returned by our bank with a protest fee of $2.50. What entry is
necessary to record this on our books?
11. Prepare trading and profit and loss accounts representing the
transactions listed in Art. 16, Pages 28 to 31, inclusive.
12. How can an order record be used as a sales record? Why is an
abstract of sales used in connection with such sales records? Explain
how this abstract is made up.
13. If goods are sold at f. o. b. prices, but the freight is prepaid as
an accommodation to the customer, how should it be treated on the books?
Why?
14. Name three or more subdivisions of sales expense, and explain what
items are properly included in each.
15. Why are check registers taking the place of the old style check
book? When a check register is used, how are the checks kept?
16. What is a cash received book, and for what purpose is it used?
17. Complete the exercise given at the end of Art. 29, Page 42.
18. What is your understanding of the meaning of the terms _commission_
and _brokerage_? What is the distinction between a commission merchant
and a merchandise broker?
19. What is a manufacturer's agent, and how does his business differ
from that of a commission merchant or broker?
20. By what term is a consignment of goods to a broker known on the
books of the shipper? In what name is an account opened to represent the
consignment?
21. How is the above account made up? When is the account closed, and to
what account is the balance transferred?
22. What is an _account sales_? When an account sales is received
without a remittance, what account should be opened, and what does it
represent?
23. When a broker receives a shipment of goods to be sold on commission,
by what name is it known on his books? In what name is an account
opened?
24. If a broker renders an account sales without a remittance, to what
account should he credit the net proceeds? Why?
25. If a broker has on hand any unsold consignments when his books are
closed, do the accounts represent assets or liabilities? How would you
determine the broker's liabilities on account of consignments?
26. Name the books used by a produce shipper, and explain how each is
used.
27. What is a _shipment ledger account_, and how is it made up? What is
a _profit and loss on shipments account_?
28. In what way does the journal used by a shipper differ from the one
used by the average merchant?
29. How is the trading account of a shipper made up?
30. Prepare trading and profit and loss accounts called for in Art. 48.
31. Name and describe the uses of the books used by a commission
merchant.
32. Prepare trading and profit and loss accounts, and balance sheet
called for in Art. 57.
33. What is a storage business, and for what purpose is it conducted?
34. What is a warehouse receipt, and what does it represent?
35. Explain what is meant by _simple storage_, and _average storage_.
REVIEW QUESTIONS
ON THE SUBJECT OF
SINGLE ENTRY—COMPARATIVE STATEMENTS
1. What is the distinctive feature of single entry bookkeeping? In what
respect does single entry fail to fulfil the functions of bookkeeping?
2. What books are usually used in single entry? How does the single
entry cash book differ from that used in double entry?
3. In posting, what features distinguish single entry from double
entry?
4. How can the accuracy of single entry books be proved?
5. To determine the profits of a business whose books are kept by
single entry, what steps are necessary? What are the steps in closing
single entry books?
6. On a certain date the assets and liabilities of Henry Lamson are as
follows:
ASSETS
Cash $452.00
Due from sundry debtors 77.20
Merchandise per inventory 764.50
LIABILITIES
Due sundry creditors 142.00
The following transactions are recorded:
Sales to sundry persons on account $46.71
Bought from sundry persons on account 339.54
Sales for cash 96.90
Received cash on account 64.00
Paid cash on account 133.50
Paid cash for rent 37.50
Paid cash for clerk hire 8.00
Record these transactions in single entry books; prepare proof of
ledger and statements of assets and liabilities, the merchandise
inventory at end of period being $983.75. Do the books show a profit or
a loss, and how does it affect the account of the proprietor?
7. Explain, briefly, the necessary routine followed in changing single
entry books to double entry.
8. H. P. Hayes established a small factory upon a borrowed capital of
$10,000. The undertaking was a success, and at the close of the first
year his financial condition was disclosed by the following particulars:
Bills payable $4,000.00
Accounts payable 6,574.50
Cash 1,752.50
Accounts receivable 12,694.18
Inventory 4,765.90
Salaries 3,500.00
Sundry expenses 435.50
Manufacturing expenses 11,759.50
Mr. Hayes kept his own books during his first year in business, but did
not keep them by double entry. His sales for the year amounted to
$35,643.25, and his total purchases amounted to $16,076.07. At this
point Mr. Hayes admitted as a partner, A. B. Andrews, who contributed
$10,000.00 to the partnership upon the agreement that the partners
should share equally in the business. A bookkeeper was engaged to keep
the books by the double entry system. From the particulars given, make a
trial balance and the necessary journal entries to complete the change
to the double entry method. Ascertain the interest of Mr. Hayes in the
business, and credit his account with the same.
