EXERCISE 2 FOR ORAL WORK These items represent the transactions of a merchant, Edward M. Brown, for several days. Name the value received and the value parted with in each transaction. Feb. 1. Bought of A. R. Dean for cash, 500 bu. wheat at $1. 2. Sold Fred S. Lay for cash, 100 bu. wheat at $1.15. 3. Bought of John Barr for cash, 50 bu. beans at $3. 4. Sold Bell Bros. for cash, 30 bu. beans at $3.50. 5. Bought of H. A. Leary for cash, a set of office books for $15. This item is called Expense because the supplies were bought to be consumed, not to be sold, an expenditure to carry on the business. 6. Bought of Thos. M. Day for cash, 200 bu. millet at $1. 6. Sold S. A. Allen for cash, 100 bu. millet at $1.30. 8. Paid John Race, a carpenter, cash for repair work, $6. 9. Bought a delivery wagon of A. R. Meek for cash, $55. 10. Bought a horse of James Crow for cash, $75. 11. Sold J. H. Morse for cash, 200 bu. wheat at $1.15. 12. Bought of Arthur Way 60 bu. beans at $3, and agreed to pay for them in 10 da. In this transaction the value received is the 60 bu. beans, and the value parted with is the stated or implied promise to pay for them in 10 da. 13. Sold Isaac Mason 40 bu. beans at $3.50, and he agreed to pay for them in 15 da. 15. Gave John Weeks, a clerk, cash, $10. EXERCISE 3 FOR WRITTEN WORK Take a sheet of paper and draw a line through the middle of the page from the top to the bottom. On the left side of this line write the technical name of the value received, and on the right side of the line write the technical name of the value parted with, for each transaction in Exercise 2. The technical term applied to goods bought to be sold is Merchandise ; to any expenditure to carry on the business, Expense; to all forms of money, and business papers which pass as money, Cash. Cash includes gold, silver, paper money, checks, bank drafts, money orders, etc. Expense may include rent, fuel, lighting, clerk hire, postage, stationery, advertising, and the like. When there is an expenditure to carry on the business, such as the payment of money for rent, the value received is entered under the name Expense. Items of Feb. 1, 2, 8, and 12 will appear as follows, in the order named: This exercise is to be worked out in the same form as the preceding one; that is, the names and the amounts of the values received and parted with are to be placed respectively on the left and right sides of a perpendicular line. As a review, the exercise may be used first orally. These items represent the transactions of a merchant, Richard S. Rowe, for several days. March 1. Bought of J. N. Osborn for cash, 60 yd. velvet carpet at $1. 2. Sold Allan Dale for cash, 25 yd. velvet carpet at $1.20. 3. Paid Henry A. Milton cash, for rent of the store for 1 mo., $28. A receipt similar to the one illustrated herewith would be received by Rowe from Milton. Albany, NY, Mas 3,19— Received of Richard S. Rowe. Twenty-eight "/w for rent of store for Ima $2800 -Dollars Henry A. Milton 4. Bought of Wm. Jackson for cash, 100 yd. Brussels carpet at $1.25. 5. Sold John Welton for cash, 40 yd. Brussels carpet at $1.50. 6. Bought of John Lane, on account, 20 Smyrna rugs at $3.75. On the right side of the line write John Lane, because the promise was given to him. In this transaction, on account means that the goods bought are to be paid for at some future time. March 6. Sold John Drew, on account, 10 Smyrna rugs at $4.75. On the left side of the line write John Drew, because the promise was received from him. 8. Sold Ira Hicks for cash, 5 Smyrna rugs at $5. 9. Bought of D. K. Pearson for cash, 100 yd. ingrain carpet at 70¢. 10. Paid John Lane cash, to apply on account, $50. On the left side of the line write John Lane, because the promise given was redeemed. In this transaction, to apply on account means that only a part of what was owed was paid. 11. Sold A. L. Derby for cash, 50 yd. ingrain carpet at 85¢. 12. Received of John Drew cash, to apply on account, $25. On the right side of the line write John Drew, because he redeemed his promise. 13. Bought of Harry Lucas for cash, office books and stationery, $12. 13. Bought of A. F. Service for cash, 200 yd. matting at 45¢. 15. Sold Harvey Gilman for cash, 100 yd. matting at 60¢. 16. Bought of Harvey Pease for cash, 3 T. coal for office use at $6. 17. Sold John L. Smith for cash, 50 yd. matting at 58¢. 