p u rch ase and t he same amo u n t i s reco rd ed o n the cred i t ,

side o f t he c red i tor s acco u n t beca u s e t he p rom ise o f t he own er of the b u si ness to
’

pay for t he mercha n d ise bo u gh t is r e garded as t he val u e parted wi th The acco u n t .

wi th a c u stom e r remai n s on t he l e dge r as a n asset an d tha t wi th a cred i tor as a ,

l iab i l i ty u n ti l se ttleme n t is made e i ther wi th cash o r some othe r asse t

, ,
.

T he fol l owi n g tran sacti on s a ffecti n g the p u rchases a n d sales o f me rcha nd ise
for cash a n d o n acco u n t performed by J H Hen derson a retai l f u rn i t u re d eale r
,
. .
, ,

d u ri n g t he mon th o f N ovembe r are show n recorded d i rect i n acco u n ts wi th Cash , ,

P u rchases Sal es c u stomers a n d cred i tors i n I l l u strati on N O 9 and a Trial B alan ce

, , ,
.

of total s mad e from the acco u n ts i n I l l u stra tio n NO 1 0 ,

. .

No v .I P u rchased f u rn i t u re from the Con sol idated F u rn i t u re C o G ran d

. .
,

Rapids o n sixty days ti me ,

’

2 Sold C H Powe rs Arl i n gto n o n acco u n t one bed room s u i te

. . .
, , , ,

6 Sold Wal te r Roge rs C i ty o n acco u n t o n e hatrack

.
, , , ,

12 Recei ved cas h fo r f u r n i t u r e sold today

.
,

14 Paid the Co n sol idated F u rn i t u re C o

. o n acco u n t . .

20 Rece ived . from Wal te r Rogers i n paymen t fo r the hatrack sold

h i m o n the 6th .

25 Rece ived . from C H Powe rs to appl y on acco u n t . . .

26 Sold C H Powers on acco u n t th ree leathe r rocke rs a t

. . . each .

29 C H Powers ret u rned one of the rockers and w a s al l owed cred i t for
. . .
24 R E CO R D I N G T RAN SACT I O NS I N T HE L E DG E R .

( M
C 2—f f 0 u v

Ja
-
s e a

o a

a f ar oi
/

— ‘

J
’

2 J J d / 7 ’

I l l u s tra tion No 9 .
,
A Led ger wi th S ix Acco u n ts .

EX PLANAT I O N Th i s i ll ust rat i o n i s i n t he sa me fo r m as I ll ust ratio n No 3 with t he

.
’

.
,

exceptio n of th ree addit i o n al acco u n ts t wo with c u sto mers a n d o ne wi th a c redito r A co m pa ri so n

,
.

o f t he t r a n sactio n s with t he re co r d will sho w that t he val ue re ce i ve d i n e ach is reco rd e d o n t he d e bit

sid e a n d t he val ue pa r te d w ith o n t he c red i t sid e T he 60 days i n t he expla n atio n col u mn of
, .
“ $

t he acco un t w ith t he C o n solidat e d F u rn it ure C O re fer s to t he ti me w h en pay men t i s to b e m ad e

. .

S i nce t he p u rcha se i s o n November 1 pay men t will be expecte d o n December 3 1 Wh“en n o sp ecific
,
.

ti me of se ttl e men t is men tio ne d t he p ur chase o r sal e i s so me t i me s re ferred t o as o n acco u n t

, ,
$

a n d se ttlemen t is u s ually req u i red o n t he fi rst of t he mo n th follo w i ng t he p ur chase o r sal e .

 R E CO R D I N G T RA NSA CT I O NS I N T HE LE DG E R . 25

7 2 0

£ 24 2s
x o ag 2 i f
/ a
7
W
M

I l l u stration N O 10 A Trial B al an ce o f Tota ls .

,
.

EX PLA NAT I O N This Trial Bala nc e w h i ch i s p re pa red fro m t he l edger i n I ll us tratio n N o

. .

9 i s t he sa me fo r m as I ll u st r atio n No 4 w ith t he additio n of t wo p er so n al acco u n ts

. B y c om .

par i n g this i ll u st ratio n w it h I ll u st ratio n No 9 it w ill be observe d that t he acco u n t wi th Walter .

,

Roger s doe s n ot app ea r o n t he Tr i al B ala n c e The reaso n fo r th i s is b e ca u se t he a m o u n ts re co r d e d

o n t he d e bit a n d c redit sid e s a re eq
.

u al This e m phasi z e s t he fact that o n ly t he open acco un ts i n

.

t he l edger app e a r o n t he T r i al Bala n c e .

E x e r c i s e NO . 7, Re c o r d i n g Tr a n s a c t i o n s D i r e c t
L e d g er i n t he .

Record on led ge r paper the fol l owi n g tra n sactio n s performed d u ri n g the mon th
*

o f Octobe r by J J Ham mond a r e tai l sho e deal e r

. . Al low space fo r the acco u n ts as
, .

fol low s :Cash te n l i n es ; P u rchases el e ve n l i nes ; Sales twe lve l i n es ; J C M ason

, , , . .
,

fiv e l i n es ; Wal te r Love six l i n es ; J C M i l le r fiv e l i n es ; Robert Wh i t ac re five

, . .
, ,

l i nes ; W O C rosswh i te seve n l i n es ; D avis B ros five l i nes ; Sm i th Shoe Com pan y
. .
,
.
, ,

six l in es Give e ach c ustom e r a n d c r e d i to r a l ocal add ress

. .

Oct 2 B o u gh t shoes from W O C rosswh i te on acco u n t

. . .
,

3 . Sold J C M ason o n acco u n t on e pai r of shoes

. .
,

5 . B o u gh t shoes from D avi s B ros o n acco u n t .

7 . Recei ved for cash sales o f shoes ,

9 . Paid W O C rosswh i te . o n acco u n t

. .

10 . Sold Wal ter Love o n acco u n t six pai rs o f shoes ,

II B o u gh t sho e s from the Sm i t h S ho e C om pa ny o n sixty d ays ti me $ 2 1 ’

.
,

12 . Rec e ived for cash sales o f sh oes ,

13 . Paid W O C rosswh i te . i n f u l l o f acco u n t

. .

14 . Sold J C M i l ler o n acco u n t t wo pai rs o f s hoes

. .
,

16 . Rece i ved fo r cas h sal es o f shoes ,

17 . Al lowed Wal te r Love cred i t for o ne pai r of sh oes re t u rn ed ,

18 . B o u gh t sh oes from W O C rosswh i t e on acco u n t $ 3 2 1 8 5 . .

, . .

19 . Paid $ 8 2 5 0 fo r shoes p u rchased an d del ive red today

. .

20 . Paid M rs W C D avis $ 6 00 for a pa i r of shoes ret u rn ed for wh i ch s he

. . . .

had paid cash whe n sold to he r .

23 . Received from Wal ter Lov e i n f u l l o f acco u n t .

25 . Paid the Sm i th S hoe Com pa n y $ 2 o n acco u n t .

26 . Rec e ived for cash sales o f shoes ,

27 . Paid the Lawto n Transfe r C o fo r frei gh t and d rayage o n shoes .

p u rchased .

28 . Sol d Robert W hi tacre o ne pai r o f shoes on acco u n t ,

30 . B o u gh t shoes from the Sm i th Shoe Compan y on sixty days time ’

31 . D avis B ros al lowed u s cred i t for . for shoes re t u r ned to them .

Whe n these transaction s have bee n recorded i n the acco u n ts p rove the eq u al i ty ,

of the deb i ts and cred i ts by a Tria l B alan ce of totals .

Se e n ot e at t he botto m O f page 1 3
*
.
26 R E CO R D I N G T RA NSACT I O N S I N T HE J O U RNAL .

E x e r c i s e NO 8 ,
Re c o r d i n g Tra n s a c t i o n s D i r e c t i n t h e L e d g e r
. .

Record o n l ed ge r pape r the fol l owi n g tran sactio n s performed b y F B B el l is . .

,

a re tai l cand y me rchan t d u ri n g th e week begi n n i n g J u l y 5 Al l ow space fo r th e

, .

acco u n ts as fol l ows :Cash eleve n l i n es ; P u rchases te n l i n es ; Sales twel ve l i n es ;

, , ,

Ca n d y Ki tc he n seve n l i n es ; Robe r t Farl a n d five l i nes ; N orway Ca n d y C o s i x

, , .
,

l i nes ; R H H u n te r fiv e l i n es G ive eac h pe rso n a l ocal street add ress

. .
, . .

J u l y 5 P u rchased from the Cand y Ki tche n C i ty o n acco u n t

.
, , ,

Cash sal es for th e d ay ,

6 Paid cash fo r n u ts p u rchased

.
,

Cash sal es fo r the d ay ,

Sold Robe r t Fa rla nd C i ty o n acco u n t six boxes o f candy a t

’

7 .
, , ,

P u rchased from th e N o rway Candy C o C i ty o n acco u n t .

, , ,

Cash sales for the d ay ,

8 Paid th e Can dy Ki tche n

. o n acco u n t .

Paid a c u stomer fo r a box o f c a nd v wh i ch he had p u rchased for

cash and re t u rn ed pe r agree me n t .

Cash sales for the day ,

9 Rece ived
. f rom Robe r t Fa rl an d o n acco u n t .

Sold R H H u n te r C i ty o n acco u n t twelve boxes o f cand y a t

. .
,
*
, ,

P u rchased from t he Cand y Ki tche n C i ty on acco u n t , , ,

Cash sales for th e d ay ,

10 Paid cash for ch ewi n g g u m

.
,

Paid t he C and y Ki tche n o n acco u n t .

P u rc hased from the N orway Cand y C o C i ty on acco u n t .

, , ,

Re t u rn ed to the Can d y Ki tche n si x boxes o f can d y p u rchased o n the 9 t h

a n d rece i ved cred i t for th e same a t pe r box the cost pri ce ,
.

Cash sal es fo r th e d ay ,

W he n these tran sactio n s have bee n recorded i n the acco u n ts prove th e eq u al i ty ,

o f the deb i ts an d cred i ts by a Trial B al a n ce o f balan ces .

R E C O RD I N G T RA N SA C T I O N S IN THE J O U RN AL
30 . Tra n sa c t i o n s wi th c u stomers on acco u n t and wi th cred i tors may be
recorded i n th e j o u rn al i n the same ma n n er as cash transaction s Whe n cred i t i s .

exte nded to a c u stome r h is n ame i s wri tte n i n the j o u rn al as th e acco u n t d ebi ted
, ,

and th e Sal e s acco u n t cred i ted ; whe n cred i t i s exte n d ed to t he b u si n ess the P u r ,

ch ases acco u n t i s deb i ted and the n ame of th e cred i tor i s wri tte n as th e acco u n t
,

cred i ted U n less a copy o f th e i tems sold to a c u stome r i s re tai n ed a descri pti on
.
,

o f th e arti cl es sho u ld b e give n i n t he explanatio n o f th e tra n saction i n the j o ur nal

beca u se th i s i n formati on may b e n eeded fo r re fere n ce Us u al l y a l is t o f th e m er .

c ha nd i s e p u rchased i s s u ppl i ed by th e c r ed i tor ; h e n ce i t i s n ot n ecessa ry to i tem i ze

th e arti cl es p u rchased i n th e expl a n atio n o f th e tran sacti o n .

Th e fol lowi n g tra n sactio n s a ffecti n g th e p u rchases and sales o f merchand i se

for cash an d o n acco u n t pe rformed by J H H ende rson a retai l f u rn i t u re deal e r
, . .
, ,

d u ri n g th e mo n th of N ove mbe r are sh own recorded i n th e j o u r n al i n I l l u strati on ,

N o 1 1 Thes e tra n sactio n s a re the same a s those o n page 2 1

. . .

Nov . I P u rchased f u rn i t u re fro m the Co n sol id ated F u rn i t u re C o G ran d

. .
,

Rapid s o n s ixty d ays ti me ,

’

Sold C H Powe rs Arl i n gto n o n acco u n t o ne bed room s u i te

'

2 . . .
, , , ,

6 Sold Wal te r Rogers C i ty o n acco un t on e h atrack

.
, , , ,

( Concluded on pa g e
NOT E T he w o r d at app e a ri n g be fo re t he p r ice i n dicate s that this p r ice i s p e r u n it ;
*

if this wo r d doe s n ot appea r t he p ric e given appli e s to t he q

.
, ,

u a n tity men tio ne d

,
S ix boxe s ca n dy .
“

at me a n s that t he a mo u n t of t he sal e is S ix boxe s ca n d y mea n s that t he “

,

a mo un t of t he sal e i s
28 R E C O R D I N G TRA NSACT I O N S I N T HE J O U R NAL .

( Conti n u ed f rom p a g e
Rece i ved cash fo r f u rn i t u re sold today $ 6 2 5 5 0 , . .

P aid t he Consol id ated F u rn i t u re Co on acco u n t . .

Rece i ved fro m Wal te r Roge rs i n payme n t for th e h atrack sold

h i m o n th e ot h .

Rece ived from C H Powe rs to appl y o n acco u n t

. . .

Sold C H Powers on acco u n t th re e lea the r rockers at

. . each .

C H Powe rs re t u r ne d o ne roc ke r a n d was al lowed cred i t for

. .

x y y ’ 7 7

—? 7W
t
/7 / 0 0

}} f 7

fiJ
r .

7 f f
£ 0
f 0 f 0

—é —
2 - L

W
'

Z / J f
/

—
7 /f
7 f
'

I l l u strati on N O 1 2 A Led ger wi th Six Acco u n ts Res u l ti n g from Posti n g

.
,
.

EX PLANAT I O N T he t ra n sactio n s i n this l edger were n ot reco rd ed di rect i n it b ut were

\

.
,

reco rd ed i n t he j o urn al sho wn i n I ll u st ratio n No 1 1 a n d post ed to i t as i ndicated by t he fig ure s i n

.
,

t he folio col u m n of e ach acco u n t C o m pa re with I ll u st ratio n No 9 a n d n ot e t he i n fo rmatio n i n

. .

col u mn 4 A T rial Bala n ce of totals taken fr o m this l edger w o uld be t he sa me as I ll u st ratio n No 1 0

. . .
 R E CO R D I N G T RA NSA C T I O NS I N T HE J O U R NAL . 29 ,

E x e r c i s e No 9 R e c o r d i n g Tr a n sa c t i o n s i n t h e J ou r n a l
.
, an d P os t i n g .

Reco rd on j o u rn al pape r th e fol l o w i n g tran saction s pe rformed by th e Ce n tral

Paper Co d u ri ng the mon th of Feb r u ary G ive ea sh c u stomer and cred i tor a
. .

local add ress .