9. Foster, Harvey, and Morton—a copartnership—wish to change their
method of bookkeeping from single to double entry. The partnership
agreement provides that each partner shall share in the profits in
proportion to his investment. Separate investment and withdrawal
accounts have been kept with each partner. In the following statement of
ledger accounts, partners' investment accounts show the same balances as
at the last adjustment, no additional investments having been made:
Foster, Investment Credit Balance $1,600.00
Harvey, Investment Credit Balance 1,200.00
Morton, Investment Credit Balance 1,200.00
Personal Accounts Credit Balance 900.00
Personal Accounts Debit Balance 1,900.00
Foster, Withdrawals Debit Balance 315.00
Harvey, Withdrawals Debit Balance 240.00
Morton, Withdrawals Debit Balance 155.00
Bank Debit Balance 2,050.00
Cash in Office 45.00
An inventory shows merchandise $1,775.00, fixtures $300.00.
Show all entries necessary to make the partnership adjustment and change
the books to double entry, indicating by check √ the accounts to be
posted.
10. The books of the Star Coal Company, a corporation with a paid-up
capital of $10,000.00, have been kept by single entry. The following
facts are gathered from the books:
Cash in Bank $3,500.00
Personal Accounts Debit Balances 6,500.00
Cash in Office 200.00
Personal Accounts Credit Balances 2,500.00
An inventory results as follows:
Coal 3,750.00
Horses and Wagons 800.00
Furniture and Fixtures 300.00
Make necessary journal entries to change to double entry. Provide a
reserve of 5% for uncollectible accounts, 10% for depreciation of horses
and wagons, 10% for depreciation of furniture and fixtures. Declare a
dividend of 10% and transfer balance of profits to surplus, making all
journal entries to record these transactions.
11. Prepare a model trial balance of an imaginary business, or one with
which you are familiar, giving special attention to the proper grouping
of the accounts. Explain the benefits of your grouping of the accounts.
12. What is a _working balance sheet_? From the trial balance, which you
have prepared, make up a working balance sheet, supplying such
additional figures as may be necessary.
13. What are the fundamental advantages of comparative statements? On
what basis should percentages be figured in on analysis of the
manufacturing account? of the trading account?
14. To prove the accuracy of the ledger without a trial balance, what
steps are necessary? What test is applied to determine whether the
ledger balances?
15. What is meant by a _book inventory_? How can the receipts be
determined? the disbursements or quantities sold?
16. What is the _reverse_ or _slip posting system_? How is it operated?
17. Describe, briefly, the _loose-leaf ledger_. Describe the principal
methods of indexing. Name some of the advantages of the loose-leaf
ledger.
18. For what classes of accounts is the card ledger specially desirable?
What are the principal methods of indexing the card ledger?
19. What is a _tabular ledger_? Describe the Boston Bank Ledger. Is a
tabular ledger well adapted for commercial accounts?
20. What is meant by a _balance ledger_? What are its advantages?
21. Prepare a form of cash journal segregating administrative, selling,
and manufacturing expense for an imaginary business, or one with which
you are familiar.
22. Prepare a form of sales journal for a business having five
departments.
REVIEW QUESTIONS
ON THE SUBJECT OF
TRUSTEES' ACCOUNTS; STOCK
BROKERS' ACCOUNTS
1. From an accounting standpoint, into what two classes can business be
divided? What is the position of the trustee of an estate, as against
the public?
2. Describe the essential features of the _accounting_ of an executor.
3. In what two forms may an executor's accounts be kept? By what term
are his accounts with properties known?
4. What are the proper classifications of an executor's accounts?
5. Two trustees collect in one year an income of $50,000.00 for a
beneficiary, at an expense of $3,100.00. If each trustee receives an
equal share, what commission should each receive, and what amount will
be paid to the beneficiary, under the New York law? Prepare a complete
solution of this problem.
