Jan. 27. Sold Howard Stetson on account: 10 bbl. Flour at $6.50 10 bbl. Salt at $1.68 27. Received of W. B. Emerson cash, on the invoice of Jan. 18, $400. 28. Received of Thomas Fleming cash, on account, $250. 28. Sold D. V. Negley on account: 10 bbl. Pork at $16.20 29. Sold Warren Phelps on account: 12 bbl. Beef at $18.25 30. Paid Bell Printing Co. cash, for advertising, $19.65. 31. Paid Albert Force, a clerk, cash, for one month's salary, $32.50. CLOSING THE WORK FOR SINGLE ENTRY After recording all transactions, have them corrected by the instructor. Close the cashbook. (See model, pages ii and iii.) Posting. In posting, observe the following: 1. Place three accounts on each page of the ledger. 2. The Proprietor's account should be placed first. 3. Open an account with each person whose name appears in the sales book or the purchase book. 4. Debit each person whose name appears in the sales book. 5. Credit each person whose name appears in the purchase book. 6. Post from the journal. The debit or the credit of each item in the journal is indicated. 7. Post from the cashbook. Each item in the first column on the left side of the cashbook should be posted as a credit; each item in the first column of the cashbook on the right side should be posted as a debit. 8. The above completes the posting. NOTE. Posting directly from the sales book, the cashbook, and the purchase book is a modification of the older methods of single entry, but the plan here suggested saves much time both in recording and in posting transactions. The Statement. Make a statement as follows: 1. The total of the balances of all the accounts in the ledger in which the debit is the larger represents accounts receivable. 2. The total of the balances of all the accounts, the Proprietor's account excepted, in which the credit is the larger represents accounts payable. 3. The unpaid notes in the bill book are to be used in making the statement. Before making the statement of resources and liabilities, it is suggested that the student examine the records in the bill book to find out if each note issued or received has been recorded, and if all notes either paid or discounted have been so marked in the bill book. It is easier to avoid errors than to correct them. Resources: Accounts Receivable, per ledger Bills Receivable, per bill book Liabilities: Accounts Payable, per ledger Bills Payable, per bill book The present worth equals the difference between the resources and the liabilities. The present worth minus the net credit equals the net gain. Enter the net gain in the journal as follows: Post the net gain to the Proprietor's account and show the present worth as in double entry. Changing to Double Entry. Change to double entry as follows: 1. Debit each of the following accounts in the ledger with the amount appearing in the statement: 2. Credit Bills Payable with the amount appearing in the statement. 3. Take a trial balance from your ledger; use the cash balance from the cashbook. NOTE. Some bookkeepers prefer to journalize the items which enter into the change of single entry to double entry. Various entries may be made to bring about the desired effect, but a record similar to the following is generally preferred, since by it all the resources and all the liabilities of the business are shown in a form convenient for transferring to the ledger. The items that are already in the ledger are marked ✓ so that they will not be posted. After the above entry has been posted, the accounts of the business are in double-entry form. A Double-Entry set of books may be changed to a single-entry set by leaving out of the ledger all accounts except personal accounts. The Use of Other Sets for Single Entry. If the instructor thinks it desirable to have additional work in single entry, it is suggested that any set in the Introductory portion of the textbook may be written in single-entry form. Journal paper and ledger paper may be used for this additional work. REVIEW EXERCISES The following review exercises are suggested: 1. July 1 Frank Wilson and Chas. K. Peck began a Provision business with the following resources and liabilities: The partners had an equal interest in the business. The books had been kept by single entry. October 1 the partners decided to change the books to double entry. The resources and the liabilities on that date were as follows: a. On a ledger sheet credit each partner with one half of the net resources on July 1. b. Make a statement showing the net gain on October 1. c. Credit each partner in the ledger with one half of the net gain, and show the present worth of each partner. d. Change the books to double entry by debiting in the ledger each resource item, and crediting each liability item, on October 1. e. Take a trial balance of the ledger. NOTE. If the instructor so desires, the change to double entry may be accomplished by making the journal entry as illustrated on page ix. 2. The following is a trial balance from a double-entry ledger. From this trial balance open a single-entry ledger, four accounts to the page. APPENDIX B DEFINITIONS AND EXPLANATIONS Bookkeeping is the art of making a systematic record of business transactions, enabling the proprietor to ascertain the condition of his business. A Business Transaction is an exchange of values. There are two methods of bookkeeping, Double Entry and Single Entry. In Double Entry, accounts are kept not only with persons but with all sources that affect the results or the condition of the business. In Single Entry, accounts are kept, usually, with persons only. There are two classes of accounts: Resource and liability accounts; Loss and gain accounts. An Inventory is an itemized statement or schedule, in writing, showing the amount of certain assets owned by the business, or certain liabilities owed by the business. Allowances are made for the use of money, for the early payment of invoices, etc. Interest and discount are allowances. Capital, at the beginning of business, usually is the amount invested; at other times it is the excess of resources over liabilities. Merchandise includes all commodities which are held for exchange. Expense is any expenditure to carry on the business. purposes of Interest is the compensation allowed by law or fixed by the parties for the use or forbearance or detention of money. Huffcut. Discount is usually an allowance for early payment. Bills Receivable are the written promises of others to pay us. Bills Payable are our written promises to pay others. Posting is a process of transferring debit and credit items to their respective accounts in the ledger. Present Worth of the Proprietor's account: Is net credit plus net gain; or Net credit minus net loss; or The excess of resources over liabilities. A Receipt is a written acknowledgment of money or other value received. A Voucher is a written statement proving that some transaction has occurred. When resources exceed liabilities a business is Solvent. When liabilities exceed resources a business is Insolvent. |