15 Bought of F. A. Smith & Co., on account, 10 days, 150 bu. rye at $1.10 per bu.; total, $165. 16 Sold W. A. Scott on account, 10 days, 100 bu. oats at 72¢ per bu.; total, $72. 17 Sold S. A. Dodge & Co., on account, 60 days, 25 bbl. flour at $9.50 per bbl.; total, $237.50. 17 Sold J. S. Sumner, on account, 250 bu. rye at $1.20 per bu., 250 bu. oats at 72¢ per bu., 270 bu. corn at 90¢ per bu.; total, $723. 19 Sold E. H. French & Co., on account, 10 days, 25 bbl. flour at $9.20 per bbl., 100 bu. oats at 72¢ per bu., 50 bu. of corn at 90¢ per bu.; total, $347. 20 Sold E. B. Adams, for cash, 200 bu. oats at 76¢ per bu.; total, $152. 23 Bought of Rice, Miller & Co., on account, 30 days, 125 bu. rye at $1.14 per bu., 300 bu. corn at 70¢ per bu.; total, $352.50. 24 Sold Roberts Bros., for cash, 100 bu. rye at $1.20 per bu.; total, $120. 26 W. A. Scott has paid you $72 cash in full settlement of his account. 26 Received cash of J. S. Sumner, $100, to apply on account. 27 Paid A. J. Lane cash, $82.46, in settlement of his account to date. 28 Paid W. H. Stevens cash, $100, to apply on account. 28 Received cash of E. H. French & Co., $347, in payment of bill of 19th inst. 28 Sold Emerson & Sons, on account, 50 bu. corn at 90¢ per bu., 30 bbl. flour at $9 per bbl., 50 bu. oats at 70¢ per bu.; total, $350. 28 Paid cash for postage and advertising, $12. Preparatory to posting, the following accounts are to be opened in the ledger, in the order given; one half of a page is to be allowed to each account, with the exception of those otherwise indicated. Not all of these accounts will be needed for the posting of the February entries, but the March transactions immediately following are a continuation of the February work and it is more convenient to open the accounts for both months at the same time. The addresses of all persons and firms should be shown, the street address being written. above the explanation space on the debit side, and the city and state above the explanation space on the credit side. (See illustrative account with H. Grant & Co., on page 48.) Proprietor (one page). Cash (one page). Purchases (three fourths of a page). Freight and Cartage (one fourth of a page). Sales (one page). General Expense. Profit and Loss. Notes Receivable. William Archer & Co., 742 Center St., Buffalo, N. Y. Notes Payable. H. S. Clough & Co., 1298 Scott St., Syracuse, N. Y. W. H. Stevens, 654 Boyd St., Minneapolis, Minn. Warner & Freeman, 424 Ward St., Cleveland, Ohio. Following the opening of the accounts, the entries for February should be posted and a trial balance taken. All personal accounts which balance should be ruled off as shown in the following illustration: The accounts to be ruled off at this time are W. A. Scott, E. H. French & Co., and A. J. Lane. Such accounts, together with the accounts to which no postings have been made, are not shown in the trial balance. After the trial balance has been examined, it should be copied in the proper blank book on the page assigned. MARCH Continuation of February Business March 1 Bought of H. S. Clough & Co., on account, 10 days, 100 bbl. flour at $8.10 per bbl., 500 bu. oats at 60¢ per bu.; total, $1110. 2 Sold Wm. Archer & Co., on account, 225 bu. oats at 76¢ per bu., 25 bu. rye at $1.20 per bu.; total, $201. 3 Paid Rice, Miller & Co., cash, $352.50, in payment of invoice of February 23. 3 Received cash of Emerson & Sons, to apply on account, $250. 5 Paid H. S. Clough & Co., cash, on account, $500. 6 Bought of Kidder & Hill on account, 60 days, 500 bu. corn at 80¢ per bu. 7 Paid cash for freight and drayage of flour and grain to date, $15. 8 Sold E. H. French & Co., on account, 10 days, 100 bu. corn at 90¢ per bu., 200 bu. oats at 76¢ per bu. 9 You have withdrawn from the business, for private use, cash, $25. 10 Bought of Kidder & Hill, on account, 30 days, 500 bu. corn at 72¢ per bu., 100 bu. rye at $1.08 per bu. 12 Paid H. S. Clough & Co. cash, $100, to apply on account. 