6. Prepare a solution of the following: Four trustees collect and pay
out of an estate the sum of $416,000.00, the total debts of the estate
being $201,000.00. What commission will each trustee receive?
7. Prepare a statement of the executor's accounts—from the particulars
given on Pages 17 and 18—showing the balance due each legatee.
8. What is a _realization and liquidation account_? How is it made up?
9. What is a _statement of affairs_? In what respect does it differ
from a balance sheet?
10. How does a statement of affairs of a bankrupt differ from that of a
going concern?
11. What is the purpose of a _deficiency account_?
12. Wm. Andrews, finding himself on July 1st unable to meet his
obligations, asks you to make up his statement of affairs for submission
to his creditors, and a deficiency account for his own information. You
find from his books and other sources the following facts regarding his
business:
Unsecured creditors $9,000.00
Fully secured creditors 2,300.00
Holding securities of the value of $3,000.00
Partly secured creditors 35,000.00
Holding securities of the value of $20,000.00
Preferred claims 800.00
Bills payable 20,000.00
Accounts receivable, home office (good) 1,000.00
" " (doubtful) $200.00, estimated to
realize 75.00
" " (bad) $300.00
Stock, Home Office, cost $1,500.00, estimated to
realize 1,200.00
Stock and accounts receivable, less sundry liabilities,
at branches 36,000.00
Of which it is estimated there will be a loss
on realization of stock $6,000.00, of accounts
receivable $9,000.00.
Buildings and equipment at branches, cost $40,000.00,
estimated to realize 20,000.00
Office furniture $300.00, estimated to realize 200.00
Cash in office 4.00
Cash in bank 80.00
Bonds held by fully secured creditors 3,000.00
Stocks held by partly secured creditors 20,000.00
Six years ago Andrews' capital was $42,000.00. The profits for the first
three years appear to have been $3,000.00, $4,000.00, and $5,284.00, and
the losses for the three subsequent years $1,500.00, $2,500.00, and
$3,000.00, after allowing $2,000.00 a year for interest on capital. His
withdrawals have been at the rate of $4,000.00 a year. From these
particulars, prepare a statement of affairs and a deficiency account.
13. What differences exist between a transaction for the purchase or
sale of stock, and the purchase or sale of grain?
14. Explain a _ring settlement_.
15. What is necessary to post to the customer's ledger account, and from
what sources do you post?
16. Show form of _margin book_ and explain how it is kept.
17. In what cases should interest be charged? What is it charged for?
18. What should be entered in the general cash book?
19. Explain fully the handling of _office cash_.
20. If _A_ bought 5,000 bushels of wheat at $1.20, and sold 12,000
bushels at $1.21, how much cash would he be obliged to deposit to secure
the fulfillment of his orders?
21. What is the cash which he deposits called?
22. Write an order form for the sale of 25,000 bushels of corn @ 76¼c
made upon the orders of Mr. D.
23. Show what acknowledgment must be made to Mr. D.
24. What is the _daily record sheet_? For what purpose is it used?
Explain the entries in this book.
25. Explain how stock purchases should be handled, what records should
be kept, and what information in regard to them is necessary.
26. What is the difference between a _bull_ and a _bear_?
27. Explain the meaning of a buying order and state how it should be
treated in the accounting department.
28. On July 5th James Robinson sold 25,000 bushels of September wheat at
1.04½; on July 10th he purchased 10,000 bushels wheat at 1.02¼, and on
July 11th he purchased 15,000 bushels of wheat at 1.02. Make a statement
of this account for Mr. Robinson.
29. What is the difference between _listed_ and _unlisted_ stock?
30. What is a _debit_ or _credit slip_ and for what purpose is it used?
31. Show the ruling of the stock ledger and explain the necessity of
each column. Rule a sample page.
32. For what purpose is the journal used in connection with the
brokerage business?
33. Explain the meaning of _buyer's option_.
34. Explain the meaning of _carrying charges_.
35. Explain the meaning of _a put_ and _a call_.
REVIEW QUESTIONS
ON THE SUBJECT OF
BILLING AND ORDER RECORDING
1. Explain the difference in principle between the _cylinder_ billing
machine and the _flat-bed_ billing machine.
2. Explain the meaning of _manifolding_.
3. Explain in your own language why the plan of copying invoices in
tissue books with a letter press is inferior to the billing-machine
method of typewriting the invoice and sales sheet simultaneously.
