90. The note returned to us is $2,010.00, that being the amount of

principal and interest. Our bills receivable and bills discounted accounts show the item as $2,000.00 only. Therefore we must include the $10.00 in our adjusting entries which will be: Bills Receivable $10.00 Interest added to Smart's note not paid when due Bills Discounted $2,000.00 Bank $2,010.00 Smart's note not paid at maturity. =93. When a Note is Past Due.= The above entries leave this unpaid item in the bills receivable account. If the business is one in which a large number of bills are discounted, it will be advantageous to show past due bills receivable by themselves, leaving bills receivable account to represent only paper not due. The entry for a bill unpaid at maturity would be: Bills Receivable Past Due $2,010.00 Bills Receivable $2,010.00 Smart's note past due. =94. When a Note is Renewed.= We shall now suppose that Samuel Smart finds that he will be unable to pay his note when due. He comes to us and offers a new note for 30 days, which we accept. He prefers to add the interest due on the original note to the principal, and makes his note for $100.50. We then return the original note and the entry is: Bills Receivable $100.50 Interest and Discount .50 Bills Receivable $100.00 New note given by Samuel Smart to cover note due Oct. 10, with interest. The effect of this transaction is that we have received a new note for $100.50, and we debit bills receivable. This new note pays an older one which goes out of our possession, so we credit bills receivable. The amount of the new note includes the interest on the old, and we credit interest. We might have gone about this in a roundabout way by making these entries: _To cancel the old note:_ Samuel Smart $100.50 Bills Receivable $100.00 Interest, and Discount .50 Note due Oct. 10th. _To enter the new note:_ Bills Receivable $100.50 Samuel Smart $100.50 New note 30 days to take up note due Oct. 10th. These entries would leave the accounts in exactly the same condition as our first entry, and would serve no useful purpose. This is given as an illustration of how several entries may be made when the transaction could be as clearly explained in one. =95. When Renewed Note Has Been Discounted.= If the note which Samuel Smart has renewed has been discounted at the bank, we must reimburse the bank in some manner before we can obtain possession of the original note. The most simple way to handle this transaction will be to give the bank our check to pay the note. The entry is: Bills Discounted $100.00 Interest and Discount .50 To Bank $100.50 Gave check to take up Samuel Smart's note. We shall then treat the new note as previously explained. If, after getting it recorded on the books, we wish to discount this note, the entries will be exactly the same as when we discounted the original note. =96. When We Give or Pay a Note.= When we give our note, the effect of the transaction is just the opposite of the receipt of a note. Instead of adding to one class of our resources we are increasing one class of our liabilities, in return for which we either receive something of value or reduce our liabilities of another class. When we give our note in payment of a loan, we receive cash; if we buy goods and give a note in payment, we receive merchandise; if we give a note in payment of an account, we simply reduce our liabilities of one class and add to those of another. The entries necessary to properly record transactions involving notes given or bills payable, are not so complex as is the case with transactions involving bills receivable. The following illustrations cover transactions likely to arise in the average business: We give our note for $100.00 payable in 30 days, without interest, to Western Grocer Co. in settlement of an account. The entry is: Western Grocer Co. $100.00 Bills Payable $100.00 Note 30 days without interest When we pay the note the entry is: Bills Payable $100.00 Bank $100.00 Check to Western Grocer Co. to pay note due Oct. 10. =97. When Our Note Has Been Discounted.= The Western Grocer Co. has either discounted the note or placed it in the bank for collection, and it is presented for payment by the Merchants Bank. We give them a check in payment, and the entry is: Bills Payable $100.00 Bank $100.00 Check to Merchants Bank to pay our note to Western Grocer Co., due Oct. 10. The entry in this case is the same as in the previous illustration, with the exception of the explanation. =98. When We Pay Our Note With Interest.