48. Directions. You may now foot these accounts in pencil, as explained in §§ 29 and 34. It is unnecessary to place pencil footings under any column of an account, when that column contains only one item. Your footings should agree with those given herewith. If you have any errors, you can probably find them easily by following the suggestions in § 40.

49. Result shown by the Proprietor's Account. You have already learned that the purpose of this account is to show the amount of the proprietor's interest in the business. At this time this account shows:

50. Results shown by these Personal Accounts. - Perhaps it will be well for you to read again §§ 44 and 45. With the exception mentioned in § 45, a personal account may show one of three things:

A balance to be received;

A balance to be paid; or,

That the account has been settled and there is no indebtedness

Therefore, the account shows that he owes you $218.75.

The account with Henderson & Hughes shows:

An item in their favor, or a credit of

An item against them, or a debit of

A balance in their favor of

Therefore, the account shows that you owe them $125.

$425.00

300.00

$125.00

Therefore, the account shows no indebtedness either way.

51. Closing Personal Accounts. These accounts may be closed whenever they balance. In closing a personal account some bookkeepers always rule and foot the account, as was done with the merchandise account on page 20. Others close the account by a single line under each amount column, as shown in the accounts on page 28. The single line without the footings shows that the account has been settled to that point, and the bookkeeper saves the time that would be required to make the extra rulings and figures. You will, of course, follow the method that your teacher prefers.

52. Directions. The account with Davis & Co. balances, and you may close it. In Geo. W. Balch's account the first item on the debit side is balanced by the credit item, and you may close the account at that point, using a single ruling. No footings are necessary, as one item exactly balances the other.

53. Directions. Take the sheet of ledger paper that you used for the first part of this exercise and enter the following transactions, opening such additional personal accounts as you may need on the second page.

Transactions.

May 1. Sell C. G. Davis & Co. on account at 30 days, 50 bbl. potatoes @ $2.20.

2. Pay Henderson & Hughes cash, in full of account.

Their account balances, and it should be closed (§ 51).

4. Buy of Henderson & Hughes on account at 20 days, 100 bbl. flour @ $4.90, and 100 bbl. potatoes @ $ 2.00.

5. Buy of James M. Perkins on account, 200 bbl. potatoes @ $1.75, and 200 bbl. apples @ $1.40.

7. Sell George Guernsey for cash, 75 bbl. potatoes @ $2.20, and 25 bbl. flour @ $5.35.

9. Sell Geo. W. Balch on account, 30 bbl. flour @ $5.30, and 50

bbl. apples @ $1.75.

11. Sell James M. Perkins on account, 20 bbl. flour @ $5.30.

May 14. You will make an additional cash investment of $ 500. 16. You will take from the store for home use 5 bbl. potatoes.

The proprietor has the right to take property from the business for his private use; but, since his account was credited with what he put into the business, it should be debited for anything that he takes out of the business (§ 46). The price of these potatoes should be that of the last lot bought.

18. Geo. W. Balch has paid $100 on account.

19. Sell C. G. Davis & Co. on account, 50 bbl. potatoes @ $2.18, and

50 bbl. flour @ $5.40.

24. Pay Henderson & Hughes for the purchase of the 4th inst.

Their account balances, and it should be closed (§ 51).

25. Sell Geo. D. Robinson, 100 bbl. potatoes @ $2.15, and receive cash for one half of the amount.

In recording a transaction of this kind, it is better to debit the purchaser with the whole amount of the sale and credit him with the amount received than simply to debit him with the net indebtedness incurred. By this method the account is made to show the transaction in full.

26. Receive cash from Geo. W. Balch, in full of account.

31. Receive cash from C. G. Davis & Co. for their bill of the 1st inst., due to-day.

The net gain for the month is $162.75.

After you have footed these accounts, you should have the following

Be pre

54. Directions. Hereafter you may close personal accounts whenever they are in balance. After the work for this exercise has been approved by your teacher, you may copy it into your ledger. pared to state whether the accounts with Davis & Co., Geo. D. Robinson, and James M. Perkins show indebtedness in favor of or against the business, and to give reasons for your opinions.

55. The purpose of Exercises II and III is, first of all, to teach the uses of accounts with property and persons; but they are also designed to show how the transactions of a small business may easily be kept in a ledger. In fact, the transactions of a business might be so few and so simple in character as to make it much easier to keep a record of them in a ledger than to keep a full set of books, such as will be explained in Part II. But when this is done, the ledger must contain all necessary details of the transactions, and for this reason these details have been recorded in the accounts in these two exercises.

NOTE. — Those pupils who need additional drill in the use of personal accounts may find exercises for that purpose on page 56.

Questions.

1. What is the purpose of a personal account?

2. When is a man said to be your debtor and when your creditor?

3. What three different results may be shown by personal accounts?

4. How often is it usual to close personal accounts?

5. What transactions are entered in the account with the proprietor?

6. Explain the difference in meaning between "Received cash on account" and "Received cash in full of account."