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CORPORATION ACCOUNTING. Besides the books of a corporation necessary to record the issues and transfers of shares, there must of course be kept books to record the business transactions of the company. These books, so far as the general business is concerned, are kept the same as for firms not corporations, but differ from them as to the making of the entries affecting capital stock.

When a corporation is formed it falls into one of the following three general classes, so far as the opening of the books is concerned:

1. Shares issued for money only.

2. Shares issued for property or for property and money.

3. Shares issued for property alone, but where working capital is to be provided by the sale of stock donated to the company.

Entries for Class 1.-Capital stock $15,000, subscribed for in equal amounts by Chester Hall, Martin Hanson, and Albert Mann, subscriptions to be paid in full in one amount. The journal entry is as follows: Subscription,

15000 00 Capital Stock,

15000 00 For shares of stock subscribed as follows:

Chester Hall, 50 shares
Martin Hanson, 50 shares

Albert Mann, 50 shares
As per subscription list dated.........., 190...

If all the stock is not subscribed for, the capital stock is credited for only the amount subscribed for.

The subscribers having paid in the amounts of their subscriptions, the following entries should be made on the debit side of the cash book: Subscriptions,

15000 00 Amount paid in by subscribers for stock as follows:

Chester Hall, $5,000
Martin Hanson, 5,000

Albert Mann, 5,000 It is not necessary to open accounts with the inds vidual stockholders.

In case the subscriptions are not paid in full, but by assessments, as called for, the journal entry debiting Subscriptions and crediting Capital Stock would be as before, and as each assessment, say of 10 per cent., is called for, a journal entry would be made as follows: Assessment No. 1,

1500 00 Subscriptions,

1500 00 Being assessment of 10 per cent. on the shares of the company subscribed as follows:

Chester Hall, $500
Martin Hanson, 500

Albert Mann, 500
As per resolution of directors adopted.
190... (See Minute Book, page —.)

When the assessment has been paid to the treasurer, the following entry is made on the debit side of the cash book: Assessment No. 1,

1500 00 Amount paid in by subscribers for stock as follows:

Chester Hall, $500
Martin Hanson, 500

Albert Mann, 500 This will close the account Assessment No. 1 in the ledger.

Entries for Class 2.—When stock is issued at par for property, as the assets of a going business, and other stock sold for cash, the various items are debited, the liability items credited, and Capital Stock credited for the net value of the investment. The stock subscribed for to be paid for in cash is treated as in Class 1.

Entries for Class 3.-When stock is issued for property, say a mine, and part of such stock is donated to the company to be sold at par to provide working capital, the entries are as follows: Mine,

20000 00 Capital Stock,

20000 00 Full explanation of issue. Treasury Stock,

10000 00 Working Capital,

10000 00 Full explanation of donation. When this is sold, make a journal entry crediting Treasury Stock for the par value of the amount sub

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scribed for and debiting Subscription to Treasury Stock for the amount of the subscriptions at the price to be paid, and debit Working Capital for the difference between the price paid and the par value of the stock.

As the subscriptions are paid, debit Cash and credit Subscriptions to Treasury Stock.

If other stock of the company is sold at par, treat it as in Class 1.

If stock is sold at a premium, debit Subscriptions for the amount subscribed for at the price sold at, and credit Capital Stock for the shares at par and Working Capital for the amount of premium.

Every entry should be followed by a full explanation of the transaction.

INSURANCE Insurance is a contract whereby for a stipulated con. sideration one party undertakes to compensate the other for loss on a particular subject for a specified peril. The party agreeing to make the compensation is called the insurer, or the underwriter, the other party to the contract being the insured. The written contract is called the policy, and the event insured against, the risk.

FIRE INSURANCE. Fire insurance is a contract by the insurer to indemnify the owner or person having an interest in the property insured for loss or damage by fire during a specified period. A policy of fire insurance may be open or valued. By the former, the amount of liability is left to be determined according to the actual loss; by the latter, a certain valuation is fixed above which the insurer is not liable for loss. In the absence of statute or charter provision, the policy may be in any form; but to avoid looseness and ambiguity statutes in some jurisdictions have prescribed the use of a standard policy.

Insurable Interest.-An interest of such a nature that the fire insured against would directly injure him, is termed insurable interest. If the person had no in. terest in the property upon which he obtained insurance, the only object would be a mere speculation, and the contract would not be upheld in law.

Cancellation.-The standard form of policy contains

stipulation that the policy may be canceled at any time by the company, or at the request of the insured upon giving five days' notice of such cancellation. In case of such cancellation the unearned premiums paid shall be returned to the insured.

Form of Contract. -The contract of insurance is usually in writing, although it may be oral, unless expressly required by the statute to be written.

Oral Contract. The contract is binding and in force as soon as the agreement is completed, although the written policy may not have been actually delivered, nor in fact ever have been issued.

Notice of Loss.-After a loss it is the duty of the insured to give immediate notice to the company. Un der the standard form of policy this notice must be in writing. The damaged goods must be inventoried, and a proof of loss duly sworn to must be filed within sixty days. Unless the notice is given as stated and the proof of loss filed within the specified time, no recovery can be had on the policy.

Effect of Fraud.-A contract of insurance is one requiring good faith between the parties, and the party seeking insurance is bound to disclose any circumstance that will affect the risk. Any fraudulent dealing is fatal to the rights of the party responsible for it. Any concealment of a material fact inquired into by the insurer will, if made intentionally by the insured, avoid the policy.

LIFE INSURANCE. A life insurance contract is, in its simplest form, an agreement upon the part of the insurer to pay a specific sum of money upon the death of a certain person, called the insured, to a specific person called the beneficiary. The consideration paid by the insured is called the premium, and is generally a certain amount payable annually or monthly. The agreement may take the form of what is termed an endowment insurance, whereby the insured, after paying the premium for a given num. ber of years, will receive a certain sum of money, or if he dies before the expiration of the period, the amount of the policy will go to the beneficiary. The beneficiary, instead of being a specific person, may be the estate of the insured.

Premiums.—The premiums on life insurance are graded according to the age of the risk. The person insured must undergo a physical examination, as only healthy persons are insured. The amounts of the premiums are determined by average results computed upon the length of life of a large number of persons carefully arranged and tabulated. These results so arranged are called "mortuary tables."

Effect of Concealment. The contract of life insurance, like that of fire insurance, requires the exercise of good faith between the parties, but to avoid the policy the concealment of a material fact not made the subject of an express inquiry must be intentional. A material misrepresentation avoids a policy.

Form of Policies.—There is no standard form of life insurance policy, and the forms of the different companies vary materially. It is customary to have the policy provide that the application be made a part of the contract, thereby making the statements in the application express warranties. So a denial that one is affected with a disease avoids the policy if untrue. The application often inquires as to what other insurance is carried, and a deceptive statement on this point is fatal to the policy. So also a statement as to age is material and the answer must be correct.

Payment.—The conditions of the policy as to payment of premiums must be strictly complied with or the policy fails, sickness or other inability to pay being no valid excuse.

Suicide.-If the policy contains no express stipulation to the contrary, the insurance company is liable on a policy if the party insured commits suicide, in case a third party is the beneficiary. If the insured is the beneficiary, the rule will be otherwise. The policy frequently contains a clause exempting the company from liability if the insured commits suicide.

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