= We give our note to Western Grocer Co. for $100.00 payable in 30 days, with interest at 6%. We pay the note by check, and the entry is: Bills Payable $100.00 Interest and Discount .50 Bank $100.50 Paid Western Grocer Co. note due Oct. 10, by check No. 10. =99. When We Discount Our Note.= We wish to borrow $100.00 from the bank, and give our note for the amount, payable in 30 days. The bank discounts the note, placing the proceeds to our credit. The rate of interest charged is 6%. Our entry is: Bank $99.50 Interest and Discount .50 Bills Payable $100.00 Note for $100.00, 30 days discounted at bank. =100. When We Pay for Goods With Our Note.= We buy goods from Michigan Milling Co. to the amount of $100.00, and tender our note at 30 days with interest, in payment. This makes it unnecessary for us to open an account with Michigan Milling Co. and the entry is: Purchases $100.00 Bills Payable $100.00 Invoice #16 from Michigan Milling Co. Gave note for 30 days with interest at 6%. =101. When We Renew a Note.= When this note is due, we find it inconvenient to pay, and give a new note for 30 days, adding the interest now due to the face of the original note. The amount of the new note is $100.50, and the entry is: Interest and Discount $ .50 Bills Payable 100.00 Bills Payable $100.50 New note given Michigan Grocer Co. to renew note due Oct. 10, $100.00, interest $.50, 30 days, with interest. =102. When We Renew Our Discounted Note.= When our note given to the bank is due, we find it inconvenient to pay the entire amount. We give the bank a check for $50.00, and a new note at 30 days for the balance. The bank always collects interest in advance, so we shall be obliged to give them our note for $50.00 plus the interest, or $50.25. In effect, the bank discounts our note for $50.25, the proceeds, $50.00, paying the balance of our note now due. The entry is: Bills Payable $100.00 Interest and Discount .25 Bank $50.00 Bills Payable 50.25 Gave check for $50.00 to apply on note due at bank to day. Discounted new note for $50.25, payable in 30 days. JOURNALIZING DRAFTS =103.= When a draft has been accepted, it should be treated the same as any other form of bill receivable or bill payable. If we make a draft on a customer, which he accepts, it becomes a bill receivable. If we accept a draft drawn on us, it becomes a bill payable. Sight drafts are frequently made use of as a convenient means of collecting an account. Such drafts are taken to our bank for collection, but they do not give us credit for the amount until the draft is paid. Drafts of this kind, which are placed with the bank for collection only, are not treated as bills receivable, as we do not credit the account of the one on whom it is drawn until payment is received. =104. When Our Sight Draft is Paid.= We draw on Samuel Smart at sight for $50.00 through our bank. When paid, we receive credit at the bank for the amount, less collection charges. The entry in our journal is: Bank $49.90 Interest and Discount .10 Samuel Smart $50.00 Paid sight draft =105. When Discounting Time Draft.= Samuel Smart owes us $100.00, and while the amount is not due for 30 days, we have reason to believe that he will accept a draft payable in 30 days. We accordingly draw on him through our bank. Our reason for doing this is that his acceptance will be a promise to pay, and our bank will then discount the draft. The draft is accepted, and our bank notifies us that the proceeds have been placed to our credit, the draft being discounted at 6%. The entries are: Bills Receivable $100.00 Samuel Smart $100.00 Samuel Smart accepted our 30-day draft Bank 99.50 Interest and Discount .50 Bills Discounted $100.00 Discounted Samuel Smart's 30-day acceptance. =106. When We Accept.= When we accept a draft payable at a future date, it immediately becomes a bill payable and should be so treated. We accept the 30-day draft of the Western Grocer Co. for $200.00. Our journal entry is: Western Grocer Co. $200.00 Bills Payable $200.00 Accepted 30-day draft. =107. When We Pay an Acceptance.= When this draft is due, we pay it, giving our check to the bank. The entry is: Bills Payable $200.00 Bank $200.00 Gave check to pay draft of Western Grocer Co. =108. When We Pay a Sight Draft.