The following is the list of the accounts to be closed into the Expense account, according to the model given herewith:

In those accounts above which have no inventory the full balance is

closed into the Expense account.

After the above accounts have been closed into the Expense account close the Expense account into the Merchandise account.

TO THE INSTRUCTOR. If you deem it preferable, the Expense account may be closed directly into the Loss and Gain account. If this is done, the Merchandise account must also be closed into the Loss and Gain account, without reference to the Expense account.

The Merchandise Inventory, the finished goods on hand, is $1285.46. Closing the Merchandise Account. Enter the inventory in the Merchandise account, find the gain, and close the account as usual. The Machinery account is inventoried at cost.

Closing the Loss and Gain Account. In this set the closing of the Loss and Gain account is effected by a journal entry, as follows:

Dividends are usually declared quarterly, semiannually, or annually. In this set, in order that the student may have the work of closing the Loss and Gain account, a monthly dividend will be declared.

At a meeting of the board of directors, a statement of the business having been presented, a dividend of 2% on the capital stock was declared. Compute the dividend and then make a journal entry similar to the one given. The net gain will be verified by the instructor. Open accounts with Dividends and Undivided Profits. Post the journal entry and close the Loss and Gain account. When the dividends are paid in cash to the stockholders, the Dividend account will then be closed. After closing the books, take a trial balance of the ledger.

An Analysis of the Merchandise Account. The student will now turn to his ledger and follow carefully the statements given below:

The above analysis shows that the raw material cost, in even numbers,

52%; labor, 28%; incidentals, 20%.

APPENDIX A

SINGLE ENTRY

Object. This set is designed to illustrate in a simple and practical way the uses of that method of bookkeeping known as single entry. As the student is already familiar with double entry, a comparison of the two methods will help him to understand single-entry bookkeeping.

Single Entry and Double Entry may be compared as follows:

The books used are very nearly the same for either method. The sales book, the purchase book, the journal, the cashbook, the bill book, and the ledger are the same in form. The general principles employed are identical.

The statement of resources and liabilities is the same.

The present worth and the net gain or the net loss of a business are shown by either method.

Single Entry and Double Entry may be contrasted as follows:

In double entry, the journal has both a debit and a credit record for each transaction; in single entry, the journal has only a debit or a credit record for each transaction. (See model journal, page ii.)

In double entry all items in the cashbook are posted; in single entry only. items that affect personal accounts are posted. In this set these items are recorded in the first column of the cashbook. (See model cashbook, pages ii and iii.)

In a single-entry ledger only personal accounts are kept.

An itemized statement of losses and gains cannot be made from a singleentry ledger, as loss and gain accounts are not kept in the ledger.

In double entry the separate sources of loss and gain are clearly set forth, while single entry shows only total results and furnishes no detailed information regarding the channels through which these results were obtained.

A double-entry ledger is in balance; a trial balance cannot be taken from a single-entry ledger, because property and other accounts not personal are not in this ledger.

Single Entry may be used to advantage in any small business, or where the business deals in few articles of purchase and sale, or where a classification of accounts relating to losses and gains is not wanted.

If books are strictly single entry, only accounts with persons are kept in the ledger; if any other accounts appear in the ledger, the method is not strictly single entry.

As the student is familiar with the various books of record, few explanations are given in this set.

Cashbook. In the explanatory part of the text, at the beginning of this set, it was noted that the cashbook is very nearly the same in single entry as in double entry. The above form is easily understood. All items that are to be posted are placed in the first money column.

Journal. The form on page ii is a single-entry journal. As the student is now familiar with the principles of debit and credit, this form will be readily understood. Just at the left of the first money column it is necessary to write either Dr. or Cr. as a means of determining how the item is to be posted. As only personal items are posted in single entry, only the names of persons appear in the journal.

Bill Book. This book is used for recording all notes received or issued by the business. It is generally divided into two parts, one for bills receivable and the other for bills payable. A full description of all notes received or issued should be recorded in the bill book. All canceled notes should be marked paid in this book.

The notes recorded in the model bill book are from the single-entry set.