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represent payments, returns and deductions discharging the liabilities incurred for things purchased, and are transcribed from the three following sources, viz. :(i.) The right hand side of the Cash Book (compare page 62);

both amounts paid and discount allowed. (ii.) The Returns and Claims (Purchases) Day Book (compare

page 58). (iii.) The Bills Payable Ledger (compare page 69).

In Set II. instances will be given of exceptional transactions causing deviations from the above sources of posting.

The directions given below illustrate the use of the Purchases Ledger, and shew the facility of reference and ease in obtaining information afforded thereby.

DIRECTIONS.

ASCERTAIN THE FOLLOW-
ING PARTICULARS, viz :-

1. The date and amount of the last payment to E. & R. Bradley and the discount then allowed.

Also the voucher for the payment.

1. By reference to the Alphabetical Index to the Purchases Ledger we find the folio containing E.& R.Bradley's account is 2. From the Dr. side of their account we ascertain the date of the last payment, June 18, 1884, the folio of the entry in the Cash Book is 2, the amount £824 2s. 11d. and the discount £21 28. 7d. Turning to folio 2 of the Cash Book (see page 37) we find on the right hand side the consecutive number of the Voucher that is fastened in the Receipts Book-File or Guard Book indicated by the figures in the Voucher column on a line with the entry of the payment, viz. : 30.

2. Full details of the goods in respect of which the payment was made.

3. Details of goods returned to them.

2. On the Cr. side of the Ledger account we find the amounts of two invoices in respect of which the payment was made, viz. : £527 88. Od. and £321 7s.6d., and the invoices themselves, containing full details are traced to the Invoice Book-File or Guard Book by help of the reference numbers 27 and 28. These numbers also guide us to the entry in the Purchases Day Book (see page 29).

3. On the Dr. side we find “ May 17, To Returns £3 10s. Od." and the reference number 28 guides us to the invoice on which the particulars are recorded and also to the Returns and Claims (Purchases) Day Book (see page 30).

4. This is ascertained by adding up the amounts on the Cr. side subsequent to the last payment or ruling off.

Where there are any postings on the Dr. side subsequent to the last ruling off, they would of course be deducted from the total of those on the Cr. side.

4. The amount owing to them on June 30th, 1884.

THE SALES LEDGER.

The Sales Ledger is ruled in exactly the same manner as the Purchases Ledger.

As its name indicates it is appropriated exclusively for personal accounts with firms to whom goods are sold, usually on credit.

Hence the ordinary postings to Dr. side of the Sales Ledger are all from the Sales Day Book (compare page 31, and see also page 59). The ordinary postings to the Cr. side of the Sales Ledger represent amounts received, discounts, returns, and deductions in discharge of the debts due to the concern in respect of goods sold, and are transcribed from the three following sources, viz. :(i.) The left hand side of the Cash book, both amounts received

and discounts (compare page 62). (ii.) The Returns and Allowances (Sales) Day Book (compare

page 59) (iii.) Bills Receivable Ledger (compare page 70). In Set II. instances will be given of exceptional transactions causing deviations from the above sources of posting.

By way of exercise in the use of the Sales Ledger the reader may ascertain the undermentioned particulars. The directions given on page 67 as to the Purchases Ledger, if reversed and applied to the Sales instead of the Purchases Day Book, should be sufficient. (i.) The date and amount of the last cash received from Williams and Co.,

Liverpool, and the discount then allowed. (ii.) Full details of the goods in respect of which amount was received. (iii.) Details of the goods returned to them. (iv.) The amount owing by them on June 30th, 1884.

THE BILLS LEDGERS (w).

An important rule, alluded to on page 65, requires that the Ledger shall be used solely for posting entries already recorded in the separate books. In dealing with Bills, however, with a view to economise labor, to facilitate reference, and also to avoid mistakes in transcription, it is expedient to depart from this rule, which is otherwise strictly adhered to. A separate book of entry for recording Bills is dispensed with, and the particulars are entered straightway into the Bills Ledger, which is ruled into several columns so as to afford a complete abstract of each bill.

It will be observed on referring to the examples, page 43, that the sides on which the particulars of bills are recorded require considerably more space than the sides on which the cash is posted. In order to distinguish the two sides the vertical columns for cash should be ruled with faint blue lines and those for the particulars of the bills with red lines (see example of Set II.)

There are two divisions of the Bills Ledger, both of which may be bound together in one book.

(w) For full information respecting Bills of

see Appendix.

1. Bills Payable.

When a bill is given (or accepted) the particulars thereof are straightway recorded in the several columns on the Cr. side of the Bills Payable Ledger. A serial number, corresponding with the number in the Bills Payable Ledger, is marked on the face of each bill.