= Instead of accepting a time draft, we pay a sight draft of Western Grocer Co. for $200.00. In this case it has not become a bill payable, and our entry is: Western Grocer Co. $200.00 Bank $200.00 Check to Merchants Bank to pay sight draft. =EXAMPLES FOR PRACTICE= The following examples are to be journalized by the student after he has become thoroughly familiar with the transactions previously explained: --Nov. 6-- Received from Jackson & Co. their note for $214.00 without interest, payable in 30 days, in full settlement of account. --Nov. 6-- Received from David Newman his note for $650.00 with interest at 6%, payable in 30 days, in settlement of account. We discounted this note at First National Bank. --Nov. 7-- Paid our note given Oct. 6, to National Spice Co., amount $150.00 with interest at 6%. This note was paid by check #11 to Mechanics Bank. --Nov. 8-- Bought from Valley Mills on our note for 30 days with interest at 6%, 100 bbls. flour at $5.25 per bbl. --Nov. 9-- Discounted our note for $1,000.00, 30 days, at First National Bank. --Dec. 6-- Jackson & Co., paid their note due to-day, $214.00. --Dec. 6-- David Newman paid $300.00 on his note due to-day. Gave new note for balance due, payable in 30 days with interest at 6%. --Dec. 8-- Paid our note to Valley Mills by check #11. --Dec. 9-- Paid $500.00 on our note to First National Bank by check #12. Gave new note for $500 payable in 30 days, interest at 6%. --Dec. 9-- Andrew White paid sight draft, $42.60, through First National Bank, exchange $.10. --Dec. 9-- J. D. Jenks accepted our 30-day draft for $140.00, which we discounted at First National Bank at 6%. --Dec. 10-- Accepted a 30-day draft for $75.00 drawn by Eastern Woodenware Co. --Dec. 11-- Gave First National Bank our check for $90.00 to pay 60-day draft of Farwell & Graves accepted by us Oct. 11. --Dec. 12-- Gave First National Bank our check for $41.00 to pay sight draft of Dun & Co. [Illustration: ACCOUNTING DEPARTMENT, SWIFT & COMPANY, CHICAGO] SINGLE PROPRIETOR'S AND PARTNER'S ACCOUNTS RETAIL BUSINESS =1.= In this section we demonstrate complete sets of books for a retail business, showing every necessary step in bookkeeping from the opening of the business. The first set represents a small business in which the simplest methods are adequate. The business is owned by a single proprietor who opens a retail grocery store. =2. Opening the Books.= Remembering that bookkeeping is the art of recording the transactions of a business, the first thing to be done is to make the proper opening entry of the books. Being the opening entry, it should record the first fact of importance, which is that the business has been opened. Since bookkeeping should exhibit the exact financial standing of the business, the next step will be a complete statement of assets and liabilities. It is customary to make this opening entry on the first page of the journal. The entry should be a plain statement of facts which can be readily understood by anyone. =3. Books Used.= In this set, the books used are Journal, Cash Book, and Ledger. In addition a _counter book_ or _blotter_, corresponding to a day book, is used. This is a rough book in which are recorded sales on account, cash purchases, and sometimes payments on account. The entries are merely memoranda of transactions, made when they occur, to be later entered in the regular books. No bookkeeper being employed, it would be inconvenient for the proprietor or his clerk to go to the desk and make a detailed entry every time a sale is made, and so the transaction is entered in pencil in the blotter. Bookkeeping records must be permanent, and should always be made in ink; and it is advisable, when possible, to have all entries made in one handwriting. A sample page of the blotter, which illustrates its use, is shown (p. 3). The marks // indicate that the item has been transferred to journal or cash book. =4.= The ledger used is one with journal ruling. In posting, each item is entered in the ledger. This is a very satisfactory plan for a small business, as the items of which each charge is composed can be seen at a glance. More space is required for an account, but the saving in time in making statements is a distinct advantage, especially when the proprietor is his own bookkeeper. With the ordinary style of ledger, it is necessary to refer to books of original entry to find the items. [Illustration: Ledger with Journal Ruling] =5. Statements.= Customers frequently request detailed statements of account which will give full particulars of each transaction, including each item. At other times the proprietor sends statements to his customers, with a request for payment. When this is done, it is not necessary to enter each item, a statement of the balance due being sufficient unless an itemized statement is requested by the customer. =6.