The term "cash" includes specie (gold, silver, nickel and bronze), treasury notes, national bank notes, gold and silver certificates, checks, post-office money orders, express money orders, bank drafts, and certificates of deposit. Rule 4.-Credit the PROPRIETOR with all amounts which he invests in the business. No. 2.—JANUARY 2, 190-. Paid J. C. Smith $75 for one month's rent of store. INSTRUCTIONS.-Whatever costs the business value should be debited. In this instance you have paid $75 rent for the benefit of the business. Rent has cost the business value. It is an expense to the business, hence Expense should be debited. Cash has been disposed of. It has produced value to the business; that is, it has been used by you to pay the rent of your store, hence Cash should be credited. The following illustrates the form of your entry, though the amounts and explanation are different. Expense Paid B.W. Ames 100 January rent in 100 Before attempting to make the above entry, examine the model journal-daybook on page 6 so as to be sure of the form and arrangement. Do not copy the illustrations, but make entries similar to them. Your entries must be made for the transactions given, and your amounts must be the amounts given in the transactions, and not the amounts shown in the illustrations. Leave one blank line after each transaction, and write the date in the center of this line, using ditto marks if the date be the same as that of the preceding transaction. Rule 5.-Debit EXPENSE for all expenses of the business. The expenses of a business include such items as outlays for rent, postage stamps, stationery, fuel, light, clerk hire, etc. Rule 6.-Credit CASH for all amounts which are paid out, or taken from the business. No. 3.-JANUARY 2, 190-. Bought of Scrantom & Wetmore, books and stationery for office use, for which I paid cash, $15. INSTRUCTIONS.-This transaction is of the same nature as the preceding one. Debit Expense (see rule 5); credit Cash (see rule 6). In the right-hand half of the wide space in your journal-daybook is written a complete record of the transaction. This record should be as brief as possible, yet it must show exactly what took place, for should any dispute arise it is this record and not the journal entry nor ledger record that will be used as evidence. No. 4.-JANUARY 3, 190-. 5 tons of coal at $5.50 per ton; Bought of the Upton Coal Co. for cash, for use in store, total, $27.50. INSTRUCTIONS.-As the coal is to be used for fuel, it becomes an expense to the busiMake entry similar to transactions Nos. 2 and 3. Determine the debit by reading rule 5; determine the credit by reading rule 6. ness. No. 5.-JANUARY 3, 190–. Paid postmaster $10.50 for 500 stamped envelopes. No. 6.—JANUARY 4, 190-. per brl., 400 bu. oats at 35¢ per bu.; total, $530. mer INSTRUCTIONS.-Goods which you buy with the intention of selling are called “ chandise." You have bought $530 worth of flour and oats for this purpose, hence Merchandise should be debited. You have paid out or disposed of cash to the amount of $530, hence Cash should be credited. The following is the form of your entry, though the amounts and explanation are different. Rule 7.-Debit MERCHANDISE for all goods which you buy for the purpose of selling. No. 7.-JANUARY 4, 190-. Bought of Charles A. Hubbard, for cash, 1000 bu. oats at 30 per bu.; total, $300. INSTRUCTIONS.-This transaction is similar to the preceding one. be debited (see rule 7); Cash should be credited (see rule 6). Merchandise should No. 8. JANUARY 4, 190-. Bought of M. F. Lynch, for cash, 500 bu. corn at 35¢ per bu.; total, $175. INSTRUCTIONS.-Make entry similar to transaction No. 6. reading rule 7; determine the credit by reading rule 6. Determine the debit by No. 9.-JANUARY 4, 190-. Bought of H. P. Dennis & Co., for cash, 100 bu. rye at 50¢ per bu., 50 brls. flour at $4.10 per brl.; total, $255. No. 10.-JANUARY 5, 190-. Sold Wilson Bros., for cash, 100 bu. rye at 60 per bu., 50 brls. flour at $4.50 per br1.; total, $285. INSTRUCTIONS.-Cash should be debited when it is received, or comes into the business; and Merchandise should be credited when it is sold, or goes out of the business. The following illustrates the form of your entry, though the amounts and explanation are different. Cash Sold Curtis & Co. for cash 485 485 100 bils. Flour 4.50 Rule 8.-Credit MERCHANDISE for all goods which you sell. No. 11.-JANUARY 6, 190-. bu.; total, $140. Sold H. A. Harvey, for cash, 400 bu. oats at 35 per Determine the debit INSTRUCTIONS.-Make entry similar to preceding transaction. by reading rule 3; determine the credit by reading rule 8. No. 12.-JANUARY 6, 190-. Sold W. D. Menter, for cash, 200 bu. corn at 40 per bu.; total, $80. (Entry similar to transaction No. 10.) No. 13.