tory of $2.50.

July 15

$279.18

There is a merchandise inventory of $114.50 and an expense invenAfter you have copied these accounts, take a sheet of paper with only the faint blue lines and rule and prepare a balance sheet, close the ledger, and hand your papers to your teacher.

No. 2. Prepare a statement of losses and gains, a statement of resources and liabilities, and a balance sheet from the following:

Case & Adams are bankrupt, and the proprietor has settled their

account and has received 75 % of his claim in cash, therefore the balance of their account at this time shows a loss.

No. 3.

A trial balance is not an absolute test of the accuracy of your ledger, for it may contain errors that will not affect the equality of debits and credits. In the following trial balance there are three accounts, each of which shows a balance on the wrong side. You may name the three accounts, and write out your reasons for thinking that there are errors in them.

No. 4. Each of the papers required for the following exercise should be prepared without reference to the text-book.

a. Write out a series of twenty or twenty-five business transactions, beginning with an investment, and requiring the use of accounts with cash, merchandise, expense, bills payable, bills receivable, and two personal accounts. Submit this exercise to your teacher for approval.

b. Take a sheet of paper with only the faint blue lines and make the necessary rulings for a journal, and using this sheet journalize the above transactions.

c. On a second sheet of paper make the necessary rulings for a ledger, and using this sheet post the entries from your journal sheet.

d. You may reverse the usual order and close your ledger at once before preparing a statement of losses and gains or a statement of resources and liabilities.

e. On a third sheet of paper make the necessary rulings, and prepare a statement of your losses and gains and a statement of your resources and liabilities. The net gain and the present worth should agree with these results as shown by your closed ledger. f. Submit these papers to your teacher and be prepared to take an examination on all the work to this point.

PART II. BOOKKEEPING.

138. The purpose of the exercises that follow is to give you some acquaintance with business forms and customs, and to illustrate several forms of books that will lessen the work of recording business transactions. Each new series of transactions illustrates some new features of bookkeeping practice, but there will be no attempt to represent all the features of any business. The illustrations will show forms actually in use in the best business houses, and you should carefully study all the details.

Packages of vouchers and blank forms have been provided for use with these exercises. Of course bookkeeping may be studied and the necessary records made without the use of these forms, but their use will help you to understand the transactions and will make you better acquainted with the customs of business.

139. Caution. The work of recording the transactions of the following exercises will be more difficult than that of Part I, and you should not begin this work till you have thoroughly mastered the use and purpose of each of the principal accounts used in bookkeeping. Do not attempt to do things by rule, but be certain that you understand why each step should be taken before taking the step. This precaution will save you an endless amount of time in hunting for and correcting errors. Make haste slowly should be a familiar rule with each student of bookkeeping.

EXERCISE XII.

THE USE OF BUSINESS PAPERS.

140. This exercise is designed to teach you how to prepare and use the principal papers employed in transacting business. You will handle the necessary papers for each transaction. The papers that you receive from others will be complete in every respect, except that it will be necessary for you to insert the name of your city and the year in which you are doing the work. You will prepare all the papers to be issued to others. Each transaction in the following series is numbered, and the vouchers for these transactions will be numbered to correspond. You will use a cash book, sales book, journal, and ledger, and you will also open a bank account and make deposits and pay bills by checks.

141. Directions. Mr. Henry A. Bidwell is about to open a retail carpet store at 421 State street in your city, and he has engaged you as bookkeeper and manager at a salary of $75 a month. Apply to your teacher for the necessary business papers. You will use these papers, as nearly as possible, just as they are used in the best business offices. The use of each will be fully explained at the point where it is introduced, and in connection with each transaction you will find such special directions as you may need.

Your teacher will assign you one of the selling price-lists on page 131, and you may copy it on your price card now. It will be well for you to make the entries for the transactions for this exercise on loose. sheets and not to copy the work into your blank books until it has been approved.

Transactions.

No. 1. Jan. 2. In your capacity as manager you will have to sign notes, checks, and other papers, and Mr. Bidwell has executed a power of attorney giving you the necessary authority.

Remove this power of attorney from your voucher pad, make the necessary insertions, read it carefully, and file it in the envelope marked Vouchers Received.

No. 2. Jan. 2. Henry A. Bidwell invests $5000 in cash in the retail carpet

business.

Take the currency from your voucher pad, count it twice to be absolutely certain that the amount is correct, and place it in the envelope marked Cash Drawer. Make the proper entry in your cash book.

It is well to make a brief memorandum in your journal in regard to the beginning of the business, and the following illustration shows a good form for this.

No. 3. Jan. 2. After reading the instructions in §§ 142 to 145, you may open an account with the Merchants' Bank and deposit the cash invested.

142. Opening a Bank Account. There are two important reasons for keeping money in a bank safety of the money, and the convenience of paying bills with checks and of depositing in the bank the checks which you receive from others. Usually, when you desire to open an account at a bank, you must, unless you are acquainted with some of its officers, be introduced by some one who can identify you. Having been properly introduced, you will be required to write your signature on a card or in a signature book. This signature should be written carefully and exactly as you intend to sign your checks. There are two general classes of banks, commercial and savings banks, and it is well to understand the difference between them.

A Commercial Bank meets the needs of business men by providing a safe place in which to deposit money, which the depositor may check out at his pleasure as explained in § 146. Such a bank does not usually pay interest on deposits except by special agreement.