11. You withdrew from the business for personal use cash, $100. 12. Borrowed of T. K. Jones cash, $150, and gave him your note at 30 da. 13. Loaned A. H. Decker cash, $200, and received his note at 60 da. LABOR-SAVING DEVICES: DIFFERENT BOOKS USED It has been seen that all the transactions of a business may be recorded in a book called the journal. In business it is more convenient, simple, and effective to classify transactions as they occur; this is accomplished by using the following books: The Cashbook contains a record of all receipts and all disbursements of cash. It is the cash account of the business, and when it is used no account with cash need be kept in the ledger. The left-hand page contains a record of all the cash debits (receipts), together with the names of the accounts to be credited, and a brief explanatory statement. The right-hand page contains a record of all the cash credits (payments), together with the names of the accounts to be debited, and a brief explanatory statement. The difference between the two sides of the cashbook should show the amount, balance, of cash on hand. The Sales Book contains a record of all sales on account, and usually of all cash sales, except small retail sales for which no bills are rendered. The records consist of the names and the addresses of the purchasers, the terms, the items, the prices, and the amounts of the goods sold. At regular intervals the book is footed and closed. The Purchase Book contains, usually, an abstract of all bills of merchandise bought. At regular intervals the book is footed and closed. When the cashbook, the sales book, and the purchase book are used, only such transactions as do not affect these books are entered in the journal. As a preliminary drill it will be found helpful to journalize on the blackboard each cash transaction and beside it make the cashbook entry. The same plan may be followed for both purchases and sales. EXERCISE 37 SET E (MODEL SET). FLOUR AND GRAIN On pages 63 to 67 is a complete model set, in script, in which the journal, the cashbook, the sales book, the purchase book, and the ledger have been used. This set was written from the following memoranda of transactions, but different prices were used in some instances. Directions and Suggestions. Write the set from the memoranda of transactions following; be guided by frequent reference to the model script set. 1. Use a double sheet of journal paper, four pages, and a sheet of ledger paper, two pages. 2. On the upper half of page 1 of the journal sheet write the journal, and on the lower half the purchase book; on pages 2 and 3, the cashbook; on page 4, the sales book. On the portion of pages 2 and 3, below the cashbook, write the trial balance, the statements and the verification. 3. This set is not to be recorded in the bound books. 4. The entries will be the same as in the script model, but the amounts will differ in some transactions. 5. A. B. Coates is represented as the proprietor. MEMORANDA OF TRANSACTIONS March 1. A. B. Coates, Chicago, Ill., began the Grain and Produce business, investing cash, $1500. Make a memorandum in the journal; enter the cash received by the business in the cashbook. 1. Paid G. H. Irving cash for rent of the store for 1 mo., $65. 1. Paid E. M. Snow cash for stationery, $6. 2. Bought of F. E. Rogers & Co., Peoria, on account, 30 da.: 500 bbl. Flour at $4 3. Bought of L. O. White & Co., City, for cash: 750 bu. Wheat at 61¢ Enter in the purchase book, placing a check mark (√) in the folio (page) column against the name of the firm; enter the cash paid on the right side of the cashbook and place a check mark in the folio column against the name of the firm. Neither entry need be posted. If the ledger is designed to show just how much business is done with each firm of whom we buy or to whom we sell, then the items should not be checked, but postings should be made from both the purchase book and the cashbook. When the check mark is used, as above, it means do not post. Until otherwise instructed, all purchases for cash will be entered in the purchase book and the cashbook, and checked; all sales for cash will be entered in the sales book and the cashbook, and checked; neither will be posted to the ledger. 5. Sold D. E. French, Joliet, on account, 20 da. : 300 bbl. Flour at $4.75 150 bu. Wheat at 89¢ March 9. Bought of F. E. Rogers & Co., Peoria, on account, 30 da.: 1000 bu. Oats at 39¢ 10. Sold P. Q. Reed, City, on account, 20 da.: 200 bu. Wheat at 89¢ 11. Sold J. K. Loveless, City, for cash less 2%: 100 bbl. Flour at $4.85 200 bu. Oats at 50¢ Enter in the sales book and check; then enter in the cashbook and check. Unless otherwise instructed, all cash purchases and all cash sales will be entered as already described. 