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It is obvious that the sum of the totals of the classification columns should agree with the sum of the totals of the columns containing the entries (i.e., the Allowances, Discounts, Cashier, and Bank columns). Of course, the commencing and closing balances (Cash and Bank) must be omitted from consideration.

The entries described as “ Petty Cash, Warehouse,” and “Petty Cash, Mill,” represent Cash supposed to be handed to sub-cashiers for small disbursements. The payments made by the sub-cashiers should be recorded in petty cash books to be submitted periodically to the chief cashier for him to inspect and verify. The Petty Cash Books should be used only for very small disbursements, and no entries must be made therein that require to be posted to the Ledgers. If desired, a special column may be added to the Cash Book for extending entries of incidental expenses, the total of which may be posted quarterly. The Petty Cash Books may be ruled with columns for classifying the payments, but this is necessary for manufacturers only in comparatively few instances.

THE LEDGERS.

The explanations given in the descriptions of the several Ledgers of Set I. apply equally to those of Set II. It will, therefore, only be necessary to supplement the remarks on pages 65-73 by explaining the treatment of accounts containing transactions which do not conform exactly to the rules already laid down.

It will be observed that both discount and cash (or bill) are in every instance posted in one sum to the Ledger accounts, the amount of the discount being stated alongside. It is preferred by some to post the discount and cash in separate items, as in Set I. The adoption of either method may be left to the choice of the book-keeper, but the exact amount of discount allowed should always be set out in the Ledger for future reference.

THE PURCHASES or MILL (h) LEDGER.

See Example, pages 130–136.

In posting to the Cr. side of the Purchases Ledger from the Purchases Day Book, it is convenient to mention the class of goods comprised in the purchase (e.g., " Material,” “Dyewares,” &c.,), and it will be observed that this is done in the example.

(h) The words “or Mill” are added because the Purchases Ledger is usually kept at the mill and the Sales Ledger at the warehouse (if any). Moreover the Mill Sales are posted to the Purchases Ledger (see Mill Sales Day Book). It is often con. venient for the Sales and Returns Day Books, the Bills Receivable Ledger and the Sales Ledger, together with a separate Cash Book, to be kept at the warehouse and balanced apart from the remaiving books, which are kept at the mill. When this is done all payments, except for petty expenses, should be made at the mill, the Warehouse Cash Book being used solely for cash received.

The following accounts require special comment, viz :Merton, Walker & Co., London. Folio 7, page 133.

This account shews how to treat a small payment made by the firm for carriage of goods purchased, which is recoverable from the vendor. The payment made on Feb. 17th is entered in the Cash Book (see page 109, folio 2) and posted direct to the Dr. of this account. The account also shews how to rectify an overcharge on goods purchased. The amount of the overcharge is entered on March 28th, in the Returns and Claims (Purchases) Day Book (see page 94) and is posted to the Dr. of this account.

Littlewood, Wilson & Co., Batley. Folio 18, page 136.

This account shews how small amounts of interest (i) may be posted to personal accounts. A note is inserted in the account stating that the machinery purchased is to be paid for by instalments of 100 per quarter, with interest at 5 per cent. per annum. It is therefore necessary, as each quarterly payment becomes due, to credit Littlewood, Wilson & Co. with the amount of interest accrued to date. Bearing in mind the rule (see page 65) that the Ledger is for postings only, the amount of interest is first entered in the Discounts column on the left hand side of the Cash Book (see pages 116, 120 and 126). Rushforth, R. & Co., Huddersfield. Folio 21, page 136.

The firm is supposed both to buy material from and to sell manufactured goods to R. Rushforth & Co.; and an account bearing their name is opened in the Purchases Ledger and another in the Sales Ledger (see page 143, S.L., folio 14). On July 21st a settlement is made of both accounts as follows :

£ s. d. R. Rushforth & Co. are Creditors for goods purchased from them (see Purchases Ledger, folio 21)

79 18 II Less Discount...

3 9 II

76 90

R. Rushforth & Co. are Debtors for goods sold to them (see Sales Ledger, folio 14)

54 5 Less Discount

I 6 I

I

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(i) The manner of dealing w interest on loans is referred to on page 216. Items of interest of the character above described are rare in a prosperous business, but where they are at all numerous it may be desirable to appropriate a small book, or portion of a book, in which to record the entries.

These and other abnormal transactions may be journalised, but the use of the Journal in ordinary cases is undesirable, and it is seldom that it cannot be dispensed with.

A cheque for £23 ios. od. is handed to R. Rushforth & Co. in settlement of both accounts. This transaction is entered as though the amount owing by R. Rushforth & Co. had been received and the full amount owing to them had been paid. Thus—on the left hand side of the Cash Book, in the Cashier

column, £ 52 195. od. is entered as received; on the right hand side of the Cash Book, in the Cashier column, £ 52 195. od., and in the Bank column, £23 Ios. od. are entered as paid (see Cash Book, folio 7, pages 118, 119). The discounts allowed both on the purchases and on the sales account can thus be

entered in the ordinary way. Accounts of this character do not often arise, and it is only desirable to keep a distinct account in the Sales Ledger where the goods sold are the manufactured article sold by the firm. As already stated on page 199, accounts relating to Sales at the Mill should be entered in the Mill Sales Day Book and posted to the Purchases or Mill Ledger. Both purchases and sales can then be carried to one account; the balance received or paid in settlement being entered and posted in the ordinary way (e.g., Jonathan Mitchell, folio 14, page 135). Sundry Persons Account. Folio 23, page 136.

