JANUARY 9, 189-.

No. 14.-CASH PAID ON ACCOUNT. Pay Redfield & Son $300 as part payment of bill No. 9. Count out the cash. Debit-Rule 15; credit-Rule 4. Make the entry as follows:

Redfield & Son Paid them
Cash

acct

on

300

Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). Recount the cash, place it in Cash Paid Out and take a receipt (No. 14) for same. File the receipt following

the instructions for No. 7.

No. 15.-MERCHANDISE BOUGHT ON ACCOUNT. Look at the terms of bill No. 15. Check merchandise (No. 15) with the bill. Verify the additions and extensions of the bill, and, if found correct, O. K. it and store the merchandise. What do Mr. Hammond's check marks and 0. K. indicate? Debit-Rule 11; credit-Rule 16. This entry is similar to Nos. 9 and 12. Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). File the bill, following instructions for No. 9.

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

Bills Receivable. Under this title are entered the written promises of other parties, payable at a future time, which come into the business, as Notes and Accepted Time Drafts. The Special Rules for debiting and crediting this account are:

17. DEBIT Bills Receivable when received 18. CREDIT Bills Receivable when disposed of, by the business. because value is supplied to other accts.

The difference between the sides of the account will show the Bills Receivable on hand. The amount of Bills Receivable on hand is a Resource. The credit side of Bills Receivable account can never be larger than the debit, because a greater amount cannot be disposed of than has been received. Bills Receivable account is debited and credited with the face value of the bills (notes), the account will therefore balance when all have been disposed of. The term Notes Receivable is sometimes used instead of Bills Receivable.

TRANSACTIONS ILLUSTRATING BILLS RECEIVABLE ACCOUNT.

Dec. 1. Proprietor invests Chas. Smith's note of $400. Dec. 3. Received of W. J. Solly his note, on account, $350. Dec. 4. Loaned Sam'l Eichert on his note cash, $100. Dec. 6. Chas. Smith paid his note in cash, $400. Dec. 8. Gave J. A. Luman, W. J. Solly's note, on account, $350.

Paille Receivable

The debit side of this account shows that other persons' notes amounting to $850 have been received by the business. The credit side shows that other persons' notes amounting to $750 have been disposed of, leaving one note of $100 on hand, which is a Resource. Why? Either rule the account or check the debit and credit items that are equal, as illustrated above.

QUESTIONS. What are included under the title Bills Receivable? When is Bills Receivable account debited? When credited? Why cannot the credit side of Bills Receivable account be larger than the debit? What does the difference in Bills Receivable account show? Is the amount of Bills Receivable on hand a resource or a liability? When will the account balance?

JANUARY 10, 189-.

No. 16.-NOTE RECEIVED ON ACCOUNT. This note (No. 16) is in part payment of No. 11. Examine the note carefully. Whose written promise is it? Who should receive credit for this note? Debit-Rule 17; credit-Rule 16. Excepting the amounts and the credit, make the entry as follows:

Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). Place the note in the Cash Drawer, where all notes received from others will be kept until paid or otherwise disposed of. Notes are not cash, and are kept in the Cash Drawer for convenience only. No receipt is given when a note is received, as when the note is paid it will be indorsed and returned to the maker, thus becoming a receipt.

JANUARY 11, 189-.

No. 17.-MERCHANDISE SOLD ON ACCOUNT. Following previous instructions, make out a bill for this order (No. 17). Satisfy yourself that you have made no error in calculations. Debit-Rule 15; credit-Rule 12. This entry is similar to what entry? Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). Place the bill and required merchandise in the proper receptacle. File the order properly, observing previous instructions.

JANUARY 12, 189-.

No. 18.-MERCHANDISE PURCHASED ON ACCOUNT. Check this bill (No. 18) with merchandise (No. 18). Verify the calculations, and, if found correct, O. K. the bill, observing previous instructions. Store the Merchandise. Note the terms of the bill. Debit-Rule 11; credit-Rule 16. Make the entry, relying upon the information obtained from reading the above rules. Give the reasons mentally for the debit (Rule 1) and credit (Rule 2). File the bill properly.

Study the following account so that you will be able to answer the questions.

Bills Payable. Under this title are to be entered our own written promises issued to other parties, by the business, payable at a future time, as Notes and Accepted Time Drafts. The Special Rules for debiting and crediting this account are:

19.

DEBIT Bills Payable when redeemed 20.
(received back) by the business.

CREDIT Bills Payable when issued, be

cause value is supplied to other accounts.

The difference between the sides of the account will show the amount of Bills Payable outstanding. The amount outstanding is a Liability. The debit side of the Bills Payable account cannot be larger than the credit, because a greater amount cannot be redeemed than has been issued. Bills Payable account is debited and credited for the face value of the bills (notes). The account will therefore balance when all have been redeemed. This account is sometimes called Notes Payable instead of Bills Payable.

TRANSACTIONS ILLUSTRATING BILLS PAYABLE ACCOUNT.

