11. What do you understand by the term " merchandise"? 12. When should the Merchandise account be debited?

13. When should the Merchandise account be credited? 14. Define posting.

15. When should posting be done?

16. Upon which side of the ledger accounts should all items in the left-hand money column of the journal appear? Upon which side, all those in the right-hand money column of the journal?

17. What is the object of a trial balance?

18. How often should a trial balance be taken?

19. What names should appear in a trial balance?

20. Why should the debit and credit columns of a trial balance show equal footings?

WORK FOR THE STUDENT.

TO BE ENTERED IN THE JOURNAL-DAYBOOK.

No. 1.-FEBRUARY 1. I (your name) engage in the Flour and Grain business, investing cash, $2500.

INSTRUCTIONS.-Write February I at the top of your journal-daybook (see model, page 6). Determine the debit by reading rule 3, page 10; determine the credit by reading rule 4, page 11. For form of entry similar to this, see transaction No. 1, page 10. No. 2.-FEBRUARY 2. Paid Henry Jones one month's rent of store, in cash, $50.

INSTRUCTIONS.-Determine the debit by reading rule 5, page 11; determine the credit by reading rule 6, page 1I. For form of entry similar to this, see transaction No. 2, page 11.

No. 3.-FEBRUARY 3. Bought of R. C. Thompson, for cash, 200 brls. flour at $4 per brl.; total, $800.

INSTRUCTIONS.-Determine the debit by reading rule 7, page 12; determine the credit by reading rule 6, page 11. For form of entry similar to this, see transaction No. 6, page 12.

No. 4.-FEBRUARY 4. total, $225.

Sold A. H. Warren, for cash, 50 brls. flour at $4.50 per brl.;

INSTRUCTIONS.-Determine the debit by reading rule 3, page 10; determine the credit by reading rule 8, page 12. For form of entry similar to this, see transaction No. 10, page 12.

No. 5.-FEBRUARY 6. Bought from Winter Bros., for cash, 600 bu. of corn at 354 per bu.; total, $210. (Entry similar to transaction No. 3.)

No. 6.-FEBRUARY 7. Sold Wm. Archer & Co., for cash, 50 brls. flour at $4.50 per brl., 200 bu. corn at 40¢ per bu.; total, $305. (Entry similar to transaction No. 4.)

No. 7.-FEBRUARY 8. Bought of Arthur McMillan, for cash, 100 brls. flour at $3.90 per brl., 1200 bu. oats at 33¢ per bu.; total $786. (Entry similar to transactions Nos. 3 and 5.)

No. 8.

FEBRUARY 9. Paid clerk hire, in cash, $15, insurance, $10; total, $25. (Determine the debit by reading rule 5, page 11.)

No. 9.-FEBRUARY IO.

Sold E. H. French & Co., for cash, 25 brls. flour at $4.50 per brl., 300 bu. oats at 38 per bu., 200 bu. corn at 40 per bu.; total, $306.50.

No. 10.-FEBRUARY 12.

per bu.; total, $110.

Bought of John C. Cornell, for cash, 200 bu. rye at 55%

No. 11.-Open the following accounts in your ledger, leaving space as indicated. (Student's name), top of page 1. Merchandise, 11th line, page 1. Expense, top of

page 2. Cash, top of page 3.

No. 12.-Post the transactions from your journal-daybook to your ledger. For explanation of posting, see page 13.

No. 13.-Take a trial balance from your ledger. See form and explanation on page 18.

No. 14.—Submit your journal-daybook, ledger and trial balance to your teacher for inspection and approval.

GENERAL RULE FOR PERSONAL ACCOUNTS.

Persons are DEBITED when they become indebted to the business, or when the business pays them on account.

Persons are CREDITED when the business becomes indebted to them, or when they pay the business on account.

Enter the following transactions in your journal-daybook, commencing directly under those that you have previously entered for the month of February.

No. 15. FEBRUARY 14. Bought of A. J. Lane, on account, 30 days, 250 bu. oats at 33 per bu.; total, $82.50.

INSTRUCTIONS.-Whenever you buy goods from a person without paying for them at the time of purchase, the goods are said to be bought on account, and the person from whom you buy should be credited, because he has produced value to your business by delivering to you a certain quantity of goods. In this instance you have received merchandise, hence Merchandise should be debited. The merchandise was purchased from A. J. Lane, who merely has your oral or implied promise to pay, hence A. J. Lane should be credited. The following illustrates the form of your entry, though the amounts and explanation are different.

Mdse.

Boton acct 30 days 70
P.M. Smith poobu. Corn
200-bu.

70

Rule 9.—Whenever you purchase goods without paying for them at the time of purchase, credit the PERSON from whom the goods are bought.

No. 16. FEBRUARY 15. Bought of W. H. Stevens, on account, 600 bu. oats at 334 per bu.; total, $198.

INSTRUCTIONS.—This transaction is similar to the preceding one. Debit Merchandise (see rule 7); credit W. H. Stevens (see rule 9).

No. 17. FEBRUARY 15. Bought of F. A. Smith & Co. on account, 10 days, 300 bu. rye at 55 per bu.; total, $165. (Determine the debit by reading rule 7; determine the

credit by reading rule 9.)

No. 18.-FEBRUARY 16.

per bu.; total, $72.

Sold W. A. Scott on account, 10 days, 200 bu. oats at 36¢

INSTRUCTIONS.-Whenever you sell merchandise without receiving payment therefor at the time of sale, the goods are said to be sold on account, and the person to whom the goods are sold should be debited. In this instance W. A. Scott has purchased from you $72 worth of merchandise without making payment therefor; you simply have his oral or

implied promise to pay. W. A. Scott has cost the business value; that is, he has received merchandise from your business, hence W. A. Scott should be debited and Merchandise credited. The following illustrates the form of your entry, though the amounts and explanation are different.

Geo. C-Chase
Mdse.

Sold on acct 30 da, 450
100bels.

Goldon acctsed

bols. Flour 4.50

450

Rule 10.- Whenever you sell goods without receiving payment therefor at the time of sale, debit the PERSON to whom the goods are sold.

No. 19.-FEBRUARY 17. Sold S. A. Dodge & Co. on account, 60 days, 50 brls. flour at $4.75 per brl.; total, $237.50.

INSTRUCTIONS.-This transaction is similar to the preceding one. & Co. (see rule 10); credit Merchandise.

Debit S. A. Dodge

No. 20.—FEBRUARY 17. Sold J. S. Sumner, on account, 500 bu. rye at 60¢ per bu., 500 bu. oats at 36¢ per bu., 600 bu. corn at 404 per bu.; total, $720. (Determine the debit by rule 10; determine the credit by rule 8.)

No. 21. FEBRUARY 19. Sold E. H. French & Co. on account, 10 days, 50 brls. flour at $4.60 per brl., 200 bu. oats at 36¢ per bu., 100 bu. corn at 40¢ per bu.; total, $342. No. 22.-FEBRUARY 20. Sold E. B. Adams, for cash, 400 bu. oats at 38¢ per bu.; total, $152. (Determine the debit by rule 3; determine the credit by rule 8.)

No. 23.—FEBRUARY 23. Bought of Rice, Miller & Co. on account, 30 days, 250 bu. rye at 57¢ per bu., 600 bu. corn at 35¢ per bu.; total, $352.50. (Entry similar to transaction No. 15.)

No. 24.-FEBRUARY 24. Sold Roberts Bros., for cash, 200 bu. rye at 60¢ per bu.; total, $120.

No. 25.-FEBRUARY 26. W. A. Scott has paid you $72 cash in full settlement of his

account.

INSTRUCTIONS.-In transaction No. 18 W. A. Scott became indebted to you to the extent of $72. He now pays this amount, thus getting out of your debt. He has produced value to the business to the amount of $72 by giving you cash, hence Cash should be debited and W. A. Scott credited. The following illustrates the form of your entry, though the amounts are different.

Rule 11.—Whenever a person pays you on account, credit that PERSON.

No. 26.—FEBRUARY 26. Received cash of J. S. Sumner, $100, to apply on account. INSTRUCTIONS.-This transaction is similar to the preceding one, with the exception that the explanation should read To apply on account instead of In full of account.

No. 27.-FEBRUARY 27. Paid A. J. Lane cash, $82.50, in settlement of his account. to date.

INSTRUCTIONS.-In transaction No. 15 you became indebted to A. J. Lane to the amount of $82.50. You now get out of his debt by paying him in cash; thus A. J. Lane costs the business value, hence A. J. Lane should be debited; cash has been disposed of, hence Cash should be credited.

The following illustrates the form of your entry, though the amounts are different.

P.M. Smith
Cash.

In full of acch

70

Rule 12.--Whenever you pay a person on account, debit that PERSON.

No. 28. FEBRUARY 28. Paid W. H. Stevens cash, $100, to apply on account. INSTRUCTIONS.-Make entry similar to preceding transaction, with exception that the explanation should read To apply on account instead of In full of account.

No. 29.-FEBRUARY 28. Received cash of E. H. French & Co., $342, in payment of bill of 19th inst. (Entry similar to transaction No. 25.)

No. 30.-FEBRUARY 28. Sold Emerson & Sons, on account, 100 bu. corn at 40¢ per bu., 60 brls. flour at $4.50 per brl., 100 bu. oats at 35¢ per bu.; total, $345. (Determine the debit by rule 10; determine the credit by rule 8.)

No. 31.—FEBRUARY 28. Paid for postage and advertising $12, cash. (Determine the debit by rule 5; determine the credit by rule 6.)

No. 32.-Open the following new accounts in your ledger, leaving space as indicated. W. A. Scott, 11th line, page 4. S. A. Dodge & Co., 22d line, page 4. J. S. Sumner, 33d line, page 4. E. H. French & Co., top of page 5. Emerson & Sons, 11th line, page 5. A. J. Lane, 11th line, page 7. W. H. Stevens, 22d line, page 7. F. A. Smith & Co., 33d line, page 7. Rice, Miller & Co., top of page 8.

No. 33.-Post the entries from your journal-daybook to your ledger, according to instructions given on page 13. Do not open new accounts in your ledger with Cash, Merchandise, and Expense, but post the items under the old accounts, as this is simply a continuation of your business.

The following illustrates the form of a Merchandise account, showing how it should appear in the ledger with the pencil footings for the first trial balance. (This is not your Merchandise account).