This account is for small purchases from firms with whom no further transactions are anticipated, and also for small sales at the mill (see Mill Sales Duy Book). In all cases where the transactions with a firm are likely to be continued a separate Ledger account should be opened in the name of that firm.

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The following accounts require explanation, viz :Atkinson, Blake & Co., London. Folio 1, page 138.

This account shews the method of dealing with a smal balance left over in settling a statement of goods due for payment. The £3 5s. 7d. carried down in italic (red ink) may represent a parcel of patterns which becomes due for payment at a later date than the current deliveries of goods. A more satisfactory method of dealing with patterns, when numerous, is described on page 200. The £3 5s. 7d. also serves to illustrate the manner in which a disputed claim, or an error in a remittance, may be brought down pending a settlement. Such balances should always be written in red ink in order to distinguish them, and to guard against their being cast up as postings when preparing the trial balance. Richardson & Clark, London. Folio 2, page 138.

This account shews the method of posting goods in respect of which a special date is fixed for payment, differing from the ordinary trade terms of credit. The due date for payment is indicated by the words "as June," "as January."

Bragg, J. B. & Co., New York. Folio 5, page 140.

This account shews the method of dealing with charges paid for and on behalf of a customer, which are re-claimable from him.

The several payments on behalf of J. B. Bragg & Co. are posted from the Cash Book to the Dr. of their account.

Where a fixed rate is added to the sale price to cover freight, duty, insurance, &c., or where such charges are included in the sale price, both goods and charges are comprised in the invoice of the goods and entered in the Sales Day Book. The outlay by the firm should be treated as an additional element of cost of the goods, and should be posted to a distinct Nominal account, being thence transferred to Section I. of the Trading Account.

Wilson, Henry & Co., Liverpool. Folio 10, page 142.

This account shews how to distinguish the items comprised in each settlement, when it is impracticable to divide them by ruling off the account.

The items marked by the letters a.a., b.b., on one side of the account, respectively balance the items marked by the same letters on the other side.

Burdon & Jones, Glasgow. Folio 11, page 142.

This account illustrates the method of treating moneys received through an agent, who deducts his commission therefrom.

The full amount received from Burdon & Jones is in each instance entered on the left hand side of the Cash Book, and the amount retained by the agent, John Alexander, is entered, as though it were paid to him, on the right-hand side of the Cash Book. The total of the customer's remittance may either be posted to the Ledger in one item, or the commission may be posted separately, as in the example.

It will be observed that the amount of the commission is entered on each side of the Cash Book in the Cash columns, as only the net amount received from the agent actually passes into the bank.

Harrop, Jonas & Sons, Halifax. Folio 12, page 143.

This account shews-(a) How to deal with a dishonoured cheque.

The amount of the dishonoured cheque is entered on the right

hand side of the Cash Book in the Bank column, and is posted to the Dr. of Jonas Harrop & Sons, from whom it

was received. (6) How to deal with the account of a customer who compounds with his

creditors. Promissory notes for the amount of the composition are

supposed to be received, and these are entered on the Dr. side of the Bills Receivable Ledger and also on the Cr. side of the insolvent customer's account.

The balance, representing the net loss after giving credit for the composition received, is transferred to the Bad Debts account in the Nominal Ledger (see page 164). The amount transferred is recorded in the Test Journal (see page 178).

Bentley & Robinson, Stroud. Folio 13, page 143.

This account shows (a) How to deal with a dishonoured bill.

The bill in this case has been deposited with the bank for

collection in the ordinary course. When dishonoured, the amount (both of the bill and expenses of noting, &c., as charged by the bank, viz., £237 55. od.), is entered on the right-hand side of the Cash Book in the Bank column (see page 119), and is posted to the Dr. side of Bentley and Robinson's account. Any additional expense incurred through the dishonour of the bill (e.g., bank commission not charged by the bank until the end of the halfyear) is entered in the Discounts column of the Cash Book alongside the amount of the bill, and is also posted to the Dr. of the customer's account (see item 5s. 6d.). The Cash Book entry should, unless immediately posted to the Ledger, describe the payment fully; in the example the description

is given only in the Ledger. (6) How to deal with an insolvent account where the settlement of the

debtor's affairs is likely to be prolonged. The whole balance due is transferred straightway to the Bad

Debts account. Dividends on account of the debt are posted when received to the Cr. of the Bad Debts account (see page 165)

Rushforth, R. & Co., Huddersfield. Folio 14, page 143.

(See Purchases Ledger, page 203).

Watkinson, Joshua, Huddersfield. Folio 15, page 143.

In paying his account Joshua Watkinson is supposed to hand over one of his own customer's cheques for more than the amount due, the surplus, £5 IS. 8d., being returned to him in cash.

The cheque received being banked by the firm, is entered on the left-hand side of the Cash Book in the Bank column (see page 114) and is posted to the Cr. of Watkinson's account. The surplus paid back to him in cash is entered on the right-hand side of the Cash Book, in the Cash column, and is posted to the Dr. of his account. Were the surplus returned in a cheque, the amount would of course be entered in the right-hand Bank column. Dyson & Rhodes, Newcastle-on-Tyne. Folio 17, page 144.

This account, like folio 2, shows how special termis, upon which goods are sometimes sold, should be stated in the Ledger, e.g., 31 June ist," indicating that payment is due less 3i per cent. discount on June ist.

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