4. If an office boy mailed a pen-written invoice without copying same
in the tissue book, what method would enable the firm to detect such
oversight?
5. What is the difference between the style of invoice used on flat-bed
machines and on cylinder machines?
6. When a concern uses two ledgers on account of having too many
customers to be conveniently held in one ledger, what change is
advisable in ruling the columns of the sales sheet?
7. What plan is used in classifying sales according to territory,
salesmen, etc.; and what means is used to prove the footings of each
page?
8. How much of the left side of the sales sheet do you understand is
covered by the invoice when they are both in the machine for the purpose
of making the bill and charge?
9. How do you classify with the machine the amounts of the bills in the
columns to the right of the total column?
10. Name all of the reasons you can, whether included in the textbook or
not, for making duplicate invoices.
11. Explain why some firms are enabled to make their invoices (and, of
course, sales sheets) before the goods are shipped, and give reasons why
other firms are forced to wait until after the order has been shipped,
or at least partially shipped, before making invoices.
12. Explain what plan you would use to inform the packer of the
description of the goods to be shipped, but prevent him from knowing the
quantities, in order to further prevent him from double-checking the
figures showing quantities and at the same time neglecting to count the
articles.
13. Where the firm sells three or four classes of goods and wishes to
keep a continuous record of the tonnage sold, that is, weight of the
various classes of goods, how would you rule the invoice and sales sheet
in order to shorten the billing?
14. If you were forced to substitute one size of an article in place of
another size ordered (without injury to the customer), how would you
design your forms in order to enable you to typewrite the size shipped
and size ordered on the sales sheet, and size ordered, only, on the
invoice?
15. If you wish to typewrite a requisition for goods ordered at the time
the invoice and sales sheet are written, how would you arrange it?
16. What is the difference between the terms _unit billing_ and
_condensed billing_? Under what conditions would you recommend unit
billing and when condensed billing?
17. What is the best plan of facilitating the filling of orders where
there are a large number of floors or departments and where each day's
orders are supposed to be filled upon the day the orders are received?
18. Why should a plan which is highly satisfactory in a small concern
prove to be an absolute failure in a large one?
19. What is meant by _split orders_?
20. Describe the different forms of punched holes of loose-leaf sheets
and why the closed-hole punching is not adapted for use with records
which are to be removed and replaced in binders from time to time.
21. Describe the different forms of binders with which you are familiar.
22. In printing invoices what is the best plan of designing the headings
in order to facilitate the execution of the invoice on billing machines?
Would you pay any attention to the space between the lines of the
heading and to the distance between the last line to be typewritten on
the heading and the first line to be typewritten on the invoice?
23. Explain the mistakes made in using carbon paper, and under what
conditions you would use the various weights of carbon paper.
24. Explain what is meant by a _blind_.
25. Explain what is meant by _credit memoranda_, and tell how to use
them in connection with a sales book instead of having to use a separate
credit sheet.
26. Explain the use of special characters on the billing machine, and
what is meant by aligning them in order to prevent one abbreviation
being printed over the top of another.
27. Explain the difference between a single-stop tabulator and a
decimal-stop tabulator.
28. What is the advantage of having a billing operator on a platform on
wheels in a wholesale dry goods house?
29. Under what conditions would you recommend the use of the separate
billing machine and separate computing machine for the same work?
30. Explain the benefits to be derived from the use of the color scheme.
31. What is meant by _compound forms_, and under what conditions can
they be used?
32. In what general way does retail dry goods billing differ from
condensed billing and what is the difference in the general style of
stationery used?
33. What is the best plan of filing the duplicate monthly retail dry
goods bill?
34. What is the plan used in retail dry goods billing to prevent goods
from being shipped out of the store without a charge being made?
35. What is the advantage of a subtracting device on the billing machine
with adding attachment?
