4. What is the object of checking from the journal to the ledger after posting? 5. Why should the Merchandise account be debited for freight and drayage? 6. Why should the proprietor be debited for money taken from the business? 7. Define a note. 8. What are bills receivable? 9. When should the Bills Receivable account be debited? 10. What are bills payable? II. When should the Bills Payable account be credited? 12. When should the Bills Receivable account be credited? 13. When should the Bills Payable account be debited? 14. Define indorsement. 15. How does the trial balance of March 31st differ from those previously taken? 16. What should the bookkeeper's statement show? 17. Define an inventory. 18. Why is it necessary to take an inventory before making a statement? 19. How is an inventory taken? 20. What price is given the goods? 21. Define accounts of business. Give examples of such accounts. 22. What information should a statement of the losses and gains contain? 23. Define accounts of finance. 24. In what statement should these accounts appear? 26. How is the present worth of any business determined? 25. Explain the method of taking a proof of statement of resources and liabilities. رمی 16500 Net Gain 55297 705297 705291 Feb Resent Worth 6852 97 Seb, Resent Worth Merchandise Jans 10 13 190 2 4 G Expense Loss & Gain Jans, Expense 19870 55297 75167 7,94225 321025 707197 19870 19870 75167 75167 MODEL LEDGER. The preceding two pages represent a model ledger properly closed and ruled. The udent should carefully examine the form and ruling. HOW TO CLOSE THE LEDGER. Close your accounts of business first, then your accounts of finance. Merchandise.-The first account in your ledger which shows a loss or a gain is Merandise. The debit side of this account is $1736.50 more than the credit side. This dicates that you bought $1736.50 worth more merchandise than you have sold, but you ill have on hand (see inventory, page 35), $2416.20 worth of merchandise. It is premed that you can sell this merchandise for its cost value, $2416.20; if so, Merchandise ould be credited for this amount. Place your inventory on the credit side of your Merandise account in red ink. Write March 31 in the date column, the word Inventory in e explanation column, and $2416.20 in the amount column. (See illustration below; so see illustration in model ledger, page 40.) The footing of the credit side of your erchandise account, including the inventory, is now $8533.20. The footing of the debit le is $7853.50. As the footing of the credit side is the larger, it is evident that there s been a gain of $679.70 ($8533.20-$7853.50=$679.70). Place the amount of the in, in red ink, on the debit side of Merchandise account, writing March 31 in the date lumn, the word Gain in the explanation column, and $679.70 in the amount column. See illustration below; also model ledger, page 40.) Foot your Merchandise account, le it, and bring your inventory below the ruled lines on, the debit side. When you commenced the closing process your ledger was in balance, as shown by the trial balance. A double entry ledger should always be in balance; that is, its debits should always equal its credits. In closing the Merchandise account you made a credit entry of $2416.20 with no corresponding debit. By transferring this amount, in black ink, to the debit side of Merchandise on the first line below the ruling under date of April I, you restore the equilibrium of the ledger, so far as this entry is concerned. You also show what the merchandise has cost which you now have on hand. All red ink entries which you make in your ledger must be transferred to the opposite side of the account in which they are made, or to the opposite side of some other account; otherwise the ledger will be out of balance. You made an entry of the gain ($679.70), in red ink, on the debit side of your Merchandise account, which of course throws your ledger out of balance. Transfer this amount, in black ink, to the credit side of the Loss and Gain account, writing the page of Merchandise in the folio column of the Loss and Gain account and the page of Loss ard Gain in the folio column of the Merchandise account. (See illustration below.) Loss & Gain 190 Maris Mase, 1120780 amount of your You have now restored the equilibrium of the ledger and placed the gain from merchandise on the gain side of the Loss and Gain account. All gains of the business are placed on the credit side of this (Loss and Gain) account, and all losses of the business are placed on the debit side. In the space for the explanation we write Mdse. for the purpose of indicating the source from which the gain was produced. The student should examine model ledger on page 40, and trace the gain from the Merchandise account to the Loss and Gain account. Expense. The debit side of the Expense account is $104. As there is nothing on the credit side, it is evident that expense has cost the business $104. Write the amount of the loss on the credit side of the Expense account, in red ink, and foot and rule the account. (See illustration below.) |