Returns and Allowances on Sales. A separate book of entry will. be kept for returns and allowances on sales. In it should be entered all returned goods, rebates, and allowances that are to be credited to customers' accounts. Daily it will be posted to the credit of the customers' accounts affected. It is best to write an explanation in the customer's account in the ledger so as to show the nature of the credit. Monthly, the total should be posted. to the debit of Returns and Allowon Sales and to the credit of Accounts Receivable, the closing entry would be as follows:

Returns and Allowances on Sales

To Accounts Receivable

$57.50

$57.50

Returns and Allowances on Purchases. In the same way, a separate book will be kept for returns and allowances on purchases. Daily it will be posted to the debit of the creditors' accounts affected. An explanation should also be written in the explanatory column of the ledger account. Monthly, the total should be posted to the debit of CASH PAYMENTS, OCTOBER 19

Accounts Payable and to the credit of Returns and Allowances on Purchases.

Accounts Payable Account. After posting the totals from the books of entry to the controlling account of Accounts Payable, the account should contain the items shown in the following account, with a balance from the previous month.

Accounts Receivable Account. After posting the totals from the books of entry to the controlling account of Accounts Receivable, the account should contain the items shown in the account, with a balance from the previous month. (See illustration on page 217)

Purchase Ledger Proof. To prove the purchase ledger, list the balance of the creditors' accounts by names and amounts. The sum of these balances should equal the balance of the Accounts Payable account in the general ledger.

Sales Ledger Proof. To prove the sales ledger, list the balances of the customers' accounts by names and amounts. The sum of these balances should equal the balance of the Accounts Receivable account in the general ledger.

Sales Ledger Proof, October 31, 19—

General Ledger Proof. To prove the general ledger, take a trial balance of differences in the usual way. The Accounts Payable and

Accounts Receivable accounts take the place of the creditors' and customers' accounts respectively.

Exercise 51. Draw a cash book form like the model in this chapter, and make the following entries in it:

September 1. Balance of cash on hand, $5673.80.

Enter this in both the General and Cash Dr. columns.

1.

3.

5.

8.

10.

12.

14.

15.

17.

18.

Received of C. J. Joy cash for invoice of August 22, amounting to $438.55, less 2%.

Paid $25 for office books and stationery.

Discounted at National Exchange Bank, B. L. Pond's note for 30 days, dated August 21, for $850. The bank charges 6%.

The bank has charged your note of July 8, payable
two months after date, with interest at 6%, for $750.
The bank has collected your sight draft, attached to
bill of lading, on F. D. Fellers, for $857.50. The
bank charged 6% collection.

Received $175 of D. G. Minn, on account.
Paid Jackson Motor Co. $1200 for a motor truck.
The bank reports the sight draft for $500, on F. E.
Enders & Co., on account of the shipment to
them, collected, less

%.

Paid cash for repairs to the building owned and used by the business, $72.85.

Paid C. James & Co. for invoice of the 8th, amounting to $563.50, less 2%.

20. Paid cash for sacks and barrels for use in the business, $7.25.

21. Discounted at the National Exchange Bank, C. L. Winters' note for $950, dated August 18, payable 60 days after date, with interest at 6%. The bank charges 6% discount.

25. Paid freight on a consignment of goods received from L. N. Norris, to be sold on commission, $18.50. Received of B. A. Durbin cash for invoice of September 17, amounting to $1012.75, less 2%.

27.

29.

Paid salaries for the month as follows: Bookkeeper
$100; stenographer and clerk, $60; deliveryman, $50.
The proprietor withdrew $75 for personal use.
Close the cash book like the model in this chapter.

30.

Exercise 52. Draw a four-column journal like the model in this chapter and make the following entries in it:

October 3. Accepted C. D. Ray's draft at 30 days, for $387.15, for invoice of September 30.

8.

Drew a sight draft for $500, on J. A. Baer, in favor of
G. L. Lien, and remitted it to him on account.

10. Received H. E. Nacey's note at 30 days, with interest
at 6%, for $375, on account.

15. Accepted D. L. Jasper's draft at 30 days, for $300, on account of the consignment of goods received from him to be sold on commission.

25. Transferred H. E. Nacey's note for $375, dated October 10, with interest at 6%, to M. E. Irving, on account. He agrees to take it at the face value plus the interest to date.

30. Shipped to B. E. Burton & Co. a shipment of merchandise amounting to $436.50, to be sold on commission. Close the journal like the model journal in this chapter.