O. K.'d by the buyer. Pay the bill, placing the cash in the Cash Paid Out receptacle. In paying parties other than your teacher, always place the cash in this receptacle, from which it will be delivered to your teacher, who represents these parties. Debit—Rule 11, page 14. Credit-Rule 4, page 9. This entry is similar to entry for No. 2.

NOTE.-The student is requested to

and every voucher received.

write his address where indicated and complete the date on each

Give the reason mentally for the debit-Rule 1; credit-Rule 2. File the bill, following instructions given for No. 2. Do not proceed with the next transaction until you thoroughly understand this one.

Study the following account and be prepared to answer the questions.

Expense Account. Under this title are to be entered all amounts expended for carrying on the business; as rent, office books and office furniture, clerks' salaries, postage, etc. If it is desired to show results in detail, separate accounts must be kept with Salaries, Rent, Office Furniture, etc., instead of including them all under the general heading, Expense. When separate accounts are kept, apply the rules for Expense account, as they are subdivisions of this account.

The Special Rules for debiting and crediting Expense account are: 13. DEBIT Expense when it costs the busi

ness value.

14.

CREDIT Expense when it supplies value from anything previously debited to Expense.

TRANSACTIONS ILLUSTRATING EXPENSE ACCOUNT.

Oct. 1. Paid rent, $12. Oct. 2. Bought two tons coal, $9.50. Oct. 3. Bought postage stamps, $5. Oct. 7. On selling out the business, sold the coal on hand for $6.

This account shows the expenditures (value received by Expense) for carrying on the business to be $26.50, and the amount "supplied" by selling the coal to be $6. Deducting the credit amount from the debit gives $20.50, the loss. Expense account generally shows a loss.

QUESTIONS. What is to be entered under the title Expense? What must be done if it is desired to exhibit results in detail? For what is Expense debited? For what credited? What does Expense account generally show?

JANUARY 2, 189-.

No. 6.-CASH PAID FOR STATIONERY AND BOOKS. Bill No. 6 is for stationery and books, which were received yesterday. It has been checked and O. K.'d by Mr. Hammond, which shows that all the items were received by him and the prices are correct.

Examine

the bill to see that no errors exist. Pay the bill, placing the cash in Cash Paid Out. Determine the account to be debited by reading rule 13, page 17. Determine the account to be credited by reading rule 4, page 9. Substituting the proper amounts, make the following entry:

Expense
Cash

Bot stationery.
books for cash

650

Give the reason mentally for the debit Rule 1; credit-Rule 2. File the bill as previously instructed. Consult your teacher about anything that you do not fully understand.

No. 7.-RENT PAID IN CASH. According to the terms of his lease, Mr. Hammond is to pay $100 per month for rent of store at 122-124 Main Street. Pay the rent for the month of January, placing the cash in Cash Paid Out, and take a receipt (No. 7) for same. DebitRule 13, page 17. Credit-Rule 4, page 9. This entry is similar to the entry for No. 6, with the exception of the explanation (Day Book entry), which is as follows: "Paid January rent." Give the reason mentally for the debit-Rule 1; credit-Rule 2. Place the receipt on the Voucher File. Are you doing everything in the exact order indicated?

JANUARY 3, 189-.

No. 8.-MERCHANDISE SOLD FOR CASH. Mr. Hammond has sold your teacher the following: 1000 bu. Oats, 1000 bu. Corn, for cash at the prices given in your selling price list. Follow instructions for No. 4 and make out the bill, after which deliver the goods and bill to your teacher, receiving the cash for same. Debit-Rule 8, page 9; credit-Rule 12, page 14. Explanation excepted, this entry is similar to No. 4. Give the reason mentally for the debit (Rule 1) and credit (Rule 2.) Recount the cash and place it in the Cash Drawer. Study the following and be prepared to answer the questions.

Personal Accounts. If a person buys goods from us, to be paid for at a future time, he receives value from the business. At the time he pays for them he supplies value to the business. If we buy of a person, in like manner he supplies the business with value. At the time we pay him, he receives value from the business.

For personal accounts we have the following Special Rules:

15. DEBIT a person when he receives value 16.

CREDIT a person when he supplies value to the business on account.

from the business on account. When a person buys goods, without paying for them at the time of purchase, the transaction is said to be on account (on credit). If the debit side of a personal account is larger than the credit, he owes us the difference, and this difference is a Resource. If the credit side of a personal account is larger than the debit, we owe him the difference, and this difference is a Liability. An account exhibits a Liability if it represents an amount owing by the business. Accounts with firms and corporations are considered Personal accounts.

TRANSACTIONS ILLUSTRATING A PERSONAL ACCOUNT.

Dealings with Edward F. Becker. Aug. 1. Sold him merchandise on account, $65. Aug. 2. Received cash of him on account, $25. Aug. 3. Received his note at 60 days for $40. Aug. 4. Loaned him $30.

Edward Becker, La

5. Market St City

40

The debit side of this account shows that Edward F. Becker has received value amounting to $95 from our business, and the credit side shows that value amounting to $65 has been supplied to our business by him, leaving a balance of $30, which is a resource to the business. Why? Never rule a personal account unless it balances. See above illustration. In many business houses personal accounts are never ruled.

