FURNITURE BUSINESS Single Entry This exercise, while providing additional practice in bookkeeping, is designed to illustrate certain principles and processes not brought out in the other sets. The most important of these are: (a) Single entry as applied to a mercantile business buying and selling on credit. (b) Determining net profit from books kept by single entry. (c) Changing from single to double entry. (d) The Merchandise account instead of Purchases and Sales accounts. (e) A single Expense account to which all business and operating expenses are charged. (f) Closing the ledger by the "direct" or cross-entry" method instead of through the journal. Single Entry. As defined in the early part of the text, single entry is a method of keeping books which is not based upon scientific principles; a method which may well be employed by any one not trained for bookkeeping work. While single entry exists in various forms, depending upon the type of business or institution it serves, as applied to a mercantile business buying and selling on credit, it is usually defined as a method of keeping books by which only accounts with debtors and creditors are kept in the ledger. The main purpose of the method is accomplished if the merchant is able to determine from the books at all times the amount owing to him by customers, the amount of his indebtedness to creditors, and the state of his cash account. Unlike double entry, the equation of exchange in a business transaction is not recognized in single entry, and hence a transaction is not looked upon as consisting of a debit and a credit item, or items, which must be equal to each other. The same principles apply however to debiting and crediting persons. When an entry is made for a transaction affecting a personal account, it is necessary to indicate whether the person is to be debited or credited by placing next to the name of the person "Dr.," if a debit, and "Cr." if a credit to the person or firm. In the exercise which is to follow, a journal, or a day book, as it is most commonly called in single entry, and a cash book are the only books which will be kept during the first month's work. A model of a single entry day book is shown on page 118. The cash book which will be used during the first month is shown on page 119. This book is of a most elementary form, receipts and payments being entered on the same page, instead of on opposite pages of a double page book. Receipts are entered in the left-hand money column and payments in the right-hand column. No entries for cash received or paid need be made in the day book, debits and credits to personal accounts being indicated in the cash book. Transactions Using a day book and a cash book as explained above and illustrated on pages 118 and 119, record the following transactions for January: January 1, 19- You have commenced a Retail Furniture business with the following investment: a stock of furniture, valued at $1968.75; office furniture, fixtures, and books, valued at $300; cash in the City National Bank, $1245.50. Credit your capital account in the journal for the investment of merchandise and furniture and enter the credit for the cash invested in the cash book. (See model form of journal entry, page 118.) January 1 Bought of the Grand Rapids Furniture Co., Grand Rapids, Mich., on account, 30 days, furniture as per invoice, $1468.20. 1 Paid freight on the above invoice, $62.25. 2 Sold Wm. M. Rand, on account, 1 parlor set, $65; 6 dining chairs at $2; 1 extension table, $15. (Enter in the journal, carrying each item into the first money column and with the total in the second column.) 3 Sold sundry items for cash, as per cash drawer, $104.50. 4 Sold Thomas W. Parsons, on account, 12 dining chairs at $1.50; 6 kitchen chairs at 75; 1 kitchen table, $2.50. 4 Sold E. M. Wardner, on account, 1 oak bedroom set, $55; 2 ash bedroom sets at $15; 1 leather couch, $45. 5 Bought of E. M. Farmer & Co., Detroit, merchandise as per invoice, $550. Gave them in payment your note at 30 days for $250; the balance on account, terms 4 mos., 5/10. (Make two separate journal entries, one crediting Farmer & Co. for the full amount, and the other debiting them for the note.) 5 Paid freight on the above invoice, $27.50. 6 Paid one month's rent, $60; also paid insurance premium, $30, 1% of insurance policy for $3000 on your stock of furniture. 6 Sold Thomas Hunter, for cash, 24 cane-seated chairs at 75¢; 3 settees at $2.25. 6 Sold Emma B. Sheridan, on account, 12 ash bedroom sets at $25; 12 cotton mattresses at $6; 4 dining tables at $12; 24 dining chairs at $1.50. Received cash, $150, to apply book.) (Debit in the journal for the full amount; enter credit for cash in the cash Balance your cash in the cash book, writing the balance in red ink in the smaller column. Rule, foot, and bring down the balance to commence the next week. Your balance at the end of this week should be $1345. You may balance your cash in like manner at the close of each week. 8 Sold C. H. Stratton, on account, Elm House, 6 hair mattresses at $25; 2 oak bedroom sets at $40; 1 parlor set, $125; 2 French plate mirrors at $15. 8 Paid Grand Rapids Furniture Co., on account, $500. 8 Sold sundry items for cash, as per cash drawer, $46.50. 9 Sold Wm. M. Rand, on account, 2 oak bedroom sets at $45; 1 cherry bedroom set, $35; 2 hair mattresses at $30; 1 cotton mattress, $6. Received cash on account, $100. 10 Bought of E. F. Higgins & Co., Michigan City, Ind., furniture as per invoice, $498.75. 10 Paid freight on above invoice, $24.93. 11 Paid cash for books and stationery, $7.50; for a horse and delivery wagon, $275. 12 Sold Mrs. Edward Leary, on account, 6 ash bedroom sets at $20; 1 extension dining table, $12; 12 cane dining chairs at $1. Received cash to apply on account, $44. 12 Sold sundry items for cash, as per cash drawer, $28.75. 12 Received of Thomas W. Parsons cash in full of account, $25. 13 Sold Edward Strang, on account, 1 cotton velour covered couch, $18; 1 Morris chair, $12.50; 4 library chairs at $6.50; 1 library table, $30. 13 Paid for clerk hire, two weeks' salary, $30. Balance your cash book, and bring down the amount, as on Jan. 6. 15 Received of C. H. Stratton his note at 60 days, to pay invoice of the 8th inst. 15 Paid the balance of E. M. Farmer & Co.'s invoice of the 5th inst., $300, less 5% of the full invoice for payment in 10 days. Discount, $27.50; cash paid, $272.50. Debit them in the cash book only for the cash paid, and make a journal entry debiting them for the discount you are entitled to. The following illustrates the entry required. E.M. Farmer lo. Dr. 5% discount on invoice of $550. 2750 15 Cash sales of merchandise, as per cash drawer, $48.50. 16 Bought of the Grand Rapids Furniture Co. merchandise invoiced at $1262.75. 16 Paid freight on above invoice, $63.13. 16 Sold Thomas W. Parsons, on account, 1 oak bedroom set, $75; 1 parlor set, raw silk, $120; 1 library lounge, $18. 17 Paid for advertising, $12. 17 Paid for shoeing horse, $1.25. 17 Sold Richard Vose, on account, 1 parlor set, $110; 1 library table, $20; 4 library chairs at $6; 1 screen, $5.50. 17 Cash sales of merchandise, as per cash drawer, $38.75. 18 Bought of E. M. Farmer & Co., Detroit, net 4 mos., furniture invoiced at $490.50. 18 Paid freight on above invoice, $24.50. 19 Bought of J. D. Lansing & Bros., on account, 90 days, furniture invoiced at $633.25. 19 Paid freight on above invoice, $31.66. 19 Sold Morris Chaney, on account, 1 plate glass beveled mirror, $22.50; 1 leather library chair, $25; 4 jardinière stands at $1.25. 19 Cash sales of merchandise, as per cash drawer, $47.75. 20 Sold H. M. Preston, on account, 1 parlor set, plush, $75; 1 oak bedroom set, $45; 1 pillar extension table, $12; six dining chairs at $1.50. 20 Bought of Phillips Chair Co., Phillipsburg, Ind., net 4 mos., 5/10, furniture as per invoice, $244.75. 20 Paid freight on above invoice, $12.24. 20 Paid for hay and oats, $7.50; clerk hire, $20; postage and express charges, $2.50. 20 Cash sales of merchandise, as per cash drawer, $69.87. 20 Sold Hunter & Allison, on account, 50 cane-seated chairs at $1; 50 school desks, individual lock, at $3.75; 1 teacher's desk, $12.50. Balance your cash, as on Jan. 6 and Jan. 13. 22 Received of E. M. Wardner, to balance account of Jan. 4, cash, $30, and his note at 30 days with interest, $100. 22 Received of Mrs. Edward Leary $15 to apply on account. 22 Cash sales of merchandise, as per cash drawer, $62. 22 Received of Edward Strang $50, to apply on account. 22 Sold Emma B. Sheridan 1 parlor set, silk brocatel, $75; 2 card tables at $2.50; 2 mirrors at $3. 23 Hunter & Allison returned 10 cane-seated chairs at $1. 23 Bought of E. F. Higgins & Co. furniture as per invoice, $235.75. 23 Paid freight on above invoice, $11.75. 24 Accepted E. F. Higgins & Co.'s draft at 30 days for amount of invoice of Jan. 10, $498.75. 24 Sold C. H. Stratton & Co., on account, 5 oak bedroom sets at $35; 1 carved sideboard, $80; 6 card tables at $3. 25 Had C. H. Stratton's note of Jan. 15 discounted at the bank, and received cash for the proceeds. Face of note, $385; discount, 50 days. (Enter the net proceeds in the cash book and make proper explanation.) 25 Sold E. M. Wardner, on account, 1 library desk, $60; 1 revolving book case, $22.50; 1 revolving chair, $8. 25 Bought of the Phillips Chair Co. merchandise as per invoice, $192.85. 25 Paid freight on above invoice, $9.65. 26 Paid J. D. Lansing & Bros. for invoice of the 19th, less 5%. (Journal and cash book.) 26 Cash sales of merchandise, as per cash drawer, $84.60. 27 Received of Hunter & Allison, to balance account, cash, $40, and their note at 4 months, with interest. 27 Sold Edward Strang, on account, 6 dining chairs at $2.50; 1 pillar extension table, $18; 1 writing table, $6.50. Received on account $50. Balance your cash book. 29 Sold Richard Vose, on account, 1 Morris chair, leather, $20; 1 rattan rocker, $7.50. Received $50, to apply on account. 29 Returned to the Phillips Chair Co. 24 cane-seated chairs at $1; 6 rockers at $2. These goods were not as ordered. 29 Cash sales of merchandise, as per cash drawer, $91.40. |