INDEX
_The page numbers of this volume will be found at the bottom of the
pages; the numbers at the top refer only to the section._
A
Abstract of sales 1
Accounting forms, special 146-161
cash books 155
ledgers 147
balance 152
card 148
loose-leaf 147
tabular 152
pay-roll records 160
tabular sales book 157
Accounts with trust provisions 180
Adding machine and cylinder billing machine combined 301
Adding machine and typewriter combined 289
B
Back orders 262
Balance ledgers 152
with two balance columns 154
with two credit columns 154
for installment accounts 155
Bearing the market 229
Bid price 229
Billing machine
development of 242
how to handle orders and bills on 280
Smith Premier 300
Billing and order recording 235-301
acknowledgment of order to salesman 268
analysis of quantities and amounts 257
back orders 262
billing machine 241
carbon paper 277
colored sheets 288
compound forms 290
computing machines in connection with 286
duplicate invoices 253
goods purchased outside 258
information on sales sheet not on invoice 257
loose-leaf sales sheets and invoices 244
manifolding, machines for 239
order form 266
reference information 289
retail dry goods billing 292
split orders 264
stationery 269
traffic department records 256
unit billing 260
Blinds 280
Board of trade terms, glossary of 229-232
Book inventories 134
Borrowing stock 229
Boston bank ledger 152
Break in the market 229
Broken lot 229
Brokerage concern, legitimate 198
Broker's commission 197
Bucket shops 197,
229
Bulls and bears 196
Buy at market 229
Buyer's option 229
Buying order 230
C
Cables 230
"Call" 230
Card ledgers 148
Carbon paper 277
color 277
copy 279
finish 277
four-pound 278
full 279
pen 279
pencil 279
seven-pound 278
ten-pound 278
troubles and remedies 279
wearing quality 280
Carrying charges 230
Cash book 15, 155
Cash grain 230
Cash received book 49
Check register 45, 227
Clearing house 199
Colored sheet system for billing and order recording 288
Commission accounts 60-83
actual sales, treatment of 68
cash book 77
consignment 62
consignment ledger 77
exercise 76
manufacturer's agent 60
merchandise broker 60
produce shipper's books 63
receiving book 77
sales book 77
sample transactions 69, 78
shipments 61
shipper's trading account 68
Commission, executor's 168
Commissions 230
Commodities handled by brokers 200
Comparative statements 129
book inventories 134
proof without trial balance 131
reverse or slip posting 143
trial balance 129
Computing machines, use of, in connection with billing 286
Consignment 62
commission account 63
principal's account 62
Controlling accounts 12
"Cornering the market" 200
"Curb" 230
Curbstone broker 230
Customers' ledger 220
Customer's statement 224
Cylinder billing machines 241
D
Debit and credit rules 93
Debit and credit slip 206
"Delivery" 230
Designing stationery 273
"Dividend" 230
"Dump" 230
E
"Even" 230
Executor's accounts 163
classification 168
commissions 168
form of 166
sample accounts 169
schedules 164
Expense account, subdivision of 16
F
Flat-bed billing machines 241
"Flurry" 230
Forms
abstract of sales, departmental 43, 57
accounting of an executor 186
balance form for general ledger 222
balance form of ledger card 151
balance ledger for installment accounts 155
balance ledger with two balance columns 154
balance sheet and trial balance of general ledger 37
billing of invoicing loose-leaf sales book 249
Boston bank ledger 153
broker's general cash book 213
broker's statement to a customer 223
cash journal 156
columnar 27
for commission business 66, 72
cash received book 48
check register 228
check register and cash expenditure book 47, 58
colored sheet system for billing and order recording 291
commercial tabular ledger 153
commission merchant's
cash journal 81
consignment and sales ledger 82
general ledger 83
journal 80
receiving book 80
sales book 80
compound forms showing invoice and office records 293
credit slip given to customer by broker 206
customers' ledger, variety of rulings for 219
daily advice of purchase or sale rendered to customers 210
daily sales journal or record of grain sales 208
daily sales journal or record of stock sales 207
deficiency account which shows causes of loss 191
departmental pay-roll record for piece work and day workers 159
executor's account of cash receipts and disbursements 173
executor's accounts with trust provisions 181-185
executor's journal 172
general ledger 33-35,
227
information on sales sheet not on invoice 259
invoice for use on billing machine 247
journal entries, adjusting 25
journal entries to change to double entry 119
ledger with accounts classified 139-143
ledger after changing to double entry 120
ledger with two credit columns 154
ledger account of each stock handled 218
ledger account of an executor, classified 174
ledger card for dentists 149
ledger card for publishers 150
ledger proof without a trial balance 144
loose-leaf ledger 148
loose-leaf sales sheet 248
loose-leaf sales sheet and invoices 246