When personal accounts are not ruled, it is a good plan to check the payments when such payments equal one or more items on the opposite side. This is done by placing neat check marks (√) at the time of posting on the double vertical rulings directly to the left of both the debit and credit items that are equal to each other, as illustrated above.

NOTE. In the above illustration the items that balance are both ruled and checked. You are to either check or rule the items that balance, as your teacher may direct. Do not fail to consult your teacher.

TRANSACTIONS ILLUSTRATING A PERSONAL ACCOUNT.

Dealings with Frank J. George. Nov. 1. Bought merchandise of him on account, $450. Nov. 2. Paid him cash on account, $150. Nov. 3. He sold us merchandise on account, $200.

The credit side of this account shows that Frank J. George has supplied value to our business amounting to $650; the debit side shows that he has received value amounting to $150 from our business, leaving a balance of $500, which is a liability to the business. Why?

QUESTIONS. When is a person to be debited? When credited? If a person buys goods and does not pay for them at the time of purchase, what is said of the transaction? When a person's account is debited for more than it is credited, does he owe us or do we owe him? Is the difference a resource or a liability? How is it when the credit side of a personal account is the larger? Is the difference a resource or a liability?

JANUARY 4, 189-.

No. 9.-MERCHANDISE BOUGHT ON ACCOUNT. This bill (No. 9) of merchandise Mr. Hammond has bought on account. He will owe the parties until the bill is paid. Are the prices correct? How can you tell? Verify the addition and calculations and O. K. it, if found correct. Store the merchandise if found to agree with the bill. Debit-Rule 11; credit-Rule 16. Make an entry like the following, substituting the correct amounts for the amounts given:

Mase
Redfield Son

Bot bill of Jan 3

on acct

1114

50

Give the reasons mentally for the debit (Rule 1) and the credit (Rule 2). This bill is Fold the bill lengthwise, face outward, and write across the face Place same on the Invoice File. Place all subsequent bills bought

not receipted. Why not? "Entered" and the date. on account on this file.

No. 10.-MERCHANDISE SOLD ON ACCOUNT. This order (No. 10) Mr. Hammond has secured from A. P. Batson. Make out the bill, using the prices given in your price list, but do not receipt it. No terms are placed on the bill when the sale is on account and the time is not given. Place the number (10) of the order on the bill. Go over the calculations and addition to see that you have made no errors. Debit-Rule 15; credit-Rule 12. Make the entry as follows, placing the correct prices, extensions and amounts instead of the ones given:

Give the reason mentally for the debit (Rule 1) and credit (Rule 2). Select the merchandise and place it together with the bill in "Vouchers for Others" receptacle. Fold the order lengthwise, face outward, write across the face "Filled" and the date; after which place it on the Voucher File.

JANUARY 6, 189-.

No. 11.-MERCHANDISE SOLD ON ACCOUNT. Make out the bill for this order (No. 11) following previous instructions. Place the order number on this and every subsequent bill. Verify your extensions and addition. Debit-Rule 15; credit-Rule 12. Excepting the items and amounts, this entry is similar to entry for No. 10.

Give the reasons for the debit (Rule 1) and the credit (Rule 2). File the order as previously instructed. Place bill and the required merchandise in Vouchers for Others.

First Report. Carefully review the General Rules for debiting and crediting and the classes of accounts which have been presented. Take a Report Blank and make a report of cash and all merchandise and vouchers intended for parties with whom the business has had dealings. Present same, together with the vouchers, cash, and merchandise intended for others, and your bookkeeping work to your teacher for inspection and approval; before so doing, examine every voucher carefully to see that you are not presenting work that is a discredit to your ability. Poor work will not be accepted; your best work will be none too good. Rewrite all work that is not your best before handing it in.

If your work meets your teacher's approval, make a neat and careful transcript of your journal sheet into your regular Journal. When completed, present it to your teacher, and be prepared to answer all questions he may ask you pertaining to the Cash account, Proprietor's account, Merchandise account, Expense account, Personal accounts, and the General Rules for debiting and crediting. You may then take up the next transaction.

JANUARY 8, 189-.

No. 12.-MERCHANDISE PURCHASED ON ACCOUNT. Bill No. 12 is bought on account. When the terms are not given, it is understood that the purchase is on account. Check the bill with the merchandise (No. 12). Verify the calculations; if everything is found to be correct, O. K. it and store the merchandise. In case you discover an error, report same to your teacher. Debit-Rule 11; credit-Rule 16. This entry is similar to entry for No. 9. Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). File the bill, following instructions for No. 9.

No. 13.-CASH RECEIVED ON ACCOUNT.-This cash (No. 13) is received in part payment of the bill purchased on the 4th inst. Count it carefully. Debit-Rule 3; credit— Rule 16. Make the entry as follows, substituting the correct amounts for the amounts given:

Cash

HP Batson Reed on acet

500

Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). Place the cash in the proper receptacle. Write a receipt for the same, using voucher No. 7 as a model. Excepting the amount, your receipt should read as follows: