c) To put the accrued liability inventories of expense and interest on notes payable in the respective accounts. Credit Accrued Liability Inventories. d) To close the trading accounts into Merchandise Trading. e) To close Merchandise Trading account into Profit and Loss. f) To close the profits in the Profit and Loss section into Profit and Loss. g) To close the losses in the Profit and Loss section into Profit and Loss. h) To close the balance of the Profit and Loss account into the partners' capital accounts. The balances are closed into the partners' capital accounts because no personal accounts are necessary in this set. 11. Rule each account that balances. 12. Balance all other accounts except those that have but one item in them. 13. Compare each account after closing with the amount of that account in the balance sheet you have made. The amounts should agree. 14. Copy the Trading and Profit and Loss statements and the Balance Sheet in your books. 15. Submit all your books to your teacher for correction. Exercise 67. Draw forms for the necessary books of entry and make the entries for the following transactions: August 1. Received of the Mason Commission Co., Davenport, Iowa, a consignment of 36 cases eggs, 36 doz. each, to be sold on commission. 2. Paid freight on this consignment, $10.65, and drayage, $3.50. 3. Sold 12 cases eggs at 29¢ a dozen to M. E. Sargent for cash. 5. Sold 8 cases eggs at 30¢ a dozen to J. A. Murray, on account. 7. Paid the sight draft of the Mason Commission Co., for $100. 9. J. A. Murray returned one case of eggs as unsalable. Gave him credit for them. 10. Sold 10 cases eggs at 28¢ a dozen to M. I. Long, on account, 10 days. 12. Sold 6 cases eggs at 31¢ a dozen to J. B. Marvin for cash. 13. Rendered account sales. Charged the following items in addition to those already entered: Insurance, $1.42, storage, 2¢ per case per day, and commission, 5%. Credited the net proceeds to their account. Exercise 68. a) Draw the form of a consignment ledger and post to it the transactions of Exercise 67 that affect the consignment account. b) Find the net proceeds. c) Make the entries in journal form for the transactions on August 13 to show the debit and credit effect of the transactions. Exercise 69. You hold C. L. Colby's 90-day note for $750 and their account shows a balance of $312.25. He is bankrupt and, with other creditors, you accept payment at 65 cents on the dollar. A check is received on that basis. Make the necessary entries. Exercise 70. On March 10, Townsend & Co. bought 50 shares of First National Bank stock, of a par value of $100 each, at 125, brokerage, %. On April 1, a dividend of 2% was received on the stock. On May 15, 30 shares of First National Bank stock were sold at 1271, less% brokerage. On May 20, 20 shares of First National Bank stock were sold at 1243, less brokerage, Make the necessary entries for %. these transactions and show the ledger accounts closed up. Exercise 71. From the following mixed Merchandise account and an inventory of $5876.15 make four trading accounts and show each one closed, under date of March 31. Exercise 72. J. E. Jackson and M. L. Elliot are engaged in a partnership business under the firm name of J. E. Jackson & Co. On January 1, J. E. Jackson invested $8000 and M. L. Elliot, $6000. J. E. Jackson's personal account shows a credit of $75 on January 15 and of $75 on January 31. M. E. Elliot's personal account shows a credit of $60 on January 15 and of $60 on January 31. On January 10, J. E. Jackson withdrew $32 and on January 20, $25. On January 8, M. E. Elliot withdrew $40 and on January 22, $15. Adjust interest at 6%, under date of January 31. REVIEW QUESTIONS 1. What are the advantages of a loose-leaf consignment ledger? 2. What items in the consignment ledger are debits and which credits? 4. Give the columns of the commission sales book and tell how each is posted daily and monthly. 5. In posting the commission sales book, what should be done with each item sold from a consignment? 6. Why is a column for consignments kept on the Cash Payments? How is it posted? 7. How are purchases of merchandise entered in this set? 8. Give the closing entry for the journal. 9. What is the object of the accounts sales register? 10. What columns of the account sales register are posted and why? 11. How do you prove the consignment ledger? 12. What is meant by the net proceeds of a consignment? 13. How is an allowance to a customer for a sale entered? How is it posted? 14. What entry is made when the business pays a draft on account of a consignment? 15. What entry is made when the business accepts a draft on account of a consignment? 16. What is the meaning of an open consignment with the debit side the larger? MISCELLANEOUS QUESTIONS AND PROBLEMS 1. A firm is in the retail implement business and receives many notes in payment of sales. It discounts all of these notes at once. How would you modify your books of entry so as to give the necessary information with less work? 2. In the firm of Walker & Co., J. C. Walker's capital is $8000 and M. E. Miller's capital is $6000. They share profits and losses equally. They agree to take in C. L. Frost as a third partner on the payment of $8000, $2000 of which is paid for the good will of the business. What entries should be made? What 3. Two persons exchange each other's notes for $2000. would probably be the object of such a transaction? What entry would be made on the books of each? 4. On accepting a position as bookkeeper you find that the cash is short $100. What methods would you take to find the shortage? If it could not be found, what entry would you make with the consent of the proprietor? During the 5. J. A. West began business with a capital of $7500. year he withdrew $1250. At the end of the year a statement of assets and liabilities showed assets of $9375 and liabilities of $15785. Has he lost or gained, and how much? Show his capital account closed up. 6. Under what circumstances would it be advisable to keep more than one Sales account? What changes would you make in the books of entry if you did? 7. An auditor found, in auditing the books of a business after it had been closed, that an inventory of $4750 had been entered as $5750. Unpaid wages accrued of $40 had not been entered and commission earned by the business amounting to $25 had not been entered. How would you correct the mistakes? 8. A, the owner of a store building, used by his business, wishes his books to show that his expense for rent earned by the building each month is $150. How should he show this on his books? 9. A check for $150, which you received from C. A. Stockton and credited to his account is returned marked "No funds." What entry would you make? 10. A business borrows $5000 from a bank on its note and gives as collateral security eight Illinois Central $1000 bonds. What entry and records should be made? 11. The books of a business have been destroyed by fire. From card records it is found that at the time of making the last statement, the goods on hand amounted to $7385, and that there was bought during this time goods amounting to $7510. From these card records it was also found that there was on hand at the time of the fire an inventory of $5480. The insurance company paid $4275 for the merchandise destroyed. Sales were made at a profit of 20% on the sales. Does the Merchandise Trading account show a profit or a loss and how much? 12. A note of H. A. Faber, for $500, which Brown & Co. had discounted at the bank is protested for non-payment. As indorser, Brown & Co. must pay the face of the note, the interest at 6% for 90 days, and the protest fees, 50¢. What would the entry be? |