-JANUARY 6, 190-. Sold J. B. Hamill, for cash, 200 bu. oats at 36¢ per bu., 100 bu. corn at 40¢ per bu.; total, $112. POSTING. At such times as may be convenient, the bookkeeper transfers the items from his journal (in which they have been entered daily as the transactions have occurred) to the ledger. Transferring entries from the journal to the ledger is called "posting," and when completed all the debit cash items in the journal will appear on the debit side of the Cash account in the ledger, and the credit cash items in the journal will appear on the credit side of the Cash account in the ledger. (See Cash account in model ledger, page 8.) All debit merchandise items in the journal will appear on the debit side of the Merchandise account in the ledger, and all credit merchandise items in the journal will appear on the credit side of the Merchandise account in the ledger; and the same will be true of Expense account, the proprietor's account, and such other accounts as the business may have. There is no stated time at which posting should be done. In the busy office it is generally done at odd times, when the bookkeeper is not otherwise occupied, but it must be completed at the close of each month, in order to take a trial balance. When posting, the utmost care should be exercised that all debit items be carried to the debit side of the proper accounts in the ledger, and all credit items to the credit side of the proper accounts in the ledger. It is quite a common error to post a debit item to the credit side, or a credit item to the debit side of an account, especially when the student is taught to post alternate debits and credits. The practical bookkeeper rarely posts in this manner, but instead posts first all his debits, then all his credits. As he is at all times posting to only one side of the ledger, he reduces to the minimum the danger of posting an amount to the wrong side of an account. Opening Ledger Accounts.-Examine the model ledger on page 8, and notice the form and arrangement of the accounts. Take a sheet of ledger paper and open accounts as follows: At the top of the first page write your own name. (For form, see account of A. H. Harper in model ledger, page 8.) See that each name is in the center of the page. On the fifth line below write Cash; 12 lines below Cash write Merchandise; 12 lines below Merchandise write Expense. Number your journal page 1; number your ledger page 1. SUCCESSIVE STEPS. FIRST STEP.-All amounts in the debit money column of your journal are carried to the left-hand or debit side of your ledger. All amounts in the credit money column of your journal are carried to the credit or right-hand side of your ledger. The first item on the debit side of your journal is Cash; the amount is $4000. Turn to the Cash account in your ledger and write the amount on the debit side of this account. Place the page of the journal (1) in the folio column of the ledger, and write the date on which the journal entry was made (Jan. 1) in the date column of the ledger, placing the current year above the first entry in the date column for the purpose of indicating the year. The following illustrates the form of your ledger entry. Next enter the page of the ledger (1) in the folio column of the journal. The following illustrates the form. Cash Commenced the 4000 Student's name Flour and Grain business investing 4000 In posting always place the number of the page of the journal from which the amount is posted in the folio column of your ledger, and place the number of the page of your ledger on which the account is written in the folio column of your journal. This is termed "postmarking." SECOND STEP.-All the debits in your journal should be posted first, then the credits. The next debit item in your journal is Expense; the amount is $75. Turn to your Expense account in the ledger and write $75 in the amount column. Place the page of the journal (1) in the folio column, and the date of the transaction (Jan. 2) in the date The following illustrates the form of your ledger entry. column. Place the page of your ledger (1) in the folio column of your journal. (For form of entry, see illustration of journal in first step; also see model journal on page 6.) THIRD STEP.-The next item on the debit side of your journal is Expense; the amount is $15. Turn to the Expense account in your ledger and place the amount on the debit side, writing the page of the journal in the folio column of the ledger, and the date (Jan. 3) in the date column of the ledger. The following illustrates the form of the entry, showing the Expense account as it should appear in your ledger at the present time. Write the page of the ledger in the folio column of your journal. FOURTH STEP.-The next item on the debit side of your journal is Expense; the amount is $27.50. Post this to your ledger, as previously instructed. The following illustrates the form of an Expense account with three items entered thereon. FIFTH STEP. The next item on the debit side of your journal is Expense; the amount is $10.50. Post as before to the left-hand side of Expense account in the ledger. Do not neglect to place the ledger page in the folio column of your journal. SIXTH STEP.-The next item on the debit side of your journal is Merchandise; the amount is $530. Post this to your ledger as previously instructed. The following illustrates the form of the entry. Merchandise Jan 530 |