15. Sold D. E. French, Joliet, on account, 20 da. : 500 bu. Oats at 55¢ 200 bu. Wheat at 89¢ 20. Sold C. A. Wesp, City, for cash less 2% : 100 bbl. Flour at $4.95 300 bu. Oats at 53¢ 23. Bought of M. N. Olson, City, on account, 3 da.: 1500 bu. Wheat at 63¢ 25. Received of D. E. French his check in full for the invoice of March 5, $1558.50. A check is regarded as cash; record the amount on the left side of the cashbook. 26. Gave M. N. Olson cash in full for the invoice of March 23. 27. Remitted F. E. Rogers & Co., a note at 10 da., with interest in full for the invoice of March 2. 30. Received cash of P. Q. Reed in full for the invoice of March 10. 31. Paid the bookkeeper, H. C. Ray, his monthly salary in cash, $40. Balance the cashbook; follow the model script form. Make the closing entry in the purchase book. Make the closing entry in the sales book. Post all the books to the ledger; allow ten lines for each account, as follows: 1. Post the journal in the usual way, writing J in the explanation column of the ledger to indicate the book from which it was posted. 2. Post the cashbook. The amounts on the debit (left) side should be posted to the credit of the ledger accounts named. The amounts on the credit (right) side should be posted to the debit of the ledger accounts named. Write C in the explanation column of the ledger. Write the page of the ledger in the folio column of the cashbook. Checked items must not be posted. 3. Post the sales book. Debit each personal account that is not already checked, and credit merchandise for the total sales, the footing. Write S for sales book in the explanation column of the ledger. Write the ledger page in the folio column of the sales book. 4. Post the purchase book. Credit each personal account that is not already checked, and debit merchandise for the total purchases, the footing. Write P for purchase book in the explanation column of the ledger. Write the ledger page in the folio column of the purchase book. Recheck the posting; foot the ledger accounts. Take a trial balance. Remember that the balance of the cash in the cashbook must be carried to the trial balance, on the debit side. Have the trial balance approved. Pass all work to the instructor. NOTE. If an additional exercise is required, use Exercise 22, Set C. EXERCISE 38 SET F. COAL AND WOOD Directions and Suggestions. This set is designed to give further drill in the use of the cashbook, the sales book, the purchase book, the journal, and the ledger. 1. Use loose sheets of journal paper and ledger paper. 2. This set is not to be recorded in the bound books. 3. Follow the directions given in the model script set. 4. Student is represented as the proprietor. MEMORANDA OF TRANSACTIONS April 1. Begin a Coal and Wood business, investing cash, $1750. 2. Rent a coal and wood depot of C. M. Estes, 17 Warren Street; give him a check for one month's rent, $75. 3. Buy of M. L. Travers for cash: 2 Work Horses, $130 each 1 set Double Harness, $35 Debit Expense for the above items. 1 Delivery Wagon, $100 1 Osgood Scales, $200 4. Buy of C. F. Osborn & Co., City, on account, 10 da.: 100 T. Egg Coal at $6 100 T. Grate Coal at $6.10 100 T. Stove Coal at $6.25 April 6. Buy of Stevens & Co., Pittsburgh, on account, 10 da.: 100 T. Nut Coal at $6.20 100 T. West Virginia Coke at $5 8. Buy of C. L. Smith, City, for cash: 10 cd. Maple Wood at $3.50 10 cd. Pine Wood at $4.50 10 cd. Body Hickory Wood at $5.50 9. Sell George H. Marshall, Homeville, on account: 50 T. Stove Coal at $7.50 50 T. Grate Coal at $7.25 11. Sell Gaylord & Son, City Point, on account: 50 T. Nut Coal at $7.50 50 T. West Virginia Coke at $6 12. Sell G. A. Collier, City, for cash less 2%: 50 T. Stove Coal at $7.50 10 cd. Maple Wood at $4.50 10 cd. Body Hickory Wood at $6.50 15. Pay C. F. Osborn & Co. cash, to apply on account, $500. 16. Receive of Gaylord & Son cash, to apply on account, $250. 17. Give Stevens & Co. a note at 30 da. with interest, to apply on account, $1000. 18. Withdraw cash for personal use, $100. 20. Receive of Gaylord & Son their check to balance account, $425. 25. Receive of George H. Marshall cash, to apply on account, $350. 27. Sell G. A. Collier, City, for cash less 2%: 10 cd. Pine Wood at $5.50 50 T. Grate Coal at $7.25 29. Pay Mary L. Pierce, the bookkeeper, her monthly salary in cash, $30; pay James Torrey, the teamster, his monthly salary, $30; E. L. Higgins for care of the horses, $16.50. Debit Expense for the above items. 30. Make an additional investment in cash, $750. INVENTORIES, APRIL 30, 19— Merchandise: 50 T. Nut Coal at $6.50 100 T. Egg Coal at $6 50 T. West Virginia Coke at $4.75 Expense: Horses, Wagons, and Harness at 1% below cost, $391.05 |