Feb . I
P u rchased pape r fro m th e Wh i ti n g Paper Co o n acco u n t
. .
,

2 Sold paper to th e Fede ral Press on acco u n t

.
,

3 Rece ived
. fo r pape r sold tod ay .

5 P u rch ased e n vel opes from t he U S E n velope C o on acco u n t

. . . .
,

6 Rece i ved
. from th e Fed e ral Press i n f u l l of acco u n t .

7 Sold pape r to C J Kreh b i el

. Co o n acco u n t . . .

'
,

9 Paid t he Wh i ti n g Pape r Co
. o n a cc o u n t . .

12 P u rch ased paper from th e Wh i taker Pape r C o on acco u n t

. .
,

14 Paid . fo r frei gh t an d d rayage b i l l s to d ate .

16 Sold pap e r to C W Ogd e n o n acco u n t

. . .
,

19 Rece ived cred i t from t he U S E n v e l ope Co fo r

. val u e of e u . . .

v e lo p e s re t u rn ed by u s p e r agreeme n t .

20 Rece ived for cash sal es o f paper tod ay

.
,

21 Rece ived
. from C J Krehb ie l C o i n f u l l of acco un t . . . .

23 Sold pape r an d e n velopes t o the Fed eral Press o n acco u n t

.
,

24 A l l owed C \V Ogd e n cred i t fo r pape r ret u rn ed

. . .
,

26 Paid t he He r rli n g e r Paper Co

. for paper d el ivered today . .

27 Sold paper a n d e n vel opes t o C J Krehb ie l

. C o on acco u n t . . .
,

28 Paid the U S E n vel op e Co b al a n ce d u e on acco u n t

. . . .
,

Recei ved from C W Ogd e n on acco u n t . . .

Whe n t he above tra n saction s h ave bee n recorded i n t he j o u rn al as i n str u c ted ,

ope n acco u n ts o n a shee t of l ed ge r paper wi th Cash P u rchases Sales

Federal Press C J Krehb ie l Co C W O gde n
. . Wh i ti n g Paper Co . . . .

U S E n vel ope C o
. . Wh i take r Pape r Co al l owi n g for each acco u n t the
. .

n u mbe r o f l i n es i nd i cated ; pos t th e transaction s an d prove th e posti n g by a Trial ,

Bal an ce of total s .

E x e r c i s e No 10 R e c o r d i n g Tr a n s a c t i o n s i n t he J o u r n a l
.
, an d Posti n g .

Record o n j o u rn al pape r th e fol l owi n g tra n sactio n s performed d u ri n g th e

mon th of M ay by J O C u tshaw a n a u tomob i l e ti r e deal e r :
. .
,

M ay 1 P u rch ased from the Good year Ti re C O C i ty o n acco u n t

. .
, , ,

3 Rece ived cash for fo u r Good year 3 3 x 4 cord ti res

.
,

5 P u rch ased from th e G ood ri ch Ti re C o Ci ty o n acco u n t

. .
, , ,

Sold th e Cen tral G roce ry C o C i ty on acco u n t two Ford ti res .

, , , ,

7 Rece ived cash for on e 3 5 x 5 Si l ve rtown cord ti re

.
,

10 Paid th e Good year Ti re C o

. on acco u n t . .

12 Sold I W Wal ke r Ci ty o n acco u n t fo u r M i l le r cord ti res at

. . .
, , ,

each .

13 Gave I W Wal ke r cred i t for on e o f th e ti res sold h i m on the 1 2 th an d

. . .

ret u rn ed by h i m today per agreem e n t .

14 Rece ived for cash sales of ti res

.
,

16 Rece ived . from the Ce n tral G roce ry C o i n f u l l o f acco u n t . .

20 Sol d \V L Watson Ci ty o n ac co u n t two 3 3 x 4 Fisk cord ti res a t

. . .
, , ,

thes e ti res are n o t carried i n stock and were p u rchased from

t he Fi sk Ti re C o C i ty on acco u n t at .
, , ,

Re co r d t he sal e a n d p u r chas e as se pa r at e t r a n sactio n s .

( Conclu ded on pa g e
30 QU E ST I ON S O N R E CO R D I N G T RAN SA CT I O N S .

( E x erci se N o f rom pa g e Conti n u ed

—
. I o

25 . Sold D avid J ordan C i ty on acco u n t two 3 2 x 4 Si lvertown cord ti res

, , ,

at each .

26 . Pa id th e Good rich Ti re C O o n acco u n t . .

2 Rece ived from W L Watso n to appl y o n acco u n t . . .

28 . Paid the Fisk T i re C o i n f u l l o f acco u n t . .

Re t u rn e d to th e Good ri ch T i re C o two 3 2 x 4 fab ri c ti res a nd rece i ve d .

c red i t fo r
31 . Recei ved fo r cash sales of ti res ,
P u rc hased fro m t he G ood yea r Ti re C o C i ty o n acco u n t .
, , ,

Wh e n t he above tran sactio ns have bee n r e corded i n th e j o u rn al as i n str u cted ,

ope n acco u n ts o n a shee t o f led ge r pap e r wi th Cash ( I o) P u rchas e s Sal es ,

Good y e a r Ti re C o Good ri ch Ti re Co
. Fisk Ti re C o Ce n tral G roce ry . .

Co . I W Wal ke r
. . W L Watson D avi d J orda n
-
. al l owi n g for each
.

acco u n t the n u mbe r o f l i nes i n d i cated ; post the tran saction s and p rove the posti n g ,

by a Tri al B al an ce of bal an ces .

Q U E STI O N S
I f a me rchan t b u ys me rchan d i se o n M a rch 2 1 92 2 wi th the pri vi lege o f , ,

payi n g fo r the same wi th i n sixty days o n what date wi l l h e be req u i red to ,

pay th e amo u n t ?
Wh y i s i t n o t n ecessary to keep an acco u n t wi th the perso n t o wh om the
b u si n ess sel l s for cash ?
I s an amo u n t d u e from a c u stome r on e o f the assets o f the b u si n ess ?

“
Wo u ld yo u co nside r the asse t of t he b u si n e ss d escri bed as Acco u n ts Re c e i v
” “ ”
abl e as val u abl e as the asse t d esc r i bed as Cash ? G i ve reason s for yo u r
a n swer .

D i sti n gu ish between the mea n i n g of the terms cred i tor and c u stomer .
,

Why i s i t n ecessary fo r the bookkee per to i n d i cate paymen ts made t o appl y

o n merchand is e p u rchased o r sold o n a designated date ?

Wo u l d i t be possi bl e fo r an acco u n t wi th a c u sto m e r to sh ow a cred i t balan ce ?

E xplai n .

Wo u ld i t be possi bl e for a n acco u n t w i th a cred i tor to show a d ebi t balan ce ?

E xpl ai n .

Why i s i t ad visabl e to r u le a n acco u n t rece i vabl e o r a n acco u n t payabl e whe n

the two s id es are eq u al ?
O p e n a n acco u n t wi th R obert J on es a c u stome r of th e b u si n ess a n d reco rd , ,

the fol l owi n g transacti o n s i n i t :

J a n 1 0 Sold merchand ise o n acco u n t
. .
,

15 Received. to apply o n acco u n t .

20 Sold me rcha n d ise o n acco u n t

.
,

31 Rece ived
. to appl y o n sal e o f the 1o t h .

Feb 1 0 Received
. . i n f u l l fo r sal e o f J a n 2 0 . .

Wh y is i t n ot n ecessary to sh ow o n the Tria l B ala n ce a n acco u n t wh ich i s i n

,

balan ce ?
What e ffect wo u ld i t have o n the Trial Bal a n ce i f a n acco u n t wh ich shows a
d ebi t balance o f w a s om i tted beca u se i t was r u led by m istake ?
What acco u n ts a re a ffected whe n the b u si n e s s rece i ves cash from a c u s tome r
i n par t payme n t o f h is acco u n t ?
What acco u n ts a re a ffected whe n ca s h i s pa id to a cred i tor to a pply on a n
acco u n t owed h i m ?
 QU E ST I O NS O N R E CO R D I N G T RAN SA CT I ON S .
31

I f a sale mad e to a c u stome r o n acco u n t sho u ld n ot be recorded wo u ld th i s,

aff ec t the eq u al i ty of the d eb i ts a nd cred i ts o n the Trial Bala n ce ?

Ca n y o u s u ggest a pl a n wh i ch wo u ld avoid the possib i l i ty of fai l i n g to record
t ran saction s i n wh i ch merchand ise i s sold o n acco u n t ?
I f a sal e i s made to a c u stomer fo r cash a n d the tran saction i s n ot record ed ,

ho w wo u ld the bookkee pe r detect the error ?

I f cash i s rece ived from a c u stomer i n payme n t of hi s acco u n t a nd the trans
,

acti o n i s n ot record ed ho w wo u ld the bookkeeper d etect the error ?

I f merchand ise i s p u rchased from a cred i to r o n acco u n t an d th e tran saction
i s n ot recorded how wo u ld the bookkeepe r d etec t the error ?
,

I f cash i s paid fo r mercha n d ise p u rchased an d the tra n sactio n i s n ot recorded ,

h ow wo u ld th e bookkeepe r de tect the erro r ?

I f a sal e is made to o n e c u s tome r and by m istake d eb i ted to an other c u stomer ,

wi l l th is a ffect the eq u al i t y o f the deb i ts an d c red i ts o n the Trial B ala n ce ?

How wo u l d the bookkeepe r de tect th e e r ror me n tion ed i n the preced i n g
q u esti o n ?
I f a c u s tomer s acco u n t wh ich i s n o t i n balan ce i s r u led by m istake how
’

, , ,

wo u ld the bookkeeper d i scove r the e rro r ? 5

Wh y i s i t advisab le to i nd icate th e add ress o f a c u s t omer o n hi s acco u n t i n

the l ed ge r ?
I f the two sides of the Tri al B al an ce are n ot eq u al h ow wo u ld the bookkeeper
,

ascertai n th e error ?
 C hap t e r IV
R E C O RD IN G T RA N S C TI O N S C on t i n u e d
A —

31 E x p e n s e E ach b u si n ess has a b u i ld i n g o r pl ace i n wh i ch to carry on

. .

i ts ope ratio n s ; th i s b u i ld i n g o r place o f b u si n ess i s provi ded wi th heat an d l i gh t ;

modern b u si n ess req u i res t he u se o f the telepho n e telegraph an d othe r mean s o f , ,

rapi d com m u n i catio n ; cl erks are em ployed to assis t wi th t he p u rchasi n g and sel l i n g
of th e merch an d ise o r service wh i ch t he b u si n ess sel ls ; bookkeepe rs a n d sten og
ra p he rs are req u i red i n con n ectio n wi th t he o ffi c e operatio n s ; th e ow n er rece ives a

com pe n satio n for h is services i n co n n ectio n wi th t he operation s of th e b u si n ess ;

these a nd ma n y other servi ces m u st be p u rchased a n d paid fo r by th e b u si ness .

“
S u ch servic e s a re u s u al l y re fe rred t o as t he operati n g cost o f th e b u si n ess al so ,
” ”
the expe n ses o f the b u si n ess T he term expen ses also i n cl u de an y m ateri al
.

p u rchased by the b u si n ess wh i c h wi l l b e co n s u m e d ; th is class o f material i n cl u d e s

books of acco u n t for u se i n t he o ffi c e station ery wrappi n g paper twi ne n ai l s , , , ,

fo r packi n g cases etc Th e cost o f mate r ial r e garded as expense i s u s u al ly show n

, .

i n a n acco u n t separate f rom the amo u n ts paid fo r servi ces ; th is wi l l be d isc u ss e d

la ter i n more de tai l .

A record of th e payme n t s for operati n g cost ( expe n ses ) is mad e i n on e o r more

acco u n ts depe nd i n g o n th e exte n t of th e b u si n ess operatio n s Wh e n cash i s giv e n
, .

i n payme n t for servi ces o r property wh i ch i s regarded as a n expe n se i tem the a c ,

co u n t wh ich i s to show a record o f th is operati n g cost i s d e b i ted a nd th e Cash

acco u n t c red i ted ; sh o u ld an asse t other than cash be give n t he acco u n t wh i ch sh ows ,

th e val u e of the asse t pa rted wi th i s cred i ted i n stead o f th e Cash acco u n t .

E $ P E N S E A C C O U NT
32 . Th e Pu rp ose
A cc ou n t is to show t he cost of operati n g th e
of t hi s
b u si n e ss th at i s i ts e xp e n ses I f al l operati n g cost i s deb i ted to o ne acco u n t the
, , .
,

total cos t of t he b u si n e ss op e rati o n s wi l l be show n i n th i s acco u n t Th e d eb i ts and .

cred i ts give n bel ow re f e r to o n l y o n e E xpe n se acco u n t ; othe r expe n se acco u n ts

wi l l be d isc u ssed lat e r .

D ebi t the E xp ens e A ccou nt: Credi t the E xp ens e A ccou nt:

jI 1 . Fo r amo u n ts paid fo r op e rati n g a n y adj u stme n ts w hi c h re H2 . Fo r

cost as o u tl i n e d i n § 3 1 d u ce t he ope rati n g cos t as
.

sh ow n by the deb i t sid e .

TI3 The B a la nce of thi s A ccou nt shows the operati n g cos t of the b u si n ess
.

fo r the period cove red by t he deb i ts and cred i ts to th e acco u n t Th e total .

expe n se i s a ded u ctio n from th e profi t mad e by t he operati o n s o f the b u si n e ss .

33 . I t i s u s u al ly n ecessary for th e own e r o f the b u si ness to h ave

Cap i tal .

cash o r othe r property at th e begi n n i n g of the b u si ness beca u se i f the b u si n ess i s , ,

to s u pply a d ema nd i t m u s t h av e o n h and those th i n gs wh i ch i ts c u stomers w i l l

,

wish to p u rchase The cash o r othe r property wh ich th e ow n er assign s to t he ope r

.

a t i o n s o f th e b u si n ess at i t s begi n n i n g i s regarded as a n i n vestme n t i n th e b u si n ess

“ ”
and referred to as th e cap i tal o f th e b u si n ess .

I f d u ri n g th e co u rse o f the b u si n ess add i tional capi tal i s n eeded the ow n er

, , ,

may fi n d i t n ecessary to add to hi s capi tal Th is he ca n d o by o ne o f th ree ways : .

