2. Journalize the following transactions:

--April 10-- Bought from David Cole & Son on account 100 bbls. flour at $4.60 $460.00 --10-- Sold to L. H. Stebbins on account 20 bbls. flour at 5.10 102.00 --10-- Sold to Henry Waterbury on account 30 bu. beans 2.00 60.00 20 " oats .37 7.40 --11-- Paid to David Cole & Son Cash on account 160.00 Gave them my note for 30 days 300.00 --11-- Received note from L. H. Stebbins for 30 days to balance account 102.00 --12-- Paid cash for harness oil .35 --12-- Henry Waterbury paid cash on account 40.00 RULES FOR POSTING =67.= The act of transferring all items from the journal, sales book, purchase book, cash book, or other books to the ledger is called _posting_. All items relating to one account are posted to that account in the ledger; thus all sales are posted to the sales account, and all transactions with a person are posted to the account of that person. Every debit must be posted to the debit side of the corresponding account in the ledger. =68. Routine.= The first operation in posting is to open an account in the ledger by writing the name of the account on the line at the head of the ledger page. The month and day are then written in the date column; the page of the book from which the item is posted is written in the folio column, and the amount is placed in the money column. The final operation is to place the number of the ledger page in the folio column of the book from which the item was transferred, directly opposite the item posted. =Posting from Journal.= In posting from the journal, all items in the left or debit columns are posted to the debit side of the corresponding ledger accounts, while all items in the credit column are posted to the credit side of the ledger accounts. The first item in the journal in the preceding section is a debit to Hiram Watson, amount $1.15. It is necessary to open an account in the ledger, which is done by writing Hiram Watson's name at the head of the page, above the date column on the left side of the page; in the date column we write the date, April 2; in the folio column we write the journal page, 1: and in the money column we write the amount, $1.15. The number of the ledger page is now written in the folio column in the journal, directly opposite the name of Hiram Watson. The second transaction recorded in the journal is a purchase which makes it necessary to open a purchase account in the ledger, to which is debited the amount of the purchase $18.75. The first transaction recorded in the journal is a sale, therefore the credit is to the sales account. Since we are placing all sales in a special column, the amount will not be posted until the end of the month, when the total sales will be posted to the credit of the sales account as one item. In the second transaction, the credit is to a personal account, and we open an account in the ledger with Eureka Milling Co., following the same routine in posting as with debit items, except that the item is posted to the credit side of the account. =Posting from Cash Book.= When posting from the cash book, it must be remembered that all items on the left-hand page (which debit cash) must be posted to the credit of some other account; and that all items on the right-hand page (which credit cash) must be posted to the debit of an account in the ledger. Why cash received is entered on the left-hand page of the cash book, and cash paid out on the right-hand page, is a point not always clear to the bookkeeper. To obtain a clear view of this point, it should be remembered that the cash book is nothing more or less than a ledger account with cash, and cash received is entered on the left-hand page (or debit side) for the reason that any account is debited for what is received or is added to it. We sell merchandise, for example, and the person is debited because he receives it. We buy real estate; the real estate account is debited because our real estate possessions are added to. Broadly speaking, we (the business) receive the real estate; but, instead of charging the amount to ourselves (the person), we charge it to _Real Estate_, that we may know the amount of our real estate investment. A customer pays us cash; cash is debited because our cash possessions are added to. We might charge the amount to our account; but we prefer to charge it to a cash account that we may know how much cash we have on hand. We pay out cash; cash is credited because cash has gone out of our possession. The main point of difference is that we post to other ledger accounts direct from the cash book, which is itself a ledger account, instead of journalizing cash transactions. If cash transactions were journalized-- Cash To Person Person To Cash the amounts would be posted to the debit or credits of the cash account in the ledger; but for convenience we keep the cash accounts in a separate book. Journalizing a few of the transactions given will clearly demonstrate the point. TRIAL BALANCE =69.= A _trial balance_ is a list of the balances of all accounts remaining open in the ledger, together with the balance shown by the cash account. On journal paper, all open accounts are listed by name; the debit balances are placed in the debit column, and credit balances are placed in the credit column; the pages of the ledger are placed in the folio column, opposite the names of the account. Both debit and credit columns are footed, and the footings of the two columns should agree. A trial balance is taken for the purpose of testing the accuracy of the postings to the ledger; to find out if the ledger is in balance. The trial balance can be taken without considering the balances, by taking the total debit and credit items posted to all open accounts. While the trial balance shows that for every debit posted to the ledger a corresponding credit has also been posted (double entry principle), it does not absolutely prove the accuracy of the work. If a debit item of $100.00 were posted to the debit of the wrong account, it would not affect the balance of the ledger; but if the item were posted to the credit instead of to the debit of the account, the ledger would be out of balance and the amount that it was _out_would be shown by the trial balance. CLASSIFICATION OF ACCOUNTS =70.= The arrangement of the accounts in the ledger is of considerable importance. Since one of the objects of bookkeeping is to exhibit the standing or condition of the business, the accounts should be classified in a manner that will make easiest the assembling of important statistics. The accounts in the ledger represent either _Assets_ (resources), _Liabilities_, _Profits_ (gains), or _Losses_. Every account having a debit balance represents either (_a_) an asset or (_b_) a loss. (_a_) A personal account having a debit balance represents an asset; (_b_) any expense account having a debit balance represents a loss, as it reduces the chance for profit. Every account having a credit balance represents either (_c_) a liability or (_d_) a profit. (_c_) A personal account having a credit balance represents a liability--that is, something we owe; (_d_) a sales account having a credit balance represents a profit because it increases our chance of gain. [Illustration: OFFICE OF THE REGISTRAR, AMERICAN SCHOOL OF CORRESPONDENCE] =71. Arrangement in Ledger.= The foregoing classifications should be kept in mind in arranging the accounts in the ledger. First provide space for the asset and liability accounts; then follow with the profit and loss (or revenue) accounts. As far as possible, keep all asset accounts together, following the same plan with liability and profit and loss accounts. The accounts are arranged in the trial balance in exactly the same order as they appear in the ledger; and if correctly classified they will show at a glance the assets (except inventories of merchandise) and liabilities of the business. Likewise the profit and loss accounts (also known as revenue accounts--see Article 53) will show total sales, purchases, and expense of conducting the business. SAMPLE LEDGER ACCOUNTS =72.= The ledger accounts shown on pages 80-81, representing the transactions given in the preceding set of sample transactions, demonstrate the proper arrangement of accounts, manner of posting, and the trial balance. EXAMPLES FOR PRACTICE