Allow ten lines for each account in the ledger. In the resource and liability statement, bills receivable are always a resource, and bills payable, always a liability. EXERCISE 34 CORRECTION OF ERRORS The correction of errors in books of record is a matter of special importance. Even careful workers make occasional errors, but corrections can be made so that the neatness of the books and their legal value are not affected. When an error is made, consult the instructor before attempting to correct it. Do not erase. If a journal entry is wrong, correct it as follows: Draw a red line through the wrong name, and then write the correct name either above or at the right of the correction, as follows: bash Received check for 102 50 6. May Bills Rec. note due today 10250 If a journal entry is reversed, it may be corrected by writing, in red ink, Cr. after the debit item and Dr. after the credit item. Then post correctly. Cash-bar. Invoice of L.A. 17620 17620 If it is found that a wrong amount has been entered in the ledger, correct as follows: 1. Rule a red line through the wrong amount. 2. Write the correct amount in black ink just above the amount canceled. If an amount has been entered on the wrong side of the ledger, correct it as follows: 1. Draw a red line through the amount that is wrong. 2. Enter the correct amount in black ink on the proper side of the ledger. NOTE. Sometimes a correction may be made by a counter entry in the journal. To illustrate Suppose one had made this entry, Mdse., Dr., Cash, Cr., and it was a wrong entry. It may be canceled as follows: Cash, Dr., Mdse., Cr. As the wrong entry is thus disposed of, the correct entry may now be made. FORMS OF STATEMENTS Business and financial statements are made in many different forms, depending on the character and the volume of the business, and the facts that are to be set forth. In a business under the control of one proprietor, a very simple statement may answer every requirement. In a partnership, when a number of persons are interested, a more complete setting forth of the facts of the business is necessary. In a corporation, organized under the laws of the state or the nation, the statements must show the results and the condition according to the demands of the authority under which the corporation is organized. In cities where many departments require separate accounting, still another form of statement may be demanded to set forth the facts that public business requires to be made known. On pages 4 and 40 simple statement forms are presented. The first is recommended for the beginner. As the student advances in the work of this text he will become familiar with other forms of statements. THE SIX-COLUMN STATEMENT The following script model represents a form of statement which affords condensed information regarding the results and the condition of the business. The first two columns are the trial balance. The inventories are recorded in the proper columns, either resource or liability, in red ink, to distinguish them from other resources and liabilities. After recording the inventories, each account in the trial balance should be extended into the column where it belongs. The footings show the various column totals, and the summary at the bottom sets forth the net gain and the present worth. SET I. RETAIL FUEL AND FEED BUSINESS The Object of this set is to illustrate in a practical manner one of the simplest forms of bookkeeping. In the preceding illustrative work the student has recorded all transactions and entries on loose sheets of journal paper and ledger paper, but now he is given a set of bound books, in which all records will be made. The Books used are the journal, the ledger, and the statement book. No business forms are handled, but different forms are illustrated, and entries are made directly from them. Directions and Suggestions. In working out this set the student should observe the following: 1. For the introductory memorandum, refer to the model journal on page 2. Follow this model carefully. 2. In this beginning work it is well for the student to journalize the transactions first on a loose sheet of journal paper; after correction, this work may be copied into the bound journal. The posting should be directly to the ledger. 3. A. M. Benton is represented as the proprietor. 4. Use the same explanatory forms as in the model journal. 5. The books should be paged consecutively, 1, 2, 3, etc. 6. Take pains in all writing; make neat, small figures. MEMORANDA OF TRANSACTIONS FOR JANUARY Jan. 1. A. M. Benton, Buffalo, N.Y., began the Retail Fuel and Feed business, investing cash, $2750. 2. Paid Edward N. Shaw cash, for rent of the store for 1 mo., January, $30. 3. Bought office supplies as per bill on the following page: Buffale, NY. Jan 319 Ms. A. M. Benton 26 Main St. City Co~~C. L. Martin & Co Dr. To A detailed statement of goods bought or sold is called either a bill or an invoice. A detailed statement of goods bought to be used or consumed, or a statement of services rendered, is usually called a bill. Thus, a physician's statement of services rendered, and the charges for the same, is called a bill; a statement of a quantity of silk bought or sold by a merchant is called either a bill or an invoice. |