 CAP I TAL AC CO U N T .
33

( a ) by i nvesti n g add i tional assets ; ( b ) by p u rchasi n g merchand ise o n acco u n t ;

( c ) by borrowi n g f rom the ban k I f th e operatio n s of the b u si ness are s u ccessf u l
.

that i s i f i t is rece ivi n g more fo r the merchan d ise o r service wh ich i t sel ls tha n the
,

cost of t he same pl u s th e ope rati n g cost o f the b u si n ess the own er s i n terest
— ’

( prop rie torsh i p ) wi l l be i n creased by th is profi t ; i f the res u l t o f operati n g the

b u si ness is a loss t he owne r s i n terest ( proprie torsh i p ) wi l l be decreased by th is
,
’

l oss Us u al ly o n ce each yea r the amo u n t of the profi t o r loss fo r t he year is a sc e r

.
,

t a i n e d an d the own er s Capi tal acco u n t cred i ted o r deb i ted wi th the same ; th i s
’

perm i ts h is acco u n t to show h is prese n t i n terest i n the b u si ness .

The own e r may i f h e d esi res wi thd raw a part of th e capi tal wh ich h e ha s i n
, ,

vested o r a pa r t o f the profi t res u l ti n g from th e operati on s o f the b u si ness Th ese .

wi thd rawal s from i nvestme n t or profi ts d o n o t i n cl u de an y amo u n ts wh i ch the

own e r recei ves from th e b u si n ess fo r t he services he has rend ered the b u si n ess '

beca u se s u ch i tems are ope rati n g cost th e same as sal aries paid em pl oyees When .

t he o w n e r d e c i de s to w i thd raw a m o u n ts from the b u si n ess i n payme n t fo r hi s

'

servi ces re n d ered to the b u si n e ss these sh o u ld be charged agai n st a fixed salary , .

Whe n thi s pl an i s fol lowed i t i s c u stomary to cred i t a Perso n al acco u n t wi th the

,

proprie tor for the amo u n t o f h is sal ary and deb i t th is acco u n t wi th the wi thd rawals
agai nst sala r y U n less th i s pl a n is fol l owed the amo u n ts paid by t he b u s in ess to
.
,

the own e r for servi ces he has re nd ered th e b u si n e ss wi l l n ot appear as a n operati n g

cost o f the b u si n ess The ow n e r s Pe rson al acco u n t wi l l be d isc u ssed i n d etai l l ater
.
’
.

C A PITAL A C C O U NT
Th e Pu rp o se of A ccou n t i s to sh ow th e res u l t of transacti on s
t hi s
wh ich th e b u si n ess ha s wi th th e ow n e r of the b u si n ess as they relate to i n vestmen ts
and wi thd rawals .

D ebi t the Ca p i ta l A ccou nt: Credi t the Ca p i ta l A ccou nt:

ff 1 . Fo r debts owed by the

a ny For cash or o th e r ass e ts i n
ow n e r at t he begi n n i n g of the vested a t t he begi nn i n g of the
b u si n e ss i f t hey are ass u med b u si n ess .

by t he b u si n ess . F o r s u bseq u e n t i n vestme n ts .

H2 Fo r amo u n ts wi thd rawn from

. Fo r t he n e t p r ofi t a t th e e n d of
t he capi ta l i n ve sted Th i s t he b u si n es s year i f the r es u l ts
.

d oes no t i n cl u d e a mo u n ts o f t he opera tio n s o f t he b u si

wi thd rawn for servi ces re n n ess hav e be e n a p rofi t .

d e red to t he bu si n ess .

H3 Fo r the n e t loss a t t he e n d of the

b u si n ess year i f t he res u l ts o f
'

t he operations o f the b u si n ess

have bee n a loss .

1T7 The B a la nce of thi s A ccou nt b e fore t he d e b i t o r c re d i t me n tio n ed i n

.
,

jH I 3 a n d 6 hav e bee n mad e shows t he ne t i n v e stm e n t of t he ow n e r Afte r t he

,

profi t or l oss as described i n JH I 6 and 3 has be e n c red i te d or d e b i ted to t he acco u n t ,

th e bal an c e wi l l show t he own e r s i n tere st i n t he b u si ne ss that is h is proprieto rsh i p

’

, , .

R E C O R D I N G T R AN SA C T I O N S D I RE C T IN THE L ED G E R
35 . Th e C o m p l e t e O p er a t i o n s of a b u si n ess i n cl u d e tran saction s w hi ch
rel ate to t he i n vestmen t at t he begi n n i n g o f t he b u si ness t he p u rchases and sales ,

o f me rcha n d ise an d the payme n t o f operati n g e xpe n ses

, Al l of thes e transaction s .

may b e r e corded d i rect i n t he ledge r as e xpl ai n ed i n 1 9 an d 2 9 .

T he fol lowi n g tran sactions r e l ati v e to the complet e operation s of a b u si n ess

( i n cl u d i n g i n vestme n t operati n g cost and p u rchases and sale s o f me rchand ise for
, ,

( Conclu ded on pag e

34 R E CO R D I N G T RA N SACT I O NS I N T HE LE DG E R .

A?

/ 0 0 0 91 0 0

“ ‘

7 a d o
/
‘
0 f r
7 o

/7 .

/ 2

/ 1 0 0

[f r
'

f a

I l l u strati o n N o 1 3 A Led ger wi th E igh t Acco u n ts

.
,
.

EX PLA NAT I O N Th i s l edger co n tai n s a reco rd of t he t ra n sactio n s o utli ned i n 3 5 r co rded

.
,
e

di rect i n t he l edger I t i s t he sa me as I ll u st ratio n s Nos 3 a n d 9 wit h t he additio n of acco un ts with

. .

t he o w ner a n d E xp en se . Wh eth er o n ly a pa r t o r a ll of t he t ra n sactio n s i n co nnectio n with t he op er

a t i o n s of a b u si ne ss a e re co r d e d
r ,
each t ra n sactio n a ffects t wo acco u n ts o ne sho wi n g t he val ue
,

rece ived reco rd ed o n t he d ebit sid e a n d t he oth er t he val ue pa rted w ith reco rd ed o n t he c redit sid e .

The sa me a m o un t i n e ach t ra n sactio n is re co r d ed o n t he d e bit sid e of o ne acco u n t a n d o n t he c redit

sid e of a n other acco u n t .
36 R E CO R D I N G T RAN SACT I ON S I N T HE L E DG E R .

( E x erci s e N o . I I— Conti n u ed f ro m p a g e

Ma y B o u gh t of the Pope C loth i n g C o o n acco u n t merchand ise

10 . .
, , ,

Sol d A C D u gan on acco u n t o ne spri n g ove rcoat

. . s i x ties a t , , ,

each .

11 Rece ived
. from C harl es Hean ey i n f u l l o f acco u n t .

12 B o u gh t o f B rand B ros fo r cash me rchand i s e

. .
, , ,

13 Paid . for tele pho n e servi ce .

14 Recei ved
. from A R I s aacs i n part payme n t o f the me rchan d ise . .

sol d h i m o n the 6 th .

15 B o u gh t of D avi s B ros on acco u n t me rchand ise

. .
, , ,

Paid re n t salaries o f cle rk s ,

.

Whe n these transacti o n s have bee n record ed i n the acco u n ts prove th e eq u al i ty ,

of th e d eb i ts and cred i ts by a T r ial B al an ce o f total s .

E x er c i s e NO 12 Re c or d i n g Tr a n s ac t i o n s D i r e c t i n t he L e d g e r
.
, .

Reco rd o n l ed ge r paper th e fol lowi n g tra nsacti o n s performed d u ri n g the mo n t h

o f M ay by W L Ki rby a re tai l pai n t merchan t Al l ow space fo r the acco u n ts
. .
,
.

a s fol l ows :Cash el eve n l i n es ; P u rchases e leve n l i n es ; Sales twel ve l i nes ; E x

, , ,

pe n se fiv e l i nes ; W L Ki rby Capi tal five l i n es ; J o n es B ros s i x l i n es ; C owa n

,
. .
, ,
.
,

B ros s i x l i nes ; W L L u ttrel l s ix l i n es ; W H H owland si x l i nes ; C A N orma n

.
,
. .
, . .
, . .
,

seve n l i n es ; N ation al Pai n t C o five l i n es ; M arc u s Fra n kl i n five l i n es .

, ,
.

M ay 1 . W L Ki rby i n vested
. . i n the re tai l pai n t b u si n ess .

B o u gh t of J on es B ros U n ion tow n o n acco u n t merch and ise .

, , , ,

Paid one mon th s ren t i n adva n ce ’

2 . B o u gh t of Co w an B ros C i ty te n days me rcha n d ise .

, , , ,

Sold W L L u ttre l l C i ty o n acco u n t merch and i s e pe r Sal e N o 1

. .
, , ,
. .

The sal e n u mber i n d i cate s that a copy of the i tems sol d

has bee n re tai n ed .

4 . Paid the Nation al P a i n t Co New $ or k cas h for merchand ise p u r .

, ,

chased ,

5 . Sol d W H H owla n d M id d le town on acco u n t m erchand ise pe r Sal e NO

. .
, , ,
.

2 ,

Rece ived for cash sales o f me rchand ise $ 1 ,

7 . Paid Cowa n B ros i n f u l l o f acco u n t . .

Sol d C A N orma n C i ty o n acco u n t merchand ise

. .
, , , pe r Sal e N o .
3 ,

9 . B o u gh t o f N ation al Pa i n t C o New $ ork twe n ty d ays merch an .

, , ,

d ise ,

S o d W L L u ttrel l C i ty o n acco u n t m e rchand ise pe r Sal e N o 4

10 .

lfi78 -
75
. .
, , ,
.
,

11 . Rece ived from C A N o rma n to appl y o n acco u n t . . .

12 . B o u gh t of Co w a n B ros C i ty o n acco u n t me rcha n d ise .

, , , ,

14 . Rece i ved f rom W H H owl and i n f u l l o f acco u n t . . .

16 . B o u gh t o f M arc u s F ra n kl i n Ard more five d ays me rchand ise , , , ,

17 . B o u gh t of J on es B ros Un io n tow n o n acco u n t me rcha n d i s e .

, , , ,

18 . Paid M arc u s Fran kl i n i n f u l l o f acco u n t .

Sol d W H H owla n d M idd letown o n acco u n t mercha n d ise pe r Sal e

. .
, , ,

N o 5 $ 8 8 75 o
.
, .

19 . Sol d C A N orma n C i ty o n acco u n t merchan d ise per Sal e N o 6

. .
, , ,
.
,

21 . Rece ived from W L L u ttre l l . . to a ppl y on acco u n t .

( Conclu ded on pa g e
 R E CO R D I N G TRANSACT I O N S I N T HE J O U RNAL .
37

( E x erci s e N Conti n u ed f rom p a g e o . I 2 - $

Ma y 2 1 Sold C O B ai ly for ca s h 2 0 gal lon s I $ L pai n t at

. . .
, , . . .

24 Paid J on es B ros
. t o appl y on acco u n t . .

C A Norma n ret u r n ed o n e gal lo n pai n t p u rchased from u s o n the 1 9th

. .

a nd w a s gran ted cred i t for H e paid cash for the bal ,

a nce d ue o n th i s sale .

En ter as t wo sepa rate t ra n saction s .

26 G ave a c u stomer
. i n paymen t for pai n t p u rchased from u s for ca s h
a nd re t u rn ed pe r agreeme n t .

29 Paid the N ati on al Pai n t C o $ 1 7 1 5 8 i n f u l l of acco u n t

. . .
. .

C O B ai ley ret u rned 2 gal lon s I $ L pai n t p u rchased o n the 2 l s t

. . . . .

a n d accepted i n exchan ge for i t 4 gal lon s varn ish .

NO en t r y is re q u i red Wh y ? .

3 1 .Rece ived cred i t from J ones B ros for va l u e o f 3 gal lo n s pai n t .

p u rchased o n t he 1 7 th and re t u r n ed by u s per agreeme n t .

Whe n these tran s acti on s have bee n recorded i n th e acco u n ts prove the eq u al i ty ,

of th e d eb i ts a n d cred i ts by a Trial B ala n ce of bala n ces .

RE C O R D IN G T RAN S A C TI O N S IN T H E J O U R N AL
§ 36 Tr a n sa c t i o n s wi th the ow n er a n d wi t h operati n g expen ses may be
.

record ed i n th e j o u r n a l i n the sa m e man n er a s tran sacti on s i n wh ich m ercha n d ise

i s p u rchased or sold for cash or on acco u n t Wh e n the own er i n vests cash or other .

assets i n th e b u si ness t he tra n saction i s recorded i n the j o u rn al by wri ti n g the date

, ,

the n ame o f the acco u n t deb i ted a n d amo u n t t he n am e of the acco u n t cred i ted ,

a nd amo u n t and th e expla n atio n i n the sam e form a s other tra nsaction s ; each
, ,

asse t i nvested i s deb i ted to th e acco u n t wh ich is to show i ts val u e a n d th e ow n er s ,

’

Capi tal acco u n t cred i ted Whe n the owner wi thd raws a par t of h is capi tal th e
.
,

tra n sactio n is re corded i n t he j o u r n al i n the same form as t he e n try fo r i nvestme n t ;

i n th is case h ow e ver the ow n er s Capi tal acco u n t i s d eb i ted wi th th e amo u n t o f
, ,
’

the wi thd rawal a nd t he a cco u n t wh i ch shows the val u e o f th e asse t wi thd rawn
,

i s cred i ted Whe n operati n g costs are paid the transaction i s recorded i n the
.
,

j o u rnal by wri ti n g the dat e t he n am e o f t he operati n g acco u n t a ffected ( u s u al l y

,

E xpense ) and the amo u n t of the paymen t the n ame and amo u n t o f the asse t parted ,

wi th and the expla n ation

, .

B efore record i n g tra n saction s i n the j o u rnal the st u de n t sho u ld j o u rn al i ze ,

each o ne men tal ly ; that i s he sho u ld determ i n e from the n at u re of th e transacti on

,

the acco u n t to be deb i ted a n d the acco u n t to be cred i ted S i n ce th e i n formation .

wh i ch the owner desi res is ob tai ned from the acco u n ts i t i s esse n tial that th e proper ,

acco u n ts be deb i ted and cred i ted i n each transaction Sho u ld an amo u n t be wi th .

d rawn by the propri etor from hi s i n vestmen t a n d be d ebi ted to the E xpe nse acco u n t ,

i t wo u ld chan ge the e n ti re mean i n g of the reports wh i ch the owner wo u ld receive

from the bookkeeper The same fact i s tr u e o f any oth er transactio n i n correctly
.

recorded .