18. Sold Albert Owen, on account, 40 yd. matting at 63¢. 19. Bought of Amos Gibson, on account, 100 yd. velvet carpet at $1. 20. Sold Lester Ford for cash, 25 yd. velvet carpet at $1.40. 22. Paid Amos Gibson cash, to apply on account, $75. 23. Received of Albert Owen cash, in full of account, $25.20. In full of account means that all that was owed on a given account was paid. EXERCISE 5 FOR WRITTEN WORK In this exercise use the same form as in Exercises 2 and 4. As a review, the exercise may be used first orally. These items represent the transactions of a merchant, James A. Murphy, for several days. April 1. Bought of Ball & Son for cash, 200 bbl. flour at $5. 2. Sold Henry Allen for cash, 100 bbl. flour at $6.50. 3. Paid John Weeks cash, for rent of the store for 1 mo., $50. 4. Bought of Hunt & Co., at 10 da., 500 bu. wheat at 95¢. At 10 da. means on account, to be paid in 10 da. 5. Sold Powell & Co., at 10 da., 300 bu. wheat at $1.10. 6. Sold Lane & Son for cash, 50 bbl. flour at $6.50. April 6. Bought of Harper & Co. for cash, 5 T. coal for office use at $6. 8. Sold Lee & Sampson for cash, 100 bu. wheat at $1.08. 9. Bought of Field & Co. for cash, 1 office safe for $65. Transactions for April 9 and 10 may be treated as Expense items. 10. Bought of Derby Desk Co. for cash, 1 office desk for $35. 11. Bought of Wright Bros. for cash, 600 bu. corn at 50¢. 12. Sold Elder & Co. for cash, 50 bu. wheat at $1.05. 13. Paid Hunt & Co. cash, for the amount of the bill of April 4. 15. Received of Powell & Co. cash, for the amount of the bill of April 5. 16. Paid John Atlin, a clerk, cash, $10. EXERCISE 6 TERMS EXPLAINED All items at the left of the perpendicular line, in the preceding exercises, are debits, and all items at the right are credits; hence Debits represent values received, and Credits values parted with. A systematic classification of debits and credits in business transactions is called Journalizing. A person who owes a debt is called a Debtor; a person to whom a debt is owed, a Creditor. A Debit is an amount due the business, or the amount of a thing or a service received; a Credit is an amount owed by the business, or the amount of a thing or a service given. By universal custom, the left-hand side of an account is the Debit side, and the right-hand side the Credit side. As an oral exercise, go over all the transactions in Exercises 2, 4, and 5, and classify the values received and parted with as debits and credits. EXERCISE 7 FOR WRITTEN WORK These items represent the transactions of a merchant, Wm. L. Martin, for several days. Classify the values as debits and credits. May 1. Bought of Brown Bros., on account, 1000 bu. wheat at $1. 2. Bought of Taylor & Co., at 10 da., 1000 bu. corn at 45¢. 3. Sold Henry Smith, at 15 da., 200 bu. wheat at $1.20. The technical term for my written promise to pay money to another is, on my books, Bills Payable; for his written promise to pay me, Bills Receivable. Some instructors prefer to use the terms Notes Payable and Notes Receivable. There is no objection to the use of these terms. The following Promissory Note would be classified as Bills Payable by Henry W. Sherman, and as Bills Receivable by Morgan, Taylor & Co. $120065 Boston Mass. Jan. 16,19– the order of Morgan, Taylor & Co- at Winthrop National Bank. Value received Dollars No. 12 15.. May 4. Gave Brown Bros. a note at 5 da., for $500. Who received value in this transaction? What is the name of the value parted with? 5. Received of Henry Smith his note at 5 da., for $240. What value was received in this transaction? To whom was value given? 6. Sold James W. Hills for cash, 400 bu. corn at 55¢. 6. Paid H. S. Crane cash, for rent of the store for 1 mo., $50. 8. Bought of James B. Williams, on account, 1000 bu. oats at 40¢. 9. Paid Brown Bros. cash, for a note due to-day, $500. The name of the value given in the transaction of May 4 is here the name of the value redeemed. 10. Received of Henry Smith cash, for his note due to-day, $240. The name of the value received in the transaction of May 5 is here the name of the value parted with. 11. Sold Wm. Jones, on account, 500 bu. oats at 50¢. 12. Bought of Lacey & Son for cash, 2 T. coal, to be used for heating the store, at $5. 13. Received of Wm. Jones cash, to apply on account, $100. 13. Paid James B. Williams cash, to apply on account, $250. 15. Paid Mary A. Brown, a clerk, cash, $20. |