= The business is opened by William Webster on the 21st day of November, 190-. He is to conduct a retail grocery business, and has rented a store from Wm. Bristol at a monthly rental of $30.00. His resources consist of cash $600.00; merchandise, consisting of a miscellaneous stock of groceries, $964.50; personal accounts due him as follows: Henry Norton, $25.00; L. B. Jenkins, $22.70. His liabilities consist of two accounts due for goods purchased, as follows: Brewster & Co., Rochester, N. Y., $115.20; Warsaw Milling Co., $64.00. The opening entry, which furnishes a permanent record of these facts, is shown (p. 4). =7. Proprietor's Account.= The proprietor's account is an account representing capital when the business is owned by a single proprietor. When the business is started, this account is opened in the name of the proprietor (Wm. Webster, Proprietor), and to it is credited his net investment. From time to time the books are closed and the proprietor's account then receives credit for the net profits or is debited with the net losses of the business. [Illustration: Day Book] [Illustration: Opening Entry in Journal] [Illustration: AIR-LINE MEAT-CARRYING SYSTEM FOR A LARGE RETAIL MARKET Lamson Consolidated Store Service Co.] When the proprietor withdraws money or goods from the business for his personal use, the amount may be charged to his investment or proprietorship account, or to a personal account (Wm. Webster, Personal) opened in his name. The latter method is recommended by some writers for the reason that the proprietor's personal expenses, or those of his family, are then separated from the expenses or capital expenditures of the business. As a customer of the business, he is placed on the same basis as any other individual. But the personal account must be closed some time; he must pay it in cash, or close it into profit and loss so that it finally operates to reduce his net investment. It appears, therefore, that the question whether withdrawals are charged to the investment or a personal account is largely a matter of personal preference. =8.= The opening entries having been made, the books are now ready for the recording of the regular transactions of the business. The following transactions are shown in the model set, but the blotter is omitted, all transactions being entered in the journal and cash book. The sample page of the blotter described in Article 3 is sufficient to illustrate its use. SAMPLE TRANSACTIONS =9.= --Nov. 21-- Sold to Henry Norton on account, 10# sugar .05½ $.55 2 cans corn .25 1 can peas .15 3# rice .30 ------ 1.25 --Nov. 21-- Sold to John Smallwood on account, 5# butter 1.00 4# lard .50 1 doz. eggs .25 ------ 1.75 --Nov. 21-- Cash sales 14.10 --Nov. 22-- Sold to Harry Webster on account, 7 bars Lenox soap .25 1 pkg. gold dust .20 matches .15 ¼ bbl. flour 1.35 ------ 1.95 --Nov. 22-- Bought for cash 10 doz. eggs .21 2.10 --Nov. 22-- Cash sales 11.27 --Nov. 23-- Bought from H. Klink & Co., Buffalo, N.Y., on account, 278# hams .11 30.58 200# lard .07½ 15.00 ------ 45.58 --Nov. 23-- Sold to F. W. Bradley on account, 2 bu. potatoes 1.60 --Nov. 23-- Sold to C. D. Glover on account, 1 bbl. apples 3.25 5 gal. vinegar 1.25 ------ 4.50 --Nov. 23-- Cash sales 13.20 --Nov. 24-- Bought from John Smallwood on account, 100 bu. potatoes .60 60.00 Paid him cash 25.00 --Nov. 24-- Sold John Smallwood on account, 2# cheese .32 1 bottle vanilla ext. .35 1# coffee .35 1# tea .60 ------ 1.62 --Nov. 24-- Sold to A. C. Maybury on account, 1# royal baking powder .50 1# corn starch .10 1# soda .10 2 pkgs. jello .20 ------ .90 --Nov. 24-- Cash sales 15.10 --Nov. 25-- Paid Brewster & Co. Cash 115.20 --Nov. 25-- Sold to L. B. Jenkins on account, ½# pepper .20 ½# cloves .20 ¼ bbl. flour 1.35 ------ 1.75 Sold to D. E. Johnson on account, 12# ham .14 1.68 --Nov. 25-- Received from Henry Norton Cash 26.25 --Nov. 25-- Cash sales 13.00 --Nov. 26-- Sold to Wm. Bristol on account, 11# ham .14 1.54 1 qt. bottle olives .50 2# coffee .70 20# sugar .05½ 1.10 ------ 3.84 --Nov. 26-- Credit Wm. Bristol 1 month's rent 30.00 --Nov. 26-- Sold to C. D. Glover on account, ¼ bbl. flour 1.35 1# baking powder .50 7 cakes borax soap .25 ------ 2.10 --Nov. 26-- Paid clerk hire 8.00 --Nov. 26-- Cash sales 18.70 --Nov. 28-- Sold to H. N. Shaw on account, 1 bu. potatoes .80 1 doz. cans corn 1.50 ------ 2.30 --Nov. 28-- Sold to Watkins Hotel Co., on account, 10 bu. potatoes .75 7.50 50# lard .10 5.00 20# ham .13½ 2.70 ------ 15.20 --Nov. 28-- Cash sales 9.45 --Nov. 29-- Bought