Th e fol lowi n g tra n sacti on s relative to th e com plete ope ration s of a b u si n ess
( i n cl u d i n g i n vestme n t operati n g cost a n d th e p u rchases a nd sales o f m erchand ise
, ,

for cash an d on acco u n t ) pe rformed by M E St u debaker d u ri n g the m on th of

,
. .

Octobe r are show n recorded i n t he j o u rnal i n I l l u stratio n N o 1 5 These tra ns

, . .

actio n s are the sa m e as those at the top of page 3 5 .

Oct 1 M E S t u debaker i n vested

. . . . i n th e o ffi ce s u ppl i es b u si ness .

7. P u rchased from A R Ki n g C l i n to n o n acco u n t merchand ise . .

, , , ,

10 . Recei ved for cash sales of merchand ise .

18 . Sold E B M oore 3 0 5 E lm S t C i ty , o n acco u n t on e desk

. .
,
.
, , ,

( Conclud ed on pa g e
38 R E C O R D I N G T RANSACT I O NS .

( Conti nu ed f rom p a g e
24 . Paid A R Ki n g
. . on acco u n t
,
.

28 . Sol d J W M acon 2 2 2 M ai n S t C i ty
. .
, .
, , on acco u n t th ree fi l i n g section s
, ,

31 . Paid ren t of store ,

/ 4 0 0

j /
d

/ Z
Z [ 0 _

I l l u strati on N o . 15 , A J o u rn al Page w i th Tran sacti on s Recorded on I t .

EX PLA NAT I O N T he t ra n sactio n s reco rd ed i n th i s j o urnal a re o u tli ned i n 3 6 w hich begi n s

o n page 3 7 a n d is co n cl ud ed at t he top of this page .
 R E CO R D I N G T RAN SACT I ON S .

39

A a lo o , L _ }p o_

I l l u stration N o 1 6 A Ledger wi th E i gh t Acco u n ts Res u l ti n g from Posti n g

.
, .

EX PLANATI O N This l edger sho ws t he post i n g of t he t ra n sactio n s reco rded i n t he j o urn al

.
,

I ll ust ratio n No 1 5 The a mo un ts en tere d i n t he fi r st m o ney col umn of t he j o u rn al app ea r o n t he

. .

d e bit sid e of t he l edger acco u n ts a n d t he a m o u n ts en tere d i n t he se co n d m o ney col u m n of t he j o u rn al

, ,

o n t he c re di t sid e o f t he acco u n ts A co m pa riso n of I ll u st ratio n N O 1 3 w ith t his ill u st ratio n will

. .

sho w that t he facts a e t he sa me exce pt i n t he latt er t he folio col u mn is u sed

r , .
 R E CO R D I N G T RANSACT I ON S .

E x e r c i s e No . 13 , Re c or d i n g Tra n s a c t i o n s i n t h e J o u r n a l an d P os t i n g .

Record o n j o u r n al pape r t he fol l owi n g tran sactio n s performed d u ri n g the

mon th o f J an u a ry by E B T ayl o r a retai l groce r : . .
,

Jan . I . E B Tayl or i n vested

. . i n th e r e tai l groce ry b u si n ess .

2 . B o u gh t of E C C l i n e C h i cago o n acco u n t me rchand ise . .

, , , ,

3 . B o u gh t o f La n gl ey B ros C i ty t hi rty d ays me rcha n d ise .

, , , ,

4 . Paid ci ty and state l i ce n se fo r o ne year .

6 . Sold A R M a n l ey 1 0 6 E lm S t C i ty o n acco u n t 4 0 lb s Arb u c k l e

. .
,
.
, , ,
.

co ffee at 2 0 c ; I bb l Wh i te Li l y fl o u r .
,

When t he sal e i n cl ude s m ore tha n o ne i te m t he expla n atio n i n t he j o urn al sho u ld be as ,

follo ws :
S old o n acco un t :
“

4 0 lbs A r b u c k l e C o ff ee at 4 0 c .

1 bbl Whit e Lily F lo ur .

10 . Paid J F S he rwood . . fo r me rchan d ise p u rchased toda v .

12 . Recei ved fo r s u nd ry cash sal es .

13 . Paid E C C l i n e . i n f u l l o f acco u n t
. .

16 . Sold G i bson H otel 1 2 E 4 t h S t C i t y te n days 6 bb ls Rol le r Ki n g ,

. .
, , ,
.

flo u r at 3 bb ls Wh i te Li l y Ho u r a t 4 0 lb s Arb u ckl e . .

co ff ee at 2 0 C .

17 . Sold T L S tapl es C l i n ton sixty days 4 b b ls Rol le r Ki n g fl o u r a t

. .
, , , .

4 can s 2 00 lbs l ard a t 1 5 c , .

, .

20 . Rece ived from A R M a n ley to appl y on acco u n t . . .

2 B o u gh t o f Loga n M osel ey Ce n te rvi l l e t w en ty days m e rcha nd ise , , , ,

Sold A R M a n l ey 1 0 6 E lm S t C i ty o n acco u n t 5 bb l s Wh i te Li l y
26 . . .
,
.
, , ,
.

fl o u r a t 1 1 5 lb s Arb u ckl e co ffee at 2 0 C . .

27 Rece ived. from the Gibso n H ote l to ap pl y on acco u n t .

30 Rece i ved
. for s u n d ry cash sal es .

Whe n th e above tran saction s h ave bee n record ed i n th e j o u rn a l a s i n str u cted

o pen acco u n ts i n th e l edge r wi th Cash P u rch ases Sal es E xpe n se
E B Taylor Capi tal
. . E C Cline
, Lan gl ey B ros A R M an l ey . . . . .

G i bson H ote l T L S tapl es Loga n M ose ley . al l owi n g fo r each acco u n t

.

the n u mbe r o f l i n es i nd icated ; post the tran saction s a n d prove th e pos ti n g by a ,

Tr 1al B al an ce o f totals .

E x er c i s e N O 14 Re c or d i n g Tr a n sa c t i o n s i n t he J o u r n a l
.
, and Po st i n g .

Record o n j o u rn al pape r th e fol lo w i n g tran sacti on s pe rformed d u ri n g the

mo n th of J u l y by E H Wea the rby a re ta i l groce r : . .
,

J u l y 1 E H VVe a t he rb y i n vested
. . . i n the re ta i l groce ry b u si n ess .

2 B o u gh t f rom Woodward B ros M orga n tow n o n acco u n t me rcha n d ise

. .
, , , ,

B o u gh t from Wi n ters G ay B atesvi l le th i rt y davs ti me me r ’

3 .
, , on .

c ha n d i s e ,
Paid cash for ci ty an d state l i ce n se .

5 . Sold J A Tayl or 2 2 Poplar . .acco u n t 2 5 lb s roasted co ffee a t , ,

.

3 3 C ; 5 0 lb s gran u l ated s u gar a t 7 c ; 60 lb s bacon a t 2 3 C . . .

B o u gh t from C ha fin J on es C i ty for cash merchand ise , , , ,

6 . Rece ived for s u nd r y cash sales to date .

Paid Wood w ard B ros i n f u l l o f acco u n t . .

( Conclu ded on pa g e
 R E CO RD I N G T RAN SACT I O NS .
41

f rom pa g e
( E x erci s e N o . I 4
—
Conti n u ed

Sold the Col on ial H ote l Wash i n gto n Ave o n acco u n t 5 bbl s B l u e ,
.
, ,
.

R i bbo n Ho u r a t 3 b bls W hi te Rose fl o u r at 90 lb s . .

gra nu lated s u gar at 7c .

Rece ived fro mJ A Taylor to appl y o n acco u n t . . .

B o u gh t f rom Wi n ters G ay B atesvi l l e o n th i r ty days ti me merchan , ,

’

d ise ,

Received from t he Colon ial H ote l i n part pay m e n t fo r merchan

d i s e sold on th e 8 t h .

Paid Wi n ters Gay to apply o n merchan d ise p u rchased on the

3d .

Sold M J Sand ers 2 2 7 B eech S t o n acco u n t 5 bbl s Wh i te Rose Ho u r

. .
,
.
, ,
.

at 1 0 h ams 1 9 1 l bs at 2 6c ,
.
,
.

15 . B o u gh t from Woodward B ros M organ town o n acco u n t me rcha n d ise .

, , , ,

16 . Sold th e Col on ial H otel Wash i n gton Ave o n acco u n t 7 doz can s ,
.
, ,
.

peaches at per d oz ; lb s b ran at per lb s . . .

17 . B o u gh t from the Pe rfectio n Creamery Rosedale on twe n ty days ti m e , ,

’
,

merchand is e ,

1 Rece ived from M J Sanders to appl y on acco u n t . . .

B o u gh t from C ha fin J on es Ci ty fo r cash m erchand ise , , , ,

Sold W W J o hn sto n 1 2 2 1 E lm S t o n acco u n t

. . lbs b ran at ,
.
, , .

pe r l bs ; 2 00 l bs lard a t 2 2 C ; 3 d o z can s peaches at

. pe r . .

do z . c a ns .

Paid Wi n ters Gay bal an ce d u e on me rchand ise p u rchased

o n the 3 d .

Rece ived for s u n d ry cash sales t o d ate .

Sold W W J oh ns to n 1 2 2 1 E lm S t o n acco u n t 1 00 lbs gran u lated

. .
,
.
, ,
.

s u gar at 7 c ; 1 0 bbl s Wh i te Ros e Ho u r at .

B o u gh t fro m the Perfecti on Creamery Rosedal e o n twen ty days ti me ’

, , ,

m erchand ise ,

Received fro m the Col on ial Hote l i n f u l l for balan ce d u e on

merchand ise sold them o n th e 8 t h an d on acco u n t o f that sol d o n the ,

1 6 th .

Paid Wi n ters Gay o n acco u n t of merchand ise p u rc hased on

th e 1 0 t h .

26 . Rece ived fr om J A Taylor i n paymen t for balan ce d u e on m e r . .

c ha n d i s e sol d h i m on the st h .

Sold L S Ly n n 9 1 5 J e fferso n Ave o n acco u n t 5 bb ls Wh i te Rose flo u r

. .
, .
, ,
.

at 1 0 lb s creamery b u tter at 4 2 0 . .

29 . Rece ived from L S Ly n n t o appl y o n acco u n t . . .

Paid Woodward B ros on acco u n t of merchan d ise p u rch ased o n

.

t he 1 5 th .

31 . Paid bookkeepe r s sal ary re n t telephon e servi ce

’
, , ,

Whe n t he abov e transactions h av e bee n recorded i n the j o u r n a l a s i n str u cted ,

open acco u n ts i n th e ledger wi th Cash J A Tayl or Col on ial H ote l . .

M J Sanders
. . W W J oh nston L S Lyn n . Woodward B ros. Wi n . . .

ters Gay Perfection Cr eamery E H Weatherby Capi tal Sales . .

,

P u rchases E xpe n s e al lowi n g for each acco u n t th e n u mber of l i n es i nd i cated ;

post the transaction s an d p rove the posti n g by a Tria l Bal an ce o f balan ces
,
.
42 R E C OR D I N G T RAN SACT I ON S .

Q U E ST I O N S
Name some o f the n ecessary expen ses o f a groce ry b u s i n ess .

Can y o u s u ggest a pl a n wh ich wo u ld pe rm i t the groce r to kn o w th e c o s t o f

del i veri n g me rch and ise ?
Wha t acco u n ts are a ffected whe n cash i s paid fo r tel eph o n e servi ce ?
Wha t e ffect wo u ld i t h ave on the operati n g cost o f the b u si n ess i f th e sal ary
paid th e o w ne r for hi s se rvi ces i n con n ection wi th the b u si n es s were ch arged
t o hi s C ap i tal acco u n t ?

Name the acco u n t deb i ted a nd th e acco u n t cred i ted whe n me rchand i s e i s
i n vested a t the begi n n i n g o f b u si n ess .

Wh at acco u n ts are a ffected whe n cash an d me rchand ise a re i n ve s ted a t the

begi n n i n g o f b u si n ess ?
Wh at m u st th e own e r o f a b u si n ess take i n to con sideration w he n h e fixe s th e
sel l i n g price of th e merch and ise wh i ch the b u si ness o ffe rs fo r sal e ?
Name some o f t he expe n ses i n co nn ectio n wi th the ope ratio n o f a rai l road .

I f a farme r shows al l of h is operati n g cost i n on e acco u n t n ame some of t he ,

expe n ses wh i ch wo u l d be d eb i ted to th i s acco u n t .

I f a merch an t pays fo r d rayage on me rchand ise he ha s p u rch ased ,

wo u ld th is be d eb i ted to th e E xpen se or th e P u rchases acco u n t ? G i ve

reason s fo r yo u r an swe r .

Wh at acco u n ts are a ffected whe n the own e r wi thd raws a part o f hi s capi tal ?

Name the acco u n t d eb i ted a nd the acco u n t cred i ted wh e n the ow n er i n vests
cash i n the b u si ness a t a ti m e o ther tha n the begi n n i n g of th e b u si ness .

I f a tele ph o n e com pa n y pays fo r w i re u sed i n con n ecti on wi th th e

servi ce re nd ered i ts c u stomers wi l l th is be d eb i ted to the E xpe n se acco u n t ?
,

I f a rai l road com pan y pays fo r a n ew e n gi n e wi l l th i s be d ebi ted to

,

th e E xpe n se acco u n t ?
Wh at acco u n ts a re a ffected wh e n stamps the cost o f wh i ch i s ch arged t o th e
,

E xpen se acco u n t are u sed for parce l post o n a package co n tai n i n g me rchan
,

d ise sold a c u stome r on acco u n t ?

Name t he acco u n t deb i ted and the acco u n t cred i ted i f the sale me n tion ed i n
the p reced i n g q u estio n had bee n made for cash and the c u stomer h ad give n
t he b u si n ess cash fo r t he m e rcha n d is e a n d stam ps .

I f Rober t A Cl ark th e own e r o f a b u si n ess i s to receive a sala ry o f

.
, ,

a mon th fo r h i s se rvices re nd ered to the b u si n ess a n d th i s i s wi thd raw n at

d i ffere n t ti mes what wo u l d be the n ame o f th e acco u n t ke pt wi th th e tran s
,

action s a ffecti n g th i s salary ?

Wha t acco u n ts wo u ld be a ffected w h e n th e e n try w a s mad e at the e nd of th e
mon th fo r the salary ( 83 3 page
,

N ame the acco u n t d eb i ted a n d th e acco u n t cred i ted i f M r C lark accept ed .

merchand ise fro m stock a t cost pri ce i n payme n t fo r a part o f hi s salary .

