INSTRUCTIONS TO THE STUDENT. You are now to act as bookkeeper for James M. Hastings, who commences the Flour, Grain and Produce business to-day (April 1), at 146 Elm St., your city. You will receive a salary of $60 per month. Your teacher will furnish you all the vouchers (business papers) and blank forms necessary to perform the numbered transactions which follow. You will get the same experience you would in a real business, so far as it is possible within the limits of a school to give this experience. Bills of merchandise bought, and other business papers, will be given you by your teacher, or will come from a pad of incoming vouchers, just as they would come to the business house by mail. These papers are similar in every respect to those used in business. All papers issued by the business are to be written up by you, and all transactions must be recorded in the books exactly as in real business. As Mr. Hastings attends to the buying and selling, and is absent from the city a large part of the time, it will be necessary that you sign and indorse notes, checks and other negotiable paper during his absence, as well as keep the books of the business. In order to do this, you must have a power of attorney. Mr. Hastings gives this to you, and it forms the first of your incoming vouchers, which you will find in a pad marked “Incoming Vouchers." Remove this power of attorney from the pad and fill out the blank spaces. Read it carefully and see what powers it confers upon you, then fold lengthwise and write on the upper right-hand corner, Power of Attorney, J. M. Hastings, April 1, and the current year, and place the paper in your Voucher File. A power of attorney is a legal document which confers upon the holder the right to perform certain acts specified therein, in the name of some other person who issues the power of attorney. It is generally witnessed by a notary public, who stamps the document with his seal. Such a power of attorney as you have received should be presented at the bank with which the maker does business, and also at the post-office and express office, as it gives the holder the right to indorse post-office and express money orders in the name of the maker. You will receive all goods purchased, deliver the goods sold, and make a full and complete record in the books of the business of all transactions which may occur. The work in your books will not be like the work of any other student. Your selling price-list will be assigned by your teacher from the numbered lists found in the text-book, page 66. Your price-list will be unlike that of any other student, and you must adhere strictly to this price-list in order to get correct results. Do not compare your books with those of other students. The results will be different, and you cannot learn too early the habit of self-reliance. Understand why you make each record, and you will succeed. Before making the entry in your books for any transaction, determine first which accounts are affected by that transaction, and then which account is to be debited and which is to be credited, by applying the rules for debit and credit in the journal exercises to which you will be referred by number. Books Kept.-The books which you will keep in this work are the journal-daybook and the ledger as principal books, and the check book as an auxiliary book. L.M. PROPRIETOR. Jan 25 790 3 Present Worth 685297 55297 705297 705297 Feb, Present Worth 685297 Feb, Rresent Worth Merchandise Loss & Gain 190 19870 Jan 31 Mase.. Jans, Expense 55297 75167 198170 19870 75167 75167 The preceding two pages represent a model ledger properly closed and ruled. The student 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 Merchandise. The debit side of this account is $1736.50 more than the credit side. This indicates that you bought $1736.50 worth more merchandise than you have sold, but you still have on hand (see inventory, page 35), $2416.20 worth of merchandise. It is presumed that you can sell this merchandise for its cost value, $2416.20; if so, Merchandise should be credited for this amount. Place your inventory on the credit side of your Merchandise account in red ink. Write March 31 in the date column, the word Inventory in the explanation column, and $2416.20 in the amount column. (See illustration below; also see illustration in model ledger, page 40.) The footing of the credit side of your Merchandise account, including the inventory, is now $8533.20. The footing of the debit side is $7853.50. As the footing' of the credit side is the larger, it is evident that there has been a gain of $679.70 ($8533.20-$7853.50=$679.70). Place the amount of the gain, in red ink, on the debit side of Merchandise account, writing March 31 in the date column, 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, rule 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 1, 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.) 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.) Expense 150 Mars, Loss |