The Date given, Serial number and Amount are then entered on the Dr. side of the account in the Purchases Ledger bearing the name of the party to whom the bill is given, and the folio of the Purchases Ledger account is inserted in the column of the Bills Ledger headed Purchases Ledger Folio. At the end of the quarter a line is drawn across the

page

beneath the last entry, the column containing the amounts on the Cr. side is cast up and the total is inserted. (See example page 43). In the example on March 31st, we find, (i.) A total of £1840 gs. 2d. entered on the Cr. side of the Bills

Payable Ledger. (ii.) A total of £1840 gs. 2d. entered on the Dr. side of accounts

in the Purchases Ledger ; Folios i and 5. We have already stated that these entries, Cr, as well as Dr., are made individually straightway into both the Bills Ledger and Purchases Ledger without first passing through a separate book of entry, to which fact we shall have further occasion to allude when explaining the use of the Test Journal. Nevertheless, it will be observed that the principle of double-entry, requiring a Dr. for every Cr. in the Ledger, is complied with as each entry is made.

When a bill payable matures the bank is usually advised to pay it. The payment is entered on the right hand side of the Cash book, the amount being placed in the Bank column (compare page 60, and see example pages 35 and 37). The Date, Folio of the Cash book and Amount paid are posted to the Dr. side of the Bills Payable Ledger on the same line as the particulars of the Bill, and the serial number of the Bill is inserted in the column of the Cash book headed Ledger folio.

In order to ascertain at any time the total amount of outstanding Bills, subtract the total of the Dr. column from the total of the Cr. column of the Bills Payable Ledger. The outstanding bills are individually identified by the absence of any amount posted to the Dr. side on a line with the particulars.

II. Bills Receivable.

When a Bill is received the particulars thereof are straightway recorded in the several columns on the Dr. side of the Bills Receivable Ledger. A serial number, corresponding with the number in the Bills Receivable Ledger, is marked on the face of each Bill.

The Date received, Serial number and Amount are then entered on the Cr. side of the account in the Sales Ledger bearing the name of the party from whom the bill is received, and the folio of the Sales Ledger account is inserted in the column of the Bills Receivable Ledger headed Sales Ledger folio.

At the end of the quarter a line is drawn across the page beneath the last entry, the column containing the amounts on the Dr. side is cast up and the total is inserted (see example page 43). In the example on March 31st we find, (i.) A total of £ 2085 135. od. entered on the Dr. side of the

Bills Receivable Ledger, (ii.) A total of £ 2085 135. od. entered on the Cr. side of

accounts in the Sales Ledger; Folios 2 and 7. As we have already stated these entries, Dr. as well as Cr., are made individually straightway into both the Bills Ledger and Sales Ledger, to which fact we shall have further occasion to allude when explaining the use of the Test Journal. Nevertheless, it will be observed that the Dr. and Cr, entries of the Bills in the Ledgers (Bills and Sales) are equal.

When a bill is deposited with the bank for collection the amount is entered as received on the left hand side of the Cash book in the bank column (compare page 6o, and see example, pages 34 and 36. The Date, Folio of the Cash book and the Amount received are posted to the Cr. side of the Bills Receivable Ledger on the same line as the particulars of the Bill, and the serial number is entered in the column of the Cash book headed Ledger folio.

In Set II, the treatment of bills is explained under a variety of circumstances in which they may be employed and disposed of. It is customary however to deposit with the bank for collection all bills received, either immediately before they mature, or at an earlier date, according to the financial needs or arrangements of the firm (see Finance). In our example, page 43, it is supposed that Bills Receivable Nos. 1 and 2 are kept in hand until two days before maturity. Nos. 3, 4, 5, 6 and 7 are deposited in the bank before they become due, in order to provide the bank with funds to meet prospective drafts.

The bank charges for discounting bills are usually included with the commission, interest, &c., and entered in the pass book half-yearly. If specified separately the items should be abstracted from the pass book once every month. In either case the amount is entered on the right hand side of the Cash book (Bank column) as a payment. (See example page 37).

In order to agree and check the amount of Bills in hand, substract the total of the Cr. column from the total of the Dr. column of the Bills Receivable Ledger : the individual bills are identified by the absence of any amount posted to the Cr. side on a line with the particulars.

THE PRIVATE LEDGER (x).

The Private Ledger contains Property and Nominal Accounts (compare page 8). It is ruled in a similar manner to the Purchases and Sales Ledgers, except that another money column is added on both the Dr. and Cr. sides, and more space being required each folio occupies two pages instead of one. (See pages 44 to 51).

It should be particularly observed that every book except the Private Ledger and the Cash book might be dispensed with had we only ready-money transactions