Wh at acco u n ts wo u ld be a ff ected i f Mr Cl ark accepted m erchan d i s e from

.

stock at th e sel l i n g pri ce i n pay m e n t for a par t o f hi s sala ry ?

W hat en try wo u ld be req u i red i f o n e c u stome r was d ebi ted wi th mercha nd ise
p u rchased by a n othe r c u stomer ?
Name so m e o f the tran saction s wh ich m i gh t occ u r i n con n ect i on W i th the
com pl e te ope rati on s o f a hard w are b u si n ess .

Name some o f the tran sact i on s wh i ch m i gh t occ u r i n con n ect i o n W i th th e

co m pl ete operation s o f a pl u m bi n g b u s i n ess .

Un der wh at ci rc u m stan ces wo u ld y o u ad vise the keepi n g o f more than on e

acco u n t wi th th e expe n ses of a b u si n ess ?

Name some o f th e tran sacti o n s wh i ch m igh t be performed i n con n ecti on wi th

‘

the operation s of a dai ry .

44 R E CO R D I N G T RAN SACT I ON S I N T HE PU RC H AS E S J O U RN AL .

Da t e LF i
. . Ac c o u n t C r de i ed
t Addr e
ss T e r ms Am o u n t

I l l u st rati o n N o 1 7 P u rc hases J o u rn al
.
,
.

EX PLANATI O N E ach t ra n sact i o n i s reco rd e d o n o ne ho ri o n t al l i ne T he i n fo rm at i o n

. z .

i n t he P r No col mn re fer s to t he list of mer cha n d i se sen t by t he se ll er to t he p r chaser ; th i s

“
u . .
”
u u
list is fil e d fo r f t ure re feren ce T he en ti re re co r d i n this p ur chase s j o urnal is e q u ivalen t to o ne
u .

j o urn al en t r y i n which t he P urchase s acco u n t is d e bite d a n d th ree per so n al acco u n ts c re dit ed .

§ 3 9 P o s t i n g fr o m t h e P u r c h a s e s J o u r n a l
. E ach amo u n t e n te r ed i n .

the m on ey col u m n i s posted to the cred i t of the acco u n t wri tte n o n the same l i n e
( Con clu ded on pag e

I4 2 / 0 if J
' “

I l l u strati on N O 1 8 Led ge r Res u l ti n g from Posti n g I l l u s tration N o 1 7

.
,
. .

EX PLANATI O N A T rial Bala n ce fr o m this l edger will sho w that t he d ebit a m o un t i s

.

e q u al to t he c redit a m o un ts even tho u gh t he reco rd i n t he acco u n ts does no t represen t al l of t he

t ra n sactio n s that t he b u si ne ss w o u ld perfo r m One p u rpose of this ill u st ratio n i s to S ho w that t he
.

l edger is i n bala n ce w h en al l t he t ra n sactio n s f ro m a n y o ne j o urn al have been post ed .

 R E CO R D I N G T RANSACT I ON S I N T HE PU RC HAS E S J O U RNAL .
45

wi th i t The d ate the l ette r P an d the page of the p u rchases j o u rnal are e n te red
.
, ,
“
i n the ledge r th e same a s i n posti n g from an othe r j o u rn al th e le tter P
i nd i cates the ti tl e o f th e book o f ori gi n al e n try I f a speci fi c ti me of payme n t i s .

stated th is sho u ld be wri tte n i n the explan ati on col u m n of the l ed ge r a s explai n ed
,

u nd e r I l l u s trati o n N o I Th e page o f th e led ge r i s wri tte n i n the fol i o col u m n of

. .

the p u rchases j o u rn al to i nd icate tha t t he tran sactio n has bee n posted The P u r .

chases acco u n t i s no t d eb i ted w i th th e amo u n t of each p u rchase b u t w i th the total ,

p u rchases a t the en d of the mon th .

The posti n g of the tra nsaction s record ed i n the p u rchases j o u rn al I l l u s trati on ,

N o 1 7 is sh own i n I l l u strati o n N O 1 8
.
,
. .

E x e r c i s e NO 15 Re c o r d i n g Tr a n sa c t i o n s i n t h e P u r c h a s e s J o u r n a l
.
, .

Record i n t he p u rc hases j o u r n al ( pape r r u l ed sim i lar to I l l u strati on N o 1 7 ) .

the fol l owi ng tra n saction s rel ati ve to t he p u rchase of me rchan d ise d u ri n g the mon th
of Febr u ary by W O Gard n er wh o i s e ngaged i n t he hardware b u si ness :
. .
,

Feb I B A Ames Toled o 3 0 d ays P u rchase N o 1

. . .
, .
,
.
,

5 H M Lowe N ashvi l le Feb 3 3 0 days P u rchas e N o 2

. . .
, ,
.
, ,
.
,

I n this p u r chase t he m er cha n dise wa s shipp e d F e b 3 a n d re ce i ved F e b 5 ; t he a mo u n t is . .

d ue 3 0 days fr o m F e b 3 . .

9 H T Harri s Roch es te r 2 0 days P u rchase N o 3

. . . , , ,
.
,

12 J T Good ri ch C i t y Feb 1 0 90 d ays P u rchase N o 4

. . .
, ,
.
, ,
.
,

18 J P B e n son C l eve land Feb 1 7 60 d ays P u rch ase N o 5

. . .
, ,
.
, , .
,

23 C O Parson s C i ty 3 0 d ays P u rchas e N o 6

. . .
, , ,
.
,

28 H L Si m pso n D ayton Feb 2 6 3 0 d ays P u rchase N o 7

. . .
, ,
.
, ,
.
,

Wh e n t he a bo v e tran sacti on s h ave bee n recorded i n the p u rchases j o u rn al a s

'

i n st ru cted an d the p u rch ases j o u rn a l r u led as i n I l l u strati on N o 1 7 open acco u n ts

,
.
,

o n a shee t o f l edge r paper wi th P u rch ases an d each of the seve n cred i tors al l owi n g ,

fo u r l i n es for e ach acco u n t Wh e n t he posti n g has bee n com ple ted prove th e .
,

e q u al i ty of th e d eb i ts an d cred i ts by a Tri al B al an ce .

E x er c i s e No . 16, R e c o r d i n g Tr a n s a c t i o n s i n t h e P u r c ha s e s J o u rn a l .

Record i n t he p u rch ases j o u rn al t he fol l owi n g tra nsacti on s relati ve t o th e

p u rchase of merch an d i se d u ri n g th e mon th of J an u ary by W H Goodwi n a retai l . .
,

groce r :
Jan . 2 . B row n C o E l mwood o n acco u n t P u rchase N o I .
, , ,
.
,

3 . K nox B ros C i ty o n acco u n t P u rch ase N o 2

.
, , , .
,

10 . H aze n Lockhart D an vi l l e o n acco u n t P u rchase N o 3 , , , .

,

15 . B rown C o E l m wood on acco un t P u rchase N o 4 .

, , , .
,

La e V i ew C reamery Lake V iew J an 1 4 2 0 days P u rchase

gAl le n Sm i th 8:C
17 .
, ,
.
, ,
No .
5 ,

3 .
J . o Rockford 1 0 days P u rchase N o
.
, , ,
. 6,
27 . D on ald son B ros .
, C i ty J an 2 4 acco u n t P u rchase N o
, .
, ,
.
7 ,

Wh e n th e above tran sacti o n s h ave bee n recorded i n th e p u rchases j o u r n a l a s

i n str u cted an d th e p u rchase s j o u rn al r u led ope n acco u n ts o n a shee t o f l ed ge r
, ,
‘

paper w i th P u rchases an d each of th e s ix cred i tors al lowi n g five l i n e s for B row n ,

Co an d fo u r l i n es fo r each o f th e oth er acco u n ts Whe n the posti n g ha s bee n

. .

com pl e ted prove th e e q u al i ty o f th e d eb i ts a n d cred i ts by a Tri al B alance

, .

Afte r t he i n str u ctor ha s approved th i s exerci se retai n th e p u rchase s j o u rn al ,

for u se i n con n ection wi th E xe rcise N o 2 2 . .

 R E C O R D I N G T RAN SACT I O NS I N T HE SAL E S J OU R NAL .

E x e r c i s e NO . 17 , Re c o r d i n g Tr a n s a c t i o n s i n t h e P u r c ha s e s J ou r n a l .

Record i n the p u rchases j o u r n al th e fol l owi n g tran sacti on s relative to th e

p u rchase o f merchand i se d u ri n g th e mo n th o f Ma rch by C U Steel e a re tai l sh o e . .
,

d eal e r :
M a rch B ay State Shoe C o B os ton Feb 2 8 1 0 d ays P u rchase N o 1 .
, ,
.
, , .
,

3 . Hay n es Hen son C o N ewark N J M ar 2 1 0 d ays P u rchase N o

,
.
, , . .
,
.
, ,
.

2 ,

4 .M B La n g C i ty M ar 3 3 0 d ays P u rchase No 3
. .
, , .
, ,
.
,

6 Cl i n e Shoe C o Pi ttsb u rgh M ar 4 3 0 d ays P u rchase N O 4

. .
, , .
, . .
,

18 .B ay S tate Shoe C o B osto n M ar 1 5 3 0 d ays P u rchase N o 5 .

, ,
.
, , .
,

25 Hay n e s Hen s on
. C o N ewark N J ,
M ar 2 0 3 0 days P u rcha se .
, , . .
, .
, ,

No 6 .
,

26 .C l i n e S h oe C o Pi ttsb u rgh M ar 2 0 3 0 d ays P u rchase No 7 .

, ,
.
, ,
.
,

31 A O Hai n es Al ban y M ar 2 1 60 d ays P u rchase N o 8

. . .
, , .
, ,
.
,

M B Lan g C i ty M ar 2 2 3 0 d ays P u rchase N o 9

. .
, ,
.
, ,
.
,

Whe n th e above transaction s have bee n record ed i n th e p u rchases j o u rn al as

i nstr u cted a n d th e p u rchases j o u r n al r u led ope n an acco u n t wi th P u rchases at
, ,

the top o f page 1 o f a d o u bl e shee t of l edge r pape r and an acco u n t wi t h each of ,

the five cred i tors o n page 2 of the same sheet al lowi n g eq u al space fo r each pe rsonal ,

acco u n t ; prove t he eq u al i ty o f the deb i ts and cred i ts by a T r ial Bala n ce .

I f do u ble l edger paper r ul ed w ith fr o m thi rty to fo r ty hor i o n tal li ne s o n each page ca n n ot z

be obta i ne d u se a n y l edger pap er availabl e a n d allo w fi e li ne s fo r e ach acco u n t

,
v .

Afte r the i n s tr u ctor has approved th i s exerci se retai n th e l ed ge r shee t for u s e ,

i n E xerci se s N os 2 0 and 2 3 . .

§ 40
. S a l e s J o u r n a l i s a book o f ori gi nal e n try i n wh i ch al l sal e s O f
Th e
merch a n d i se o n acco u n t a re recorded and no othe r tra n saction s are record ed i n i t .

Th e com pl ete record o f a tran sac ti on i n wh ich merchand ise i s sold o n acco u n t
i n cl u d es the d ate o f the sal e th e n ame and add ress of t he pe rso n o r fi rm to w h om ,

the merch and ise i s sold th e terms th e i te m s sold an d th e a m o u n t of th e sal e I f

, , ,
.

the sel l e r d oes n o t re tai n a copy o f the i tems sold th e r u l i n g i n th e sal es j o u rn al ,

sho u ld be s o arran ged th at these i te m s may be record ed i n con n ecti on w i th th e

othe r i n formation i n regard to th e tra n sacti on I f th e sel l e r does re tai n a l i st o f .

the i tem s sold th i s can be n u mbered and fil ed fo r refe ren ce and th e n u mbe r re
,

cord ed i n the sal es j o u rn al I t i s n ecessary fo r the sel le r to retai n a record of the

.

i tems sold a c u sto m e r o n acco u n t beca u se th i s i n formati on w i l l be n eed ed i n case

adj u stme n ts are req u i red I f a c u sto m e r ret u r n s i tems wh ich h e cla i ms were
.

p u rchased from th e sel le r an d the sel l e r h ad n o record o f th e i te m s sol d to th i s c u s

tome r h e m i gh t be i m posed u po n by a l lowi n g cred i t for merchand ise wh i ch w a s
,

n ot p u rchased from hi m .

I l l u strati on N o 1 9 shows th e form of sale s j o u rn al wi th the i te m s record ed i n

.

i t an d I l l u stration N o 2 0 the sa m e i te ms recorded i n a sal e s j o u rnal wi th the i tems

, .

i n d icated by the sal e n u mber The me th od sh ow n i n I l l u s tration N o 2 0 i s mo re . .

e ffi ci e n t beca u se i t req u i res l ess ti me to record a n u mbe r than i t does a l is t of

articl es sold Th e othe r form is show n beca u se i t i s u sed by some b u si n ess co n ce r n s
. .

N o matter wh ich me thod o f re cord i n g sales i s u sed the a rra nge m e n t o f the sales ,

j o u r n al sho u ld be s u ch that the acco u n t wi th e ach c u stomer may be debi ted wi th

th e amo u n t o f hi s p u rchase a nd the Sales acco u n t cred i ted at the e nd o f th e
mon th wi th the total sales .

Cash sal es are n ot recorded i n th e sales j o u rn al b u t the total cash sal es for ,

each d ay are e n tered i n th e cash record Th e n at u re o f cash sal es i s d i ffere n t from .

that of cash p u rch a ses i n tha t i t i s c u sto ma ry for th e c u stome r t o p a y cash for th e
 R E CO R D I N G T RANSACT I O NS I N T HE SAL E S J O U RNAL .
47

merchand ise h e p u rchases and e i th e r take i t w i th hi m or have i t d el ivered O n the

o th er h an d the ow n er o f a b u si n ess u s u al ly orde rs hi s me rchand ise i n advan ce and
,

record s the p u rchase w he n i t i s rece ived and pays for i t accord i n g to th e te rms I n .

a b u si n e s s wh e re on l y occasion al cash sal es are mad e these may be record ed i n th e ,

sales j o u rn al Th e n at u re of the b u si n ess an d d esi res of the man agemen t wi l l

.

d etermi n e t he practice to be fol l owed i n record i ng cash sales .

The fol l owi n g sales mad e by E B Tayl or a re tai l groce r d u ri n g th e mon th

. .
, ,

of J an u ary are shown recorded i n th e sal es j o u rn al i n I l l u strati on s N o s 1 9 and 2 0

,
. .