from Lowell & Sons 500# sugar .04¾ 23.75 50 gal. molasses .30 15.00 ------ 38.75 --Nov. 29-- Bought from Star Salt Co. 10 bbls. salt .80 8.00 --Nov. 29-- Sold to R. H. Sherman on account, 1# coffee .25 1# chocolate .45 1 qt. olive oil 1.35 ¼# ginger .15 ¼# pepper .15 1 pkg. mince meat .10 2# lard .25 ------ 2.70 --Nov. 29-- Cash sales 14.35 --Nov. 30-- Received from F. W. Bradley Cash 1.60 --Nov. 30-- Paid Warsaw Milling Co. Cash 64.00 --Nov. 30-- Sold to John Smallwood on account, 1 bbl. salt 1.10 --Nov. 30-- Sold to D. E. Johnson on account, 10# lard .10 1.00 1# baking powder .50 1 pk. apples .35 ------ 1.85 --Nov. 30-- Bought for cash 5 bu. apples 1.00 5.00 --Nov. 30-- Cash sales 17.90 [Illustration: Journal Entrees Recording all Transactions] [Illustration: Journal Entries Recording all Transactions] [Illustration: Journal Entries Recording all Transactions] [Illustration: Cash Book] [Illustration: Journal Ruled Retail Ledger] [Illustration: Journal Ruled Retail Journal] [Illustration: Journal Ruled Retail Ledger] [Illustration: Journal Ruled Retail Ledger] [Illustration: Journal Ruled Retail Ledger] [Illustration: Journal Ruled Retail Ledger] At the close of business, Nov. 30, a trial balance of the ledger accounts is taken. No attention is paid to the accounts which are closed, the open accounts being only included in the trial balance. The proprietor wishes to know whether the business has made or lost money, and what the gross and net profits (or the losses) have been. To obtain this information the books are to be closed. Before this process can be completed, it is necessary to know the value of goods now in stock--that is, to _take an inventory_. INVENTORY =10.= An inventory is taken by counting, measuring, or weighing all goods in stock. The stock is listed on journal paper or in a day book, listing first the quantity; second, the name of the article; third, the price; fourth, the value of each item. [Illustration: Inventory Sheet] [Illustration: Trial Balance] =11. Pricing.= In taking an inventory, _all goods must be priced at cost--never at the selling price_. If selling prices are used, credit is being taken for profits which cannot be earned until the goods are sold. It may even be found advisable at times to list goods at less than cost. Some classes of goods deteriorate; at other times the stock may contain merchandise that was purchased on a high market, on which prices have been materially lowered. To price such goods at actual cost prices is creating fictitious values. Conservatism is necessary in pricing an inventory, for the taking of credit for unearned profits is wrong in principle. This inventory shows the cost of goods in stock to be $1,042.77. =12. Closing the Books.= This is the process of balancing all revenue accounts, and transferring the balances to the profit and loss account, the balance of the account being finally transferred or closed into the capital, surplus, or deficiency account, as the case may be. We have learned that in a single proprietorship, profit and loss is finally closed into capital or investment account. [Illustration: ERECTING SHOP IN THE WORKS OF THE BALDWIN LOCOMOTIVE WORKS, PHILADELPHIA, PENNA.] This being a trading business, the first step is to open a _trading account_ for the purpose of finding the gross profit. The accounts now in the ledger to be closed into trading account are _merchandise_, _inventory_, and _purchases_, which are entered on the debit side; and _sales account_, which is entered on the credit side. The present inventory is now entered on the credit side; the two sides of the account are footed; and the difference or balance represents the gross gain or loss. =13.= The trading account shows a credit balance or gross profit of $92.00. This balance is now closed into profit and loss, being entered on the credit side. The only revenue account now open is expense, which shows a debit balance of $38.00. This is a revenue expenditure, representing a loss, and is therefore transferred to the debit or loss side of profit and loss account. Profit and loss shows a credit balance or net profit of $54.00. The balance closes into the account of the proprietor, where it is entered on the credit side increasing his net investment to $1,487.00. NOTE--Complete postings from page 4 of the journal. =14.