May 1. Gave W. W. Scott our note on account, $400. May 2. Accepted Jos. Frey's draft on us, $200. May 3. Gave John Hauser our note for $350. May 30. Paid note favor of W. W. Scott, $400.

Bills Payable

The above account shows that notes (written promises) amounting to $950 have been issued by the business, and one note of $400 has been redeemed (paid), leaving a balance of $550 unpaid, which is a Liability. Bills Payable account is ruled or checked similar to Bills Receivable account or personal accounts.

QUESTIONS. What are included under the title Bills Payable? When is Bills Payable account credited? When debited? Why cannot the debit side of Bills Payable account be larger than the credit? What does the difference in Bills Payable account show? Is the amount outstanding a Liability or a Resource?

JANUARY 14, 189-.

No. 19.-NOTE GIVEN ON ACCOUNT. Using voucher No. 16 as a model, write a note for $325 favor of Kaufman, Straus & Co. to apply on account. Your note will read as follows: (Your place) ............................., JAN. 14, 189-.

$325.

00

Thirty days after date I promise to pay Kaufman, Straus & Co., or order, Three Hundred Twenty-five 10% Dollars, in college currency, value received, at my office.

No. 1. Due Feb. 13, 189-.

C. W. HAMMOND,

(your name)

Attorney.

NOTE.-Do not add days of grace to notes and time drafts, in this work.
Debit-Rule 15; credit-Rule 20.

Make the entry as follows:

Kaufman Straus & Co Gave them our

Bills Pay

te on acct

note

Give the reasons mentally for the debit and credit. Place the note in Vouchers for Others. Replace the note used as a model.

No. 20.-OPENING AN ACCOUNT WITH THE CITY BANK. Mr. Hammond has made arrangements with the City Bank of this city to deposit therein for safety and convenience the cash received by the business. All transactions with the bank are recorded in the Check Book. No journal entry is required when a deposit is made, the cash so deposited being considered practically as on hand, because it is not paid out in the sense of being disposed of, as the bank simply becomes the custodian of it in place of our Cash Drawer. You will now make a deposit of $5000. Count out the cash. Study the following form of deposit ticket, after which write one like it. Next take your Check Book and make a record of your deposit on the stub as follows:

Take the cash, deposit ticket and Pass Book to the bank. In case there is no regular bank, your teacher will receive your deposits and give you credit for them in your Pass Book. You will be required to write the firm's signature in a book for that purpose; as you write it in this book, you must always write it when signing the business papers of the firm. Before leaving the bank, see that you have been credited with the proper amount in your Pass Book.

JANUARY 15, 189-.

No. 21.—MERCHANDISE SOLD ON ACCOUNT. Make out a bill for this order (No. 21). Verify your calculations. What account has received value? What account has supplied value? In making this entry apply the General Rules for debiting and crediting. Place the bill and the required merchandise in the proper receptacle. File the order as previously instructed.

JANUARY 16, 189-.

No. 22.-CHECK RECEIVED ON ACCOUNT. This check (No. 22) is received in part payment of No. 17. Examine and study the form carefully so as to be able to draw up one properly when required to do so. Debit-Rule 8; credit-Rule 16. This entry is similar to No. 13. Give the reasons mentally for debiting and crediting. Place the check in the Cash Drawer. Why? No receipt is necessary when payment is made by check. When the check is returned to the maker by the bank on which it is drawn, it is filed as evidence of payment.

A Check is a written order by a depositor on his bank requesting the bank to pay a certain sum out of his deposit to the party named in the check.

Second Report. Review the classes of accounts which have been presented and the General Rules for debiting and crediting. Carefully inspect all the vouchers intended for others and rewrite those which do not show evidence of your best efforts. Make a report, using a Report Blank, and present same, together with the business papers for others and all your bookkeeping work, to your teacher.

Having had all your work approved, proceed to copy it into your regular Journal. Be prepared to answer all questions pertaining to the classes of accounts which have been presented. Having answered all questions satisfactorily, you may proceed with the next transaction.

JANUARY 17, 189-.

No. 23.-CHECK GIVEN ON ACCOUNT. Pay Henry Knefely & Son by check $250 to apply on account. Take your Check Book, fill out the stub of the check as shown below, then write the check.

Tear out the check and place it in the Cash Paid Out receptacle. Always fill out the stub before writing a check. Subtract the amount of the check from the deposit. When Knefely & Son present this check at the bank it will be paid out of the deposit you have made, and in order to keep the amount in the bank and your Check Book balance alike, you must subtract every check that is issued. Make all entries for checks issued from the stubs of the checks. Debit-Rule 15; credit-Rule 4. This entry is similar to all entries for cash paid out.

JANUARY 18, 189-.

No. 24.—MERCHANDISE SOLD ON ACCOUNT. Bill the goods called for in this order (No. 24). Place the terms, "20 das.," on your bill. Recalculate the items. What account has received value? What account has supplied value? In making this entry apply the General Rules (1 and 2) for debiting and crediting. Place the bill and required merchandise in Vouchers for Others. File the order.