J an 6 Sold A R M an l ey 1 0 6 E lm S t C i ty o n acco u n t 4 0 lb s Arb u ckle co ffee

'

. . . .
. .
, , , ,

at 2 0 c ; 1 bb l Wh i te Li l y flo u r
’

.
,

16 . Sold G i bson H ote l 1 2 E 4 t h S t C i ty on te n d ays ti me 6 bbl s Rol l e r

,
. .
, ,
’

,
.

Ki n g Ho u r a t 3 bbl s Wh i te Li ly fl o u r at 4 0 lb s Ar . .

b u ckl e co ffee a t 2 0 C .

17 . Sold T L Stapl es C l i n ton o n s ixty d ays ti me 4 bbl s Rol le r Ki n g Ho u r

. .
, ,
’

,
.

at 4 can s 2 00 l bs lard at 1 5 c ,
.
,
.

26 . Sold A R M an l ey 1 0 6 E lm S t Ci ty o n acco u n t 5 bbl s Wh i te Li l y

. .
,
.
, , ,
.

flo u r at 1 1 5 l bs A rb u ckl e co ffee at 2 0 C . .

3 0 do

'

J o 4 0

A5

z é

e —z
’

f
f c fi

3 / 2 0

I l l u st rati on N o 1 9 Sales J o u rn al wi th I tems Sold Recorded i n I t

.
, .

EX PLANAT I O N E ach t ra n sactio n reco rd ed show s t he dat e t he n a me a n d add ress of t he

.
,

c u sto mer t he total a m o u n t o f t he sal e a n d t he it e m s sold ; if t he t er m s a e to b e i n dicat ed the y

, ,
r ,

sho uld b e wri t t en o n t he li ne w i th t he n a me of t he acco un t o r t he l i ne b elow T he a mo u n t of each .

sal e i s wr i tten o n t he sa me l i ne w ith t he n a me of t he c u sto mer to facilitat e post i n g

.

.
48 R E CO R D I N G T RANSACT I O N S I N T HE SAL E S J O U RN AL .

e
Da t L F
. . eie
Account D b t d

4 114 5

L.

I l l u stration N o 2 0 Form of Sal e s J o u rn al whe n a Copy of I te ms Sold i s R e tai n ed

.
,
.

EX PL A NATI ON All t he i n fo rmatio n i n rega rd to each t ra n sactio n is record ed o n o ne li ne

.

t he sa me as a t r a n sactio n re co r d e d i n t he p ur chase s j o urn al

. The copy of t he it e m s i n e ach sal e is
n u mbered a n d fil ed fo r f u t ure referen c e T he reco rd i n thi s i ll u st ratio n is e q u ival en t to a j o u rn al
.

en t r y i n w h i ch th ree per so n al acco u n ts a re d ebite d a n d t he S al es acco un t c redite d fo r t he total .

§ 4l P o s t i n g fr o m t h e S a l e s J ou r n a l E ach amo u n t e n te red i n the

. .

mon ey col u m n i s posted to th e d eb i t o f th e acco u n t wri tte n o n th e sam e l i n e wi th

“ ”
i t Th e d ate th e l etter S and the page of th e sal es j o u rn al are e n te red i n th e
.
,

( Conti nu ed on p a g e

/9 2

J A M

Ck f f
. 2 _
7

I l l u stration N o 2 1 Ledge r Res u l ti n g from Posti n g I l l u stration N o 1 9 o r N o 2 0

.
, . . .

EX PLANAT I O N T he sa me expla n atio n appli e s here as t hat given i n co nnect i o n wi th t he

.

l edger re s ulti n g fr o m posti n g t he t ra n sactio n s fr o m t he p ur chase s j o urnal I ll u st ratio n No 1 8

,
. .
 R E CO R D I N G T RAN SACT I O NS I N T HE SAL E S J OU RN AL .
49

“ ”
led ge r the sa m e a s i n posti n g from an othe r j o u rna l ; th e l e tte r S i nd i cates th e
ti tl e of th e book o f origi n al e n try I f a spe ci fic ti m e of payme n t i s stated th i s .
,

sho u ld be wri tte n i n th e expl an ation col u m n o f th e l ed ge r a s expl ai ned u nde r

I l l u stratio n N o 1 The page o f the ledge r i s wri tte n i n the fol io col u m n of th e
. .

sal es j o u rnal to i nd icate that the tra nsactio n ha s bee n posted The Sal es acco u n t .

i s n o t cred i ted wi th the a m o u n t o f each sal e b u t wi th the total sales at th e en d of ,

the mon th .

Th e posti n g o f th e tran sacti on s recorded i n t he s a l es j o u rnal I l l u strati on N o , .

1 9 o r N o 2 0 i s sh ow n i n I l l u stratio n N o 2 1
.
,
. .

E x e r c i s e NO S a le s J ou rn a l
. 18 , R e c or d i n g Tr a n sa c t i o n s i n t he .

Record i n the sales j o u r n al ( paper ru l ed si m il ia r to I l l u strati on N o 2 0 ) the .

fol l owi n g transaction s relative t o t he sal e o f me rchand ise o n acco u n t d u ri n g t he

mon th of Feb r u ary by W J Wheeler a retai l merchan t : . .
,

Feb 3 E M M i l le r 5 0 7 Gay S t Sale N o

. . . .
, .
,
.

8
. Wi l l iam A Wal lace E vanston Sal e N o 2 .
, ,
.
,

12. B T Hart C o M aryvi l l e Sal e N o 3

. . .
, , .
,

14. D T S i n ton U n i on tow n Sale N o 4

. .
, , .
,

18. G L Frye 2 9 M ai n S t Sale N o 5

. .
, .
, .
,

20. The Lo n g Con str u ction C o Un io n tow n 3 0 days Sal e No 6 .

, , , .
,

23. He n ry M aso n 64 U n io n S t Sal e N o 7 ,

.
, .
,

27. D P Lewis 3 1 0 C hestn u t S t Sale N o 8

. .
, .
,
.
,

28. M ayn ard Pri tchett B rookvi l le 3 0 days Sal e N o 9 , , ,

.
,

Whe n t he above transacti ons h ave bee n recorded i n the sales j o u rn al as i n

str u cted an d the sales j o u rnal r u led a s i n I l l u strati on N o 2 0 ope n acco u n ts on a
,
.
,

shee t o f ledge r pape r wi th Sal es and each of the n i n e c u s tome rs al l o w i n g fo u r ,

l i nes for each Whe n t he posti n g has bee n com pleted tak e a Trial B alan ce
.
,
.

E x e r c i s e No . 19 , Re c o r d i n g Tra n sa c t i o n s i n t h e S a l e s J ou rn a l .

Record i n th e sal es j o u rn al ( j o u rn al pape r r u led s i m i la r to I l l u stratio n N o 1 9 ) .

the fol lowi n g tran saction s re lative to t he sal e of merchan d ise d u ri n g the mon th o f
J a n u ary by W H Good w i n a retai l groce r :
. .
,

J an 4 A R J e n n i n gs 1 0 5 M ai n S t 2 0 lbs roasted co ffee a t 3 3 c ; 1 00 lb s

. . . .
, .
, . .

gran u lated s u gar a t 7c ; 5 0 lbs baco n at 2 3 c . .

8
. C e n tral H otel 2 2 Wal n u t S t 5 bbls B l u e Ri bbo n Ho u r at 4 hams , .
,
.
,

1 0 0 l bs at 2 6C ; 1 00 lb s gra n u l ated s u gar a t 7c .

, . .

11
. A R J en n i ngs 10 5 M ai n S t 1 d oz can s tomatoes
. .
4 ca ns 2 1 6 , .
, .
, ,

lbs l ard at 2 6 c .
, .

13
. M A J oh nson Ki n gsto n 5 bbls Wh i te Rose flo u r at
. . 6 hams 1 4 1 , , .
,

lbs at 2 6c .
, .

16
. I m perial H otel 200 Loc u st S t 5 bbls B l u e Ribbon flo u r at 1 00 , .
, .

l bs gra n u lated s u gar at 7c . .

19
. A C Wi l l iams 1 2 2 1 E lm S t 1 2 d oz can s peaches at
. . pe r doz ; , .
,
. .

lbs b ra n a t per lbs . .

22
. R G M athews 2 5 E Fo u rth S t 1 0 b u meal a t
. .
5 b u bean s a t ,
. .
, . .

3 doz can s peaches at per doz . .

25
. I mp e ri al H otel 2 00 Loc u s t S t 5 bbls Wh i te Rose flo u r at 25 , .
,
.

l bs creame ry b u tte r at 4 1 0 . .

26
.
J C Wi lson 2 70 Cen tral Ave
. . l bs b ran at pe r lbs ;
, .
,
. .

5 can s 2 4 8 l bs l ard a t 2 6c , .
, .

27
. C L Loyd 1 604 V i n e S t 1 00 l bs b rown s u gar at 6 /
. .
1 c
2 ; 1 00 l bs gran
, .
,
. .

u la t e d s u gar at 7c ; 5 bb ls Wh i te Rose fl o u r at .

Whe n the above transacti on s have bee n recorded i n th e sales j o u r nal as i n

s tr u cted and the sal es j o u r n al r u l ed a s i n I l l u strati on N o 1 9 ope n acco u n ts o n a
, .
,
50 R E CO R D I N G T RANSACT I O N S I N T HE SAL E S J O U R NAL .

shee t o f l ed ger pa pe r w i th Sales and each o f th e e igh t c u sto m e rs a ll o w i n g five ,

l i n es each for A R J e n n i n gs a nd I m pe rial H ote l and fo u r l i nes fo r each of th e

. . .

oth e r acco u n ts W he n the posti n g has bee n com pleted take a Trial B alan ce
.
,
.

Afte r the i n str u cto r ha s approved th i s exercise re tai n th e sal es j o u rnal fo r ,

u se i n con nection wi th E xerci s e N o 2 2 . .

E x e r c i s e No 20, Re c or d i n g Tr a n s a c t i o n s i n t h e S a l e s J ou r n a l
. .

Record i n th e sal es j o u rn al ( j o u rn al pape r r u l ed si m i l ar to I l l u stration N o 1 9 ) .

the fol lowi n g tran sacti on s rel ative t o th e sale of mer ch and i se d u ri n g th e mon th o f
'

M arch by C U Steel e a re tai l shoe deal er :

. .
,

M arch 1 R L Watso n 2 0 7 M ason S t 1 p r Q u ee n C i ty shoes

. . . . .
, .
,

4 C A Sh e ppard Can ton 3 prs Lad i e s shoes a t

. . .
, , .
’

J C Wil son C o H am i l ton 8 p rs M e n s Cal f shoes at

’

9 . . . .14 , ,
.

p rs M e n 3 J e ffe rson shoes at $ 3 7 5

’
. . .

12 A R Ki n g B osto n 1 pr Lad i es B al a t
. . .
, , .
’
.

15 W E Pete rs C l i n ton I p r M e n s V i c i A u tocra t shoes

. . .
, ,
.
’

18 W K Love 2 0 7 M ai n S t 1 p r M e n s V i ci Kid shoes

. . .
,
.
,
.
’

21 A R Ki n g B oston 2 p rs Wom e n s B ox Cal f a t

. . .
, ,
.
’

26 C A Sh eppard Ca n to n 1 pr M e n s Co n g Cal f
. . .
, ,
.
’
.
,

30 R L Watson 2 0 7 M aso n S t 6 prs Ch i ld re n s Sati n Cal f a t

. . .
,
.
,
.
’

Whe n th e above transacti on s h av e be e n recorded i n th e sal es j o u rn al a s i n

s tr u cted an d the sal es j o u r n al r u l ed as i n I l l u stration N o 1 9 O pe n a n acco u n t
,
. ,

wi th Sal e s e igh t l i n es from t he top of page 1 o f th e d o u bl e sh ee t o f l ed ge r paper u sed

i n E xercise N o 1 7 ; ope n an acco u n t wi th each o f the s i x c u sto m ers o n page 3 o f
.

th is sam e l ed ge r shee t al lowi n g eq u al spac e fo r each person al acco u n t ; take a

,

Trial B ala nce W he n approved re ta i n t he ledger sheet fo r u se i n E xercise N o 2 3

.
, . .

42 . Th ere are t w o classes o f cash tran sacti on s :those

Th e C a sh Re c or d .

i n wh i ch cash i s rece ived an d those i n wh i ch cash i s paid These tran saction s m a y

,
.

be record ed i n two separate j o u r n al s th e recei pts i n a cash re ce i p ts j o u rn a l and th e ,

( Conclu ded on pa g e

3 4 3 4

J A / M M W 4
cz / r aj
7
4 0

f z c fi f f

I l l u stratio n N O 2 2 Rece i pts Sid e of Cash B ook .

,
.

EX PLANATI O N T he t ra n sactio n s reco rd ed o n t he receipts sid e of t he cash b o ok i n t he

.

il l u st ratio n a re e q u ival en t to a j o u rn al en t ry i n which t he C ash acco un t is d e bited fo r t he total ,

a nd each of t he fo ur acco u n ts c redited fo r t he a mo u n t writt en o n t he sa me li ne w ith i t T he r u li n g .

se par ate s t he cash rece ipts fo r t wo di ff eren t mo n ths t he bala n ce at t he b egi nn i n g o f t he m o n th ,

i s ca rri e d do w n b elo w t he r u li n g be ca u se it w ill b e need ed i n s u bse q uen t p r ovi n g of cash .

52 R E CO R D I N G T RANSACT I O N S I N T HE CASH B OOK .

1 7 }

@2 _

l ? }

£2 .
2 r 7 . 3 0
_

633

I l l u strati on N o . 24 , Led ge r Res u l ti n g from Posti n g I l l u strati on s N os . 22 an d 23 .

EX PLANAT I O N This i ll u st ratio n i s g i ven t o sho w that t he l edger is i n bala n ce wh en all

.

t he t r a n sactio n s re co r d e d i n t he cash book hav e b een post e d a n d n ot to sho w t he t r ue me a n i n g of

,

t he acco u n ts . Acco un ts re s u lti n g fro m t he post i n g O f t ra n sactio n s reco rd e d i n t he cash book o n ly

w ill n ot sho w th e i r t r ue mea n i n g b e ca u se of t he co nne ctio n b e t ween t he re co r d i n t he cash boo k
a n d that i n t he p ur chase s a n d sal e s j o u rn als I f d e si red t he posti n g fr o m t he re ce ipts sid e t he pay
.
, ,

men ts sid e a n d both sid e s of t he cash book ma y each be p rove d by a se pa rat e T r ial Bala n c e
, .
 R E CO R D I N G T RA NSACT I O N S I N T HE CASH B OO K .
53

§ 44 . P rov i n g
C a sh The d i fferen ce be twee n the two sides of the cash .

book s ho u ld at al l ti mes eq u al th e amo u n t of ca s h bel on gi n g to th e b u sin es s

, ,
.