12 Sold F. W. Garland, on account, 25 bbl. flour at $9.20 per bbl. 13 F. W. Garland, sends you his note at 10 days without interest, in payment of his bill of the 12th. 13 Sold Wm. Archer & Co., on account, 75 bbl. flour at $9.20 per bbl. 14 Received note at 15 days, without interest, from Wm. Archer & Co., in payment of bill of the 13th inst. 14 S. A. Dodge & Co., who owe you $237.50, have requested you to accept their note at 30 days in payment of the account. This you have done. 15 J. S. Sumner sends you his note at 10 days, dated March 14, to apply on account $250. 16 Sold S. A. Dodge & Co., on account, 300 bu. corn at 88¢ per bu., 25 bbl. flour at $9 per bbl. 17 Bought of H. S. Clough & Co., on account, 50 bbl. flour at $8 per bbl., 250 bu. corn at 70¢ per bu. 19 Sold J. B. Fulton, on account, 200 bu. oats at 76¢ per bu., 100 bu. corn at 85¢ per bu. 19 Bought of Kidder & Hill, on account, 100 bbl. flour at $8 per bbl., 250 bu. corn at 70¢ per bu. 20 Received note at two months without interest from J. B. Fulton in payment for goods sold him the 19th inst. 20 Gave Kidder & Hill note at 10 days without interest in payment for goods bought from them the 19th inst. 20 Bought of Warner & Freeman, on account, 300 bu. corn at 70¢ per bu. 21 Sold A. H. Warren, on account, 25 bbl. flour at $9.20 per bbl., 95 bu. corn at 80¢ per bu. 22 Sold Weston & Hill, on account, 15 bbl. flour at $9 per bbl., 155 bu. corn at 80¢ per bu. 22 Gave Warner & Freeman note at 10 days without interest in settlement of invoice of goods bought from them on the 20th inst. 23 Bought of Chas. A. Hill & Co., on your note at 60 days, 500 bu. oats at 66¢ per bu., 250 bu. corn at 70¢ per bu. 23 Sold Roberts Bros., on account, 15 days, 25 bbĺ. flour at $9 per bbl. 23 Received note at 30 days, without interest, from A. H. Warren in payment of bill of goods sold him the 21st inst. 23 F. W. Garland has paid his note of 13th inst. in cash, $230. 24 J. S. Sumner has paid his note, due this day, in cash, $250. 26 Received of E. H. French & Co., to apply on account, their note at 30 days for $200. 26 Transferred, by indorsement, A. H. Warren's note of the 21st inst. for $306 to H. S. Clough & Co., to apply on account. 26 Paid cash for clerk hire, $15; for stamps, etc., $2. 27 Gave Kidder & Hill your note at 30 days, for $340, to apply on account. 27 William Archer & Co. paid their note of the 13th inst. in cash, $690. 28 The freight and drayage bills to date are $12; they have been paid in cash. 28 You have taken from the store, for personal use, 2 bbl. flour at $8 per bbl. 29 Bought of A. J. Lane, on account, 300 bu. oats at 64¢ per bu., 100 bu. rye at $1.10 per bu. 29 Paid F. A. Smith & Co. cash, $165, in full of account to date. 29 Received of Wm. Archer & Co. cash, on account, $150. 30 Bought of Rice, Miller & Co., on account, 30 days, 25 bbl. flour at $7.90 per bbl., 200 bu. corn at 70¢ per bu. 30 Sold W. A. Scott, on account, 30 days, 200 bu. oats at 76¢ per bu., 25 bbl. flour at $9 per bbl. 30 You have paid your note of 20th inst., favor of Kidder & Hill, in cash, $975. 31 Bought of F. A. Smith & Co., on account, 30 days, 40 bbl. flour at $7.50 per bbl. 31 You have paid your note, favor of Warner & Freeman, in cash, $210. The March entries should now be posted to the ledger. As the March work is a continuation of the February work, the same ledger is used, the postings beginning directly beneath the last postings for February. Before taking the March trial balance, check all postings for March in the manner already explained. All accounts which balance should be ruled according to the instructions at the end of the section on the February work, and such accounts are omitted from the trial balance. The March trial balance should show both February and March figures; that is, in adding the accounts the March postings should be added to the February pencil footings. This applies in all cases where successive monthly trial balances are taken during a fiscal period. The trial balance is cumulative, each balance taken including the figures of all preceding trial balances of a certain period. Only the difference between the two sides of each account should be transferred to the trial balance. After the trial balance has been