= _A balance sheet_ should now be prepared; and if our work is correct in every particular, the present worth will correspond in amount with the net investment shown by the proprietor's account. BALANCE SHEET, Nov. 30 _Assets_ Cash $535.62 Accounts Receivable 57.63 -------- $593.25 Merchandise Inventory 1,042.77 1,042.77 1,636.02 -------- _Liabilities_ Sundry Accounts Payable 149.02 149.02 -------- Present Worth $1,487.00 [Illustration: Closing Entries, Trading and Profit and Loss Accounts] EXERCISE =15.= On a certain date the assets and liabilities of John Noble are as follows: ASSETS: cash, $450.00; inventory, $762.50; due from sundry debtors--John Lane $30.00, Henry Watson $17.60, D. B Olin $27.60. LIABILITIES: due sundry creditors--Perkins & Co. $90.00, F. C. Watkins $54.00. The following transactions take place: April 1: Sold to Wm. Aultman on account, 1 bbl. apples $4.50; 10 bu. corn @ 48c. Bought from Mills & Sweet, 114# cheese at 11c. April 2. Sold to Henry Watson on account, 10 bu. potatoes @ 75c; D. B. Olin paid his account in cash; sold for cash, miscellaneous merchandise $17.20. April 3. Sold to Andrew Nevin on account, 20# lard at 11c, 14-1/2# ham at 15c; sold to Homer Miller on account, 1/4 bbl. flour, $1.55, 3 doz. eggs @ 26c, 20# sugar @ 5-1/4c; sold for cash, miscellaneous merchandise $18.60. April 4. Paid Perkins & Co., cash 90.00; sold Marvin Stetson 1 bbl. apples $4.50, 2# coffee @ 40c, 1# tea @ 60c; Wm. Aultman paid his account in full; sold for cash, miscellaneous merchandise $16.30. April 5. Bought from Geneva Milling Co. 100 bbls. flour @ $3.25; sold to D. Wiseman 2 bbls. salt @ $1.10, 10# sugar @ 5-1/2c; sold for cash, miscellaneous merchandise $14.90. April 6. Sold F. C. Watkins 20 bu. corn @ 35c, 10# butter @ 30c, 1 vinegar cask $1.50; paid F. C. Watkins cash $42.50; Henry Watson paid his account in full; paid 1 month's rent $35.00; paid clerk hire $7.00; sold for cash, merchandise $27.90. At the close of business, the merchandise inventory was $987.75. Using journal, cash book, and ledger, open the books, enter and post these transactions Make a trial balance and a balance sheet, showing present worth. Does the business show a profit or a loss, and how much? How is the amount determined from the balance sheet? Close the books into the proper accounts, showing gross and net profit and loss. To what account is the profit or loss transferred? RETAIL COAL BOOKS =16.= The proprietor wishes to retire from the grocery business, and, having an opportunity to sell the stock at inventory value, does so, receiving $1,042.77 in cash. He immediately pays sundry accounts payable, $149.02. He collects all accounts receivable except the amount due from L. B. Jenkins, $24.45. This leaves him with assets consisting of cash $1,462.55; due from L. B. Jenkins, $24.45; and no liabilities. He next engages in the retail coal business, investing his entire assets. He rents an office and yards at $40.00 per month, and engages a teamster who owns a team and wagon, paying him $24.00 per week. =17.= In this business there are introduced a sales book, with which the student is familiar, and a form of ledger known as _center ruled_ (p. 25). This form at first appears slightly confusing; but there is considerable advantage in having the debit and credit columns side by side, as balances can be calculated more readily. =18.= The cash book used is one having three columns. On the debit side the third column is used for cash sales. The footing is carried forward until the end of the month, or any other time when a trial balance is desired, when the amount is posted in one item. All bills are paid by check, the money received being deposited in the bank. =19.= An auxiliary book used in this business is a _scale book_, in which are recorded the weight of wagon, gross and net weights. Weighing the delivery wagons used by the business each morning is sufficient; this weight can be used on each load hauled for the day. And on deliveries made by the regular wagons, it is not necessary to record the weight of each load in the scale book; knowing the tare, the net weight can be recorded in the sales book. The principal use of the scale book is to record the weights of coal sold at the yards and hauled by the purchaser. When a wagon comes to the yard for a load of coal, it is of course necessary to obtain first the weight of the empty wagon; and it is important that both this and the gross weight be permanently recorded to prevent later disputes. The scale or weight book is usually made with sheets of from four to six weight tickets, perforated, having stubs which are exact duplicates of the tickets. The perforated ticket is given to the customer and the stub remains in the book as a permanent record. Since it is necessary to enter the weights in two places, and because this duplication of work is liable to result in errors, a better plan would be to omit the stub and make the book with carbon duplicate tickets. Even with the old style of book a sheet of carbon paper can be placed between two sheets and two copies of the ticket made at one writing; the record sheet to remain in the book. See illustration, p. 26. [Illustration: CENTER RULED LEDGER] =20. Uncollectable Accounts.