Whe n al l cash tran sacti on s are recorded i n the j o u rn al i t i s n ecessary t o post th ese ,

to the Cash acco u n t be fore provi n g cash ; whe n th e cash tran saction s are e n tered
i n the cash book th e proof can be made before posti n g At th e ti me o f provin g
,
.
,

the total recei pts and total paymen ts are e n tered i n smal l pe n ci l fi g u res as i n I l l u s
t ra t i o n s N o s 2 2 an d 2 3 . .

After cash i s proved at th e cl ose o f a m o n th i t i s c u stom ary to e n te r the bal , ,

an ce i n red i n k o n th e paym en ts sid e r u l e t he cash book and carry the balan ce , ,

d own o n th e recei pts sid e be low th e r u l i n g as i n th e i l l u stration s The bal an ce .

carried d own o n the rece i pts side i s e n tered i n th e secon d m on ey col u m n ; othe rw i se
i t wo u ld be i n cl u ded wi th the total rec e i pts for the mon th and agai n posted to the
Cash acco u n t whe n the total i s posted I f th e r u l i n g i n th e cash book d oes n o t .

provide a col u m n i n wh i ch t o e n te r th is bal an ce an d i t i s en tered i n th e col u m n

wi th recei pts fo r the mon th th e amo u n t o f th e bala n ce m u s t be s u b tracted from th e
,

total of th e recei pts side be for e posti n g th e total recei pts at the cl os e o f t he mon th .

When r u li n g t he cash book i t i s c u sto m a ry to d ra w t he do u bl e re d li ne s o n t he sa me bl ue li ne

,

o n e ach sid e of t he cash book even t ho u gh t he n u m ber of en t r ie s o n o ne side m a y be gre at er tha n

t hat o n t he oth er sid e .

45 P o s t i n g fr o m t h e C a sh B oo k E ach amo u n t i n the money col u m n on

. .

the rece i pts sid e i s posted to t he cred i t o f t he acco u n t wri tte n o n the sam e l i n e
wi th i t ; eac h amo u n t i n th e mo n ey c ol u m n on t he paymen ts sid e i s posted t o th e
d eb i t o f the acco u n t wri tte n o n th e sam e l i n e wi th i t ; the total o f the money col u m n
on th e rece i pts s id e is posted to th e d eb i t o f th e Cash acco u n t at the e n d o f th e
mon th a n d t he total o f th e m on ey col u m n o n th e payme n ts sid e i s posted to th e
,
“ ”
cred i t o f th e Ca sh a cc o u n t a t th e e n d o f th e mon th Th e date t he le tter C an d
'

.
,

th e page o f th e cash book a re e n tered i n th e ledge r i n the same man n e r as whe n

“
posti n g from a n oth e r j o u r nal ; the l ette r C i n d icates th e ti tl e of t he book o f
origi n al e n t ry The page o f the l edge r i s w ri tte n i n the fol i o col u m n o f t he cash
.

book to i nd icate that th e e n tries h ave bee n posted .

Th e posti n g of th e tran sacti on s recorded i n the cash book I l l u stration s N o s ,

.

2 2 an d 2 3 i s show n i n I l l u strati o n N O 2 4
, . .

E x er c i s e No 21,
Re c or d i n g Tr a n sa c t i o n s i n t he C a sh B o o k
. .

Record i n th e cas h book ( th e two i n sid e pages o f a d o u bl e shee t o f j o u rna l

paper r u led si m i l ar to I l l u strati on s N o s 2 2 an d
*
recei pts on the l eft and pay .

m en ts on th e ri gh t th e fol l owi n g cash tran saction s performed d u ri n g the m on th o f

,

Feb r u ary '

Feb . 1 St u de n t i n vested
. i n t he retai l groce ry b u si n e ss .

2 Rece ived
. from E H Wh i te to a ppl y on acco u n t . . .

3 Paid o ffi ce re n t for the m o n t h o f Feb r u ary

.

4 Rece ived
. for cash sal e s .

Paid H R Swa n son t o appl y o n acco u n t

. . .

6 Rece ived
. for cash sales .

8 Paid A B H i l l
. to appl y o n acco u n t
. . .

9 Rece ived
. from J K Lach man i n pay m e n t fo r m e rch and ise sold . .

h i m on the 4 t h .

10 Paid d rayage o n me rcha nd ise p u rchased

.
,

11 Paid J G Pi pki n
.
to appl y on acco u n t
. . .

14 Rece ived
. for cash sales .

16 Received
.
from P B S Peters i n payme n t for me rch and ise sold . . .

h i m o n th e l ot h .

( Concluded on pa g e
*
I f do u bl e j o u rn al pap er w i th fr o m thi rt y to fo rty li ne s o n e ach page i s n o t ava i labl e
0

cash re ce i pts sho ul d b e re cor d e d o n o ne sh ee t of pap er a n d pay men ts o n a n oth er as t he p r oper

,

ru li n g of t he cash book ca nn ot b e sho wn w h en recei pts a re en t e red o n o ne sid e a n d pay men ts o n

t he oth er S i d e of t he sa m e sh ee t .
54 R E CO R D I N G T RANSACT I O N S I N T HE CAS H B OO K .

—
— Con ti n u ed
( E xerci se N o . 21 f rom pa g e

Paid
q
D
C fo r o ffi ce s u ppl ies .

O Paid J T L u d l ow
l‘
J
to a ppl y on acco u n t
. . .

NN P u rchased me rchand ise fo r cash from H P Ki n g . .

,

M Rece i ved
O
I for cash sales .

NP Rece ived -
f rom H M L o v e r t to a ppl y on acco u n t . . .

Q
U lP aid sal esman s expe n ses
l
’
,

Rec e ived $ 5 2 5 0 for cash sal es . .

$ Paid 1
fo r fre i gh t o n me rchand i se p u rchased .

Paid cl erk h i re ,

0
)
IPaid fo r adve r ti si n g
x
0
,

Cash balan c e ,

Wh e n th e above tran sacti on s h ave bee n recorded i n th e cash book a s i n str u cted ,

prove cash and r u l e the cash book as i n I l l u strations N os 2 2 and 2 3 Ope n a c . .

co u n ts o n a sheet of ledge r paper wi t h S t ude n t Capi tal Cash P u rchases ,

Sales E xpen se E H Wh i te J K Lach man P B S Peters

. H M
. . . . . . . .

Lo v e r t H R Swan so n A B Hill
. .
J G Pi pki n J T L u d l ow . . . . . .

al lowi n g fo r each acco u n t t he n u mbe r o f l i n es i nd i cated Post the tran saction s .

,

a nd prove the eq u al i t y of th e deb i ts and cred i ts by a Trial B alan ce o f bal an ces .

E x e r c i s e N o 22, . Re c o r d i n g Tr a n s a c t i o n s i n t h e C a sh B oo k .

Record i n th e cash book rece i pts o n th e l e ft an d payme n ts o n th e r i gh t the , ,

fol lowi n g cash tran saction s pe rformed d u ri n g t he mon th of Jan u ary by W H . .

Goodwi n a re tai l groce r : ,

J an 1
. W H G oodwi n i nvested
. . . i n t he retai l g roce ry b u s i n ess .

F Paid “
for ci ty l i ce n se
“
.

/ Paid C i ty M i l l i n g Co
Q
for a cas h p u rchase . .

A
Rece i ved F for s u n d ry cash sal e s .

Paid B row n Co i n f u l l o f acco u n t . .

9 Rec e i ved . fro m A R J e n n i n gs to appl y o n acco u n t . . .

12 Rece ived . from C e n tra l H otel to appl y o n acco u n t .

13 Rece ived . fo r s u nd ry cash sales .

Paid K nox B ros to appl y on acco u n t . .

18 Rece i ved . from M A J oh n son to appl y on acco u n t . . .

0 2Paid K nox B ros . i n f u l l of acco u n t . .

Rece ived fo r s u n d ry cash sal es .

4
2
Rece ived . from Ce n tral H ote l to appl y on acco u n t .

Paid H aze n Lockh a r t t o appl y o n acco u n t .

26 Rece i ved . from A R J en n i n gs to appl y o n acco u n t . . .

27 Received . for s u n d ry cash sales .

2 Rece ived from C L Loyd to appl y o n acco u n t . . .

Paid B row n CO to appl y on acco u n t . .

Paid bookkeepe r s sala ry re n t ’

, ,

Cash bal a n ce ,

Whe n the above transaction s have been record ed i n the cash book as i n str u cted ,

prove cash and r u l e the cash book ; the n proceed as fol lows :
Open acco u n ts o n l edge r pape r w i t h W H Goodwi n C api tal C ash
'

1 . . .
,

P u rch ases Sal es E xpe ns e A R J e nn i n gs C e n tral H otel . .

M A J oh n son
. . C L Loyd B row n . Co Kn ox B ros
. Haze n . .

Lockhart al lowi n g fo r each acco u n t the space i n d icated ; post th e transaction s ,

and prove th e eq u al i t y of the d eb i ts an d cred i ts by a Trial B al an ce o f bal ances .

( Con clu ded on pag e

 R E CO R D I N G T RANSACT I O NS I N T HE CASH B OO K .
55

( E x erci s e N o 2 2 — . n
Co ti nu ed f rom pa g e

2 . After the i nstr u ctor ha s approved the w ork req u i red i n the fi r s t para
graph post to a sheet o f ledge r pape r the tran saction s i n the p u rchases j o u r nal fo r
,

E xercise N o 1 6 and the sal es j o u rn al fo r E xe rcise N o 1 9 wh ich yo u we re i n str u ct

. .
,

ed to retai n an d the cash book i n th is exercise Arrange th e acco u n ts a s fol l o w s :

,
.

Cash c u stomers ( each 4 l i n es ) cred i tors ( each 4 l i n es ) W H Goodwi n Capi tal

, , . .
,

Sales P u rchases E xpen se al l owi n g for each the n u mber o f l i n es

i n d icated ; take a Trial B alan ce of bala n ces from th is ledge r .

Th e p u rpose of th e secon d d ivi si o n o f th is exe rcise i s to S how th at th e l edger i s

i n balan ce whe n al l th e transactio n s from al l the special j o u rn al s have been posted ,

th e same as i t is wh e n al l th e tran sacti on s from each special j o u r n al h ave been

posted .

Pr e sen t t he p u rchases j o u r n al sal e s j o u rn al s cash book ledge r res u l ti ng from

, , ,

posti n g t he t ransactio n s from the t hree books and Trial B alan ce to the i n str u ctor ,

for approval .

E x er c i s e NO 23 R e c or d i n g Tr a n sa c t i o n si n t h e C a sh B oo k
.
, .

Record i n the cash book th e fol l owi n g cash tran sact i on s pe rformed d u ri n g t he
mon th of M arch by C U S teel e a retai l sho e dealer :
. .
,

M arch C U S teel e i n vested

e . . i n th e re tai l sh oe b u si n ess .

s B o u gh t from M B Ar ns t i ne for cash stock of shoes

. .
, , ,

u Paid tel epho n e servi ce i n ad van c e for th ree mon th s ,

Rece ived for cash sal es .

m Paid cl erk s salary $ 2

’

o Rec e ived from R L Watson i n f u l l of acco u n t . . .

w Paid B ay State Sh oe C o i n f u l l of acco u n t

—
. .

o Rece ived fo r cash sal es .

w Paid cl erk s salary

q ’
p
,

Hw Paid prem i u m o n i n s u ran ce pol i cy .

Hw Paid H ay n es H en son Co ,
i n f u l l of acco u n t . .

He Rece i ved from C A Sheppard i n f u l l o f acco u n t . . .

Ha Paid fo r s tam ps an d station ery .

Hs Paid clerk s sal ary $ 2 ’

Ne Rece i ved from J C Wi lson C o i n f u l l of acco u n t . . . .

Ne Recei ved from W K Love i n f u l l o f acco u n t . . .

Ns Rece ived for cash sal es .

Paid cl erk s salary ’

,

29 Rece ived
. from A R Ki n g for merchan d ise sold h i m on the 1 2 th
. . .

31 Paid re n t
.
,

Paid C l i n e Shoe C O for merch a n d ise p u rch ased o n th e ot h

. .

Recei ved for cash sal es .

Cash bal an ce ,

Whe n th e above tran sactio n s h ave bee n recorded i n the cash book as i n str u cted ,

prove cash an d r u le t he cash book Ope n an acco u n t o n page I of t he do u bl e shee t

.

o f ledge r paper u sed i n E xe rcises N o s 1 7 an d 2 0 wi th C U Steele Capi tal eleve n . . .

, ,

l i nes below the head i n g o f the Sal es acco u n t an acco u n t wi th E xpe nse seven l i ne s ,

bel ow the head i n g of t he acco u n t w i th C U Steel e Capi tal and an acco u n t wi th . .

, ,

Cash fo u rtee n l i n es bel ow the head i n g o f the E xpe nse acco u n t Post th e e n tries .

i n the cash book t o the acco u n ts o n pages 1 2 and 3 of the l edger sheet and take a , ,

Tri al B alan ce of bal an ces .

56 R E CO R D I NG T RANSACT I O N S I N T HE G E N E RA L J O U R NAL .

46 Ge n e r a l J o u r n a l i s a book o f ori gi n al e n try i n wh i ch al l t ra ns a c

. Th e
t ions are record ed except tho s e record ed i n special j o u rn als Th e gen eral j o u rnal .

i s th e same a s th e j o u rn al explai n ed i n 2 2 a nd th e r u l i n g i s th e same as th e vari o u s ,

“ ”
i l l u strati on s o f th e j o u rna l gi ve n i n preced i n g chapters Th e te r m ge n e ral j o u r n al .

i s appl ied to the j o u rn al to d isti n g u ish i t from th e speci al j o u rnal s u s ed for record
i n g tran s action s a ffecti n g th e sa m e acco u n t .

Whe n p u rchases are recorded i n the p u rchases j o u r n al sales i n the sal es j o u rn al , ,

a nd cash recei pts an d payme n ts i n the cash book al l othe r tra nsaction s a re re ,

corded i n the gen eral j o u rnal These tran sactions may be classi fied i n to fiv e gro u ps : .

( 1 ) open i n g e n tries ; ( 2 ) c u rren t e n tries ; ( 3 ) correcti n g e n tries ; ( 4 ) adj u sti n g

e n tries ; ( 5 ) cl o s i n g en trie s .