examined, it should be copied in the proper blank book. BUSINESS AND FINANCIAL STATEMENTS The construction of financial statements is in many respects the most important phase of bookkeeping. The business man is more interested in the results shown by the bookkeeping system and in the information which the system gives him than he is in the books themselves. The record of business transactions is incidental to the statements and statistics which may be prepared therefrom at certain intervals, showing the profits or losses and the financial condition of the business. There are two main statements prepared from books kept by double entry. The first, called the Profit and Loss Statement, shows the items of profit and loss pertaining to a certain period, classified and arranged in such a manner as to give full and accurate information relating to the trading activities of the business. The final result shown by such a statement is the net profit or loss for the period covered. Other titles often given to this statement are Business Statement, Loss and Gain Statement, Trading and Profit and Loss Statement. The second statement is the Balance Sheet, showing the assets owned by a business as of a certain date, the liabilities or the indebtedness of the business, and the resulting net worth. This statement is also known as the Financial Statement, Statement of Resources and Liabilities, or Statement of Assets and Liabilities. Balance Sheet, however, is the title commonly given to the statement by accountants and business men. Financial statements are prepared at the close of a fiscal period, thus furnishing the proprietor or officers of a business with a summary of the business transactions for the period and a statement of the financial condition at the close of the period. The final trial balance for the period contains most of the data from which the statements are prepared. In addition to the trial balance, an inventory must be taken to know the value of the goods in stock, this being an asset not shown on the books. Unused supplies of various kinds, such as office stationery, postage, fuel, etc., if of sufficient value may also be inventoried, and certain assets may be revalued, all of which would be taken into account in preparing the statements. As the trial balance forms the basis of all statement work, the use and function of every account contained in it should be clearly understood. Preliminary to the actual construction of the statements, the trial balance should be analyzed, each item being designated in such a manner as to indicate whether it represents a profit, a loss, an asset, or a liability. This may be done by placing to the left of the folio column of the trial balance, on a line with each ac count, the initial letter indicating what the account represents. As an aid in analyzing the trial balance, the following general principles are of importance: Profits are always credits; losses are always debits. Assets are always debits; liabilities are always credits. An account with a debit balance, therefore, represents an asset or a loss; an account with a credit balance, a liability or a profit. The only exception is the account with the proprietor, or any account or accounts which represent an ownership interest, such accounts constituting some element of net worth. The statements shown on pages 52 and 53, prepared from the following trial balance, illustrate a simple form of Profit and Loss Statement and Balance Sheet. The accounts are identical in kind with the accounts shown in the March trial balance. 1 The heading of the Profit and Loss Statement should always show the period covered. Instead of showing the dates at the opening and the close of the period, however, the period may be indicated as follows: " for the Year (or period of different length) Ended Dec. 31, 19—." The heading of the Balance Sheet shows only the date on which it was prepared. Unlike the Profit and Loss Statement, which is a review of what took place during a certain period, the Balance Sheet shows only the financial condition at the close of that period. |