= In the closing entries of the last model set, we have shown that the gross trading profits are represented by the balance of trading account. All profits from other sources are credited directly to profit and loss account; likewise all other losses are charged directly to profit and loss. One such source of loss is _uncollectable accounts_. To charge the loss resulting from an uncollectable account against trading profits would create a false showing in respect to the trading profits during the current period, for the reason that the account may represent sales made during a former period. [Illustration: Scale Book] SAMPLE TRANSACTION =21.= The transactions which follow represent the business for the period covered: --Dec. 10-- Commenced business with the following assets: Cash $1,415.55 Due from L. B. Jenkins 24.45 --Dec. 10-- Bought from Lehigh Coal Co., on account, 25 tons nut coal $4.25 106.25 --Dec. 10-- Bought from Reading Coal Co., on account, 25 tons egg coal 4.25 106.25 15 tons pea coal 3.75 56.25 -------- 162.50 --Dec. 10-- Deposited cash 1,400.00 --Dec. 11-- Sold to Henry Newton 2,000# nut 5.25 5.25 --Dec. 11-- Sold to D. H. Kennedy 6,000# egg 5.75 17.25 4,000# nut 5.75 11.50 -------- 28.75 --Dec. 11-- Sold for cash 1,000# nut 5.25 2.63 --Dec. 12-- Sold to Andrew White 4,000# egg 5.75 11.50 1,000# pea 5.25 2.63 -------- 14.13 --Dec. 12-- Sold to F. W. Francis 6,000# nut 5.75 17.25 1,500# pea 5.25 3.94 -------- 21.19 --Dec. 12-- Sold for cash 4,000# nut 5.75 11.50 --Dec. 13-- Bought from Lackawanna Coal Co. 50 tons run of mine 3.25 162.50 --Dec. 13-- Sold to Eastern Foundry Co. 25 tons run of mine 3.75 93.75 --Dec. 13-- Sold to Geo. Miller 8,000# egg 5.75 23.00 --Dec. 13-- Sold for cash 2,000# nut 5.75 5.75 4,000# nut 5.25 10.50 2,000# pea 4.75 4.75 -------- 21.00 --Dec. 13-- Deposited all cash on hand --Dec. 14-- Bought from Lehigh Coal Co. 30 tons nut 4.25 127.50 --Dec. 14-- Sold to Lotus Club 10 tons nut 5.75 57.50 --Dec. 14-- Sold to David Meyer 4,000# pea 5.25 10.50 --Dec. 14-- Sold to City Wagon Co. 10,000# run of mine 4.50 22.50 --Dec. 14-- Sold for cash 6,000# egg 5.25 15.75 --Dec. 15-- Paid Lehigh Coal Co. Check# 1 106.25 --Dec. 15-- Received from D. H. Kennedy Cash in full payment of his account. --Dec. 15-- Sold to Samuel Hartley 1,000# pea 4.75 2.38 2,000# nut 5.25 5.25 -------- 7.63 --Dec. 15-- Sold for cash 2,000# pea 5.25 5.25 5,000# nut 5.25 13.13 4,000# egg 5.25 10.50 2,500# run of mine 4.25 6.38 -------- 35.26 --Dec. 15-- Paid Henry Wiggins, teamster Check #2 24.00 --Dec. 15-- Paid D. H. Tuttle 1 month's rent, check #3 40.00 --Dec. 15-- Deposited all cash on hand --Dec. 15-- Charged L. B. Jenkins account to profit and loss EXERCISE =22.= Open the books, using cash book, sales book, journal, and ledger. Enter each transaction, and make all postings to ledger. Take off a trial balance of the ledger accounts. At the close of business, Dec. 15, the inventory is taken, and shows the following quantities on hand: 38 tons nut @ 4.25 14 " egg @ 4.25 9 " pea @ 3.75 18½ " run of mine @ 3.25 Close all accounts representing trading transactions into a trading account, and find the gross trading profit or loss. Close trading and revenue expenditure accounts into profit and loss account. Close net profits into proprietor's account. Bring down the balances in the ledger and take a new trial balance. SALES TICKETS =23.= In a retail business it is necessary for the sales person to record purchases at the time the goods are selected by the customer. When but one or two clerks are employed, it is possible to record these sales in a counter book or blotter; but in a larger business employing several clerks, this method would be extremely inconvenient. The bookkeeper would be obliged to wait for the books; and even if two sets of counter books were provided for use on alternate days, the work would always be at least one day behind. The increase in the volume of business transacted, and the multiplicity of transactions in a retail store, have been responsible for the