H1 . Op e n i ng
are tho s e n ecessary t o ope n acco u n ts wi th the proprietor
e ntri es

for hi s i nvestmen t a n d the assets i nvested or l iab il i ties ass u med by the b u si n ess .

I f cash i s the on l y asse t i n vested the open i n g e n try may be mad e i n the cash book ; ,

b u t i f assets othe r than cash are i nvested i t wi l l be mad e i n the gen e ral j o u rnal , .

The open in g e n try i n the j o u rnal req u i res a d ebi t to the acco u n t wi th each asse t
i n vested a nd a cred i t to the ow n er s Capi tal acco u n t for the total ; also a deb i t
’

t o the own er s Capi tal acco u n t for an y l iab il i ties ass u m ed an d a cred i t to th e
’

a cco u n t wi th each l iab i l i ty .

I ll u st r atio n Ja n u a ry 1 s t J C S hook bega n t he retail shoe b u si ness He i n ve st ed cash

. . . .
,

mercha n dise a n d a n acco u n t d u e hi m fr o m W H Ba rt o n fo r

,
H is C apital acco u n t . .

w ill b e c re dit e d w ith t he cash i n t he cash boo k b u t it w il l b e ne c e ssa ry t o en t er t he val ue of t he ,

mercha n dise a n d acco u n t i n t he gener al j o u rn al T he gener al j o u rn al en t ry is P ur chase s D r .

,
.
,

W H Ba r to n D
. . a n d J C S hoo k C apital C r
,
r .
,
w it h t he a pp r op r iat e e xpla n a
. .
, , .
,

tio n .

$2 . are those n ecessary to record transaction s w h i ch occ u r

Cu rrent entri es
i n the reg u l a r ope ratio n s o f the b u si ness Wh e n the n at u re o f these i s s u ch that .

they ca n n o t be recorded i n the special j o u rnal s i t i s n ecessary to record the m i n ,

the ge neral j o u rn al C u rren t e n tries wh i ch may be recorded i n the ge neral j o u r n a l

.

i n cl u d e re t u rn ed sales ret u rn ed p u rchases cred i ts to c u stome rs whe n assets othe r

, ,

tha n cash are rece ived i n payme n t of acco u n ts and deb i ts to cred i tor s wh e n assets ,

othe r than cash are give n i n payme n t o f acco u n ts .

I ll u st ratio n M ay 1 2 th Ge o r ge A D o u glas p u rchased fr o m t he Pott er S hoe C o t wo pai r s

. . .

shoe s at w ith t he p r iv i l e ge of re t u rn i n g o n e p ai r w ithi n fiv e days H is acco un t wa s d e bite d .

i n t he sal e s j o u rn al with t he val u e of t he sho e s M ay 1 5 th he ret urned o ne pai r a n d as ked .

f o r c redit f o r T he en t ry re q u i re d i n t he gener al j o u rn al is S al e s D r a n d Ge or ge A ,
.
, .

D o u glas C r ,
w ith t he app r op r iat e e xpla n atio n
.
,
.

H3 . are th o s e wh ich a re nece s sary beca u s e o f e rror s i n

Cor recti ng e n tri es

record i ng o r posti n g tran sactio n s I f a n e rror i s mad e i n the cal c u la tion s o f a sal e .

a nd the c u stome r i s charged i n excess o f the amo u n t o f the sale the cor rec t ,

i n g e n t ry i n the j o u r n al wi l l req u i r e a d eb i t to the Sales acco u n t and a cred i t to the

acco u n t wi th the c u stome r I f a sal e is recorded correctl y b u t posted to th e .
,

acco u n t wi th a c u stome r othe r tha n the o ne wh o mad e the p u rchase the co rrecti n g ,

e n try i n th e j o u r n al wil l req u i re a deb i t to the acco u n t wi th th e c u stome r wh o

m ade the p u rchase a n d a cred i t to the acco u n t wi th the c u stome r wh o w a s deb i ted
i n error .

I ll u st r atio n Ap r il 1 6th C A M oo re p ur chase d fr o m D a we s B r os re tai l t i re d eal er s t

. . .
, ,

3 2 x 3 3 % F is k co r d ti re s at The t r a n sactio n w a s re co r d e d i n t he sal

keeper fo r D a we s B ros

expla n atio n .
 R E CO R D I N G T RA NSACT I ON S .
57

If 4 . are those n ecessary to transfe r the ba la n ce of o ne

A dj us ti ng e ntri es

acco u n t to an other a nd to place i n the ledge r asse ts belongi n g to the b u si ness

,

b u t n ot sho w n i n th e led ge r a nd l iab i l i ties owed by the b u si ness b u t n o t sho w n

,

i n the ledger Th ese wi l l be expl ai n ed and i l l u strated i n s u bseq u e n t chapters

. .

1l 5 . are those n ecessary to tra n sfe r t he bala n ce of th ose

Cl os i ng e n tri es

acco u n ts sh owi n g the profi ts a nd losses to the owner s Capi tal acco u n t i n orde r ’

that i t wi l l S how the n e t profi t o r l oss These wi l l be explai ned and i l l u strated i n .

s u bseq u e n t chapte rs .

H6 . P os ti ng f rom amo u n t e n tered i n the deb i t

the Gen e ra l J ou r na l . E ach
col u m n i s posted to the debi t side of the acco u n t wri tte n on the same l i n e wi th i t .

E ach a m o u n t e n tered i n the cred i t col u m n is posted to the cred i t side of the acco u n t
w ri tte n o n the same l i n e wi th i t T he process is the sa m e a s th at give n i n § 2 4 . .

E x e r c i s e No . 24 , P u r ch a s e s J ou r n a l S a l e s J ou rn a l Ge n e r a l J ou r n a l , , , and
C a sh B o o k .

Record i n th e p u rchases sale s ( I l l u stratio n N o and gen e ral jo u rn als and

,
.

th e cash book th e fol l owi n g tran sacti on s performed d u ri n g the m on th o f Feb r u ary
:
,

by D on ald D Sel l s a retai l h ardware merch an t

.
,

Feb 1. D on ald D Sel l s i n vest ed

. i n th e h ard w are b u si ness
. .

2 B o u gh t from M oor e
. M oore C i ty o n acco u n t mercha n d i se , , , ,

En t er i n t he p u rchases j o u rn al as P urchase No 1 a n d n u mb er s u cceedi n g en t r ies i n this .

j o u rn al i n reg u la r o r d er .

A Sol d J C M ason C i ty o n acco u n t fo u r kegs n ail s a t

(
. .
,
each , ,
.

4 Paid D avi s B ros C i ty

. for a cash p u rch ase of merchand ise
.
, ,
.

En ter o n t he pay men ts sid e of t he cash b oo k as a de bit to t he P urchases acco u n t .

” Paid $ 2
C
. telepho n e re n t fo r th ree mon th s i n ad va n c e \
.

B o u gh t from t he Pi ckeri n g H ardware C o D a nvi l l e o n fi ftee n days

’
D .
, ,

ti me merchand ise , ,

Paid M oore M oore on acco u n t .

8 Rece ived
. fo r cash sal es .

9 Sold Wal te r Love Ri ve rside o n acco u n t on e sa w

.
,
on e cor n , , ,

S hel le r ,

B o u gh t from J oh n so n B ros D ayton on fi ftee n d ays ti me merchand ise ’

10 . .
, , ,

Received from J C M aso n i n f u l l of acco u n t . . .

11 . Paid M oore M oore i n f u l l of acco un t .

12 . Sold J C M i l l er C i ty o n acco u n t 1 00 l bs l ead at 8 c ; 4 d oz p i ck s a t

. .
, , ,
. .

pe r d o z .

13 . Rece ived for cash sales .

Gave Wal te r Love cred i t fo r val u e o f t he s a w sold h i m on the 9 t h

a n d re t u rn ed by h i m p e r agreeme n t .

15 . Rece ived from Wal te r Lov e to appl y on acco u n t .

16 . Paid cl erk s sal ary ’

17 . B o u gh t from D on aldson B ros M ooresvi l le o n acco u n t merc hand ise .

, , , ,

18 . Sold Ce n tral Con str u ctio n C o Arl i n gto n o n acco u n t 3 d oz shovels .

, , ,
.

at pe r d oz ; 5 d oz pi cks at p e r d oz 6 scrape rs at
. .

each .

( Conclud ed on pa g e
58 R E CO R D I N G T RAN SACT I ON S .

( E x erci s e N o 2 4 Conti nu ed f rom pa g e .

—

19 . Paid Pi ckeri n g Hardware C o i n f u l l o f acco u n t . .

20 . Rece i ved cash from D avis B ros fo r th ree kegs o f n ai ls p u rchased .

from them o n the 4 t h a n d re t u r n ed by u s p e r agreeme n t .

Paid J oh nson B ros o n acco u n t . .

Rece i ved for cash sal es .

2
4 . D o n aldso n B ros have al l owed u s cred i t fo r . c u tl ery p u rchased
from them o n the 1 7 th a nd re t u r n ed by u s pe r agreeme n t .

Sold Wal te r Love Riversid e o n acco u n t 1 S t u d eba ke r wagon

, , , ,

Paid J oh n son B ros to appl y o n acco u n t . .

'

25 . P u rchased from the Pi ckeri n g H ardware C o D a n vi l l e on fi ftee n days .

, ,

ti me merchand ise , ,

26 . R e cei ved from Wal te r Love i n f u l l for the corn shel le r sold h i m
on t he 9 t h .

27 Rece ived
. for cash sal es .

28 Paid ren t
. cle r k s salary ,
’

Whe n th e above tran saction s h ave bee n recorded i n the fo u r books o f origi n al
e n try prove cash ( balan ce
,
a n d r u l e the cash book as i n I l l u stratio n s N o s
,
.

22 and 23 Ope n acco u n ts o n a shee t o f ledge r paper wi th Cash

.
J C M ason . .

Wal te r Love J C M i l l er Ce n tral Co n str u ction Co

. . M oore .

M oore Pi ckeri n g Hardware C o J oh nso n B ros D o n aldso n B ros . . .

D onald D Sel ls Capi tal . Sales ,P u rchases E xp e n se al lowi ng for

e a ch acco u n t t he n u mber o f l i nes i nd icated ; post from the b ooks o f origi n al e n t ry ,

and tak e a T r ial B alan ce o f total s .

Re tai n t he led ge r and Trial B alan ce for u se i n E xercise N o 3 8 . .

E x e r c i s e NO . 25 , P u r c h a s e s J o u r n a l S a l e s J ou r n a l G en er a l J o u r n a l , , an d
C a s h B oo k .

Record i n the p u rchases sales ( I l l u stratio n No an d ge n eral j o u r n al s a nd

,
.

the cash book th e fol lowi n g tran sacti on s performed d u ri n g th e m on th of October

,

by H A Popp a re tai l coal d eale r :

. .
,

Oct 1 H A Popp i n vested

. . . . i n the retai l coal b u si ness .

B o gh t from Ce tral Coal C J erseyvi l l te n days ti m e ’

3 u
. t h e n o e o n .
, , ,

En ter i n t he p u r chase s j o urn al as P u rchase No 1 a n d n u mber s u cceedi n g en t r ies i n this .

j o u rn al i n re g u la r o rd er .

Sold J C M i l le r C i ty o n acco u n t coal per S al e N o 1

. .
, , ,
.
,

B o u gh t from D avi s Coal C o C ovi n gton o n acco u n t .

, , ,

Paid for o ne m o n th s teleph on e service ’

.

B o u gh t from J el l i co Coal C o J el l ico o n fi fteen d ays ti me

’
.
, , ,

Pai d th e Ce n tral Coal Co o n acco u n t . .

Rece i ved fo r cash sales o f coal .

Sold M B Wal lace Ci ty o n acco u n t coal per Sale No 2 . .

, , ,
.
,

10 Paid the M u rray D rayage Co

. frei gh t and d rayage b i l l s o n coal .

p u rchased a n d de l ivered .

Rece ived fo r cash sal es o f coal .

11 Sold th e Cen t ral Hotel C i ty o n acco u n t coal per Sal e N o 3

.
, , ,
.
,

12 Paid the C e n tral C oal Co

. i n f u l l of acco u n t . .

13 Sold J C M i l ler C i ty o n acco u n t coal pe r Sal e N o 4

. . .
, , ,
.
,

15 Paid cl erk s salary for th e fi rs t h al f o f th e mo n th

.
’
,

Rece ived for cash sal es o f coal .

16 Rece ived
. from M B Wal lace o n acco u n t . . .

18 Paid the D on ald son Coal C o

. for coal d el ivered today . .

( Conclu ded on pa g e
 R E COR D I NG T RA NSACT I ONS .

Why i s i t n ecessary to pos t the total o f th e p u rchases j o u r n al an d th e total o f

th e sal es j o u rn al a t th e e nd o f th e mon th ?
I f th e d i ffe re n ce be t w ee n th e two sides o f th e cash book i s great e r than t he
cash o n h and wha t d oes th is i nd icate ?
,

I f th e d i ffe ren ce be t w ee n th e t wo sid es of th e cash book i s l ess tha n th e cash

o n hand , wh at d oes th i s i n d i cate ?
I f yo u were keepi n g books fo r a re tai l d r u g store and th e d i fferen ce be tween
the two s id es of th e cash book was more th a n th e cash on han d ,

wh at e n try wo u ld y o u make fo r th i s
Have y o u see n a cash registe r i n ope ration ? I f s o ca n y o u explai n i ts co n
,

n e c t i o n wi th the e n tr i es i n th e cash book ?

Wh at d oes the total o th e d ebi t sid e o th e cash book S h ow

f f ?

Wh a t d oes th e total of th e cred i t side o f th e cash book S how ?

What does th e total o f th e d eb i t s id e of t he Cash acco u n t i n th e led ger S h ow ?
Wha t d oes the total of th e cred i t sid e of th e Cash acco u n t i n the led ge r S how ?
Wi l l t he bal an ce of cash on han d a s sh ow n by the cash book o n D ecembe r 3 1
, ,

1 92 1
,
S how t he same amo u n t as t he bala n ce of the Cash acco u n t i n the
l edge r wh ich shows a record of cash t ran saction s from J an u ary 1 1 92 1 to ,

D e c e mbe r 3 1 1 92 1 ?
,

What add i tio n al i n formatio n wh i ch i s n o t S hown i n th e cash book d oes th e

, ,

ow n e r o f a b u si n ess ob tai n from th e total s o f th e two sid es o f the C ash

acco u n t i n the l edger ?
N ame some o f the transaction s wh ich th e bookkee pe r for a re tai l j ewel r y
b u si n ess m i gh t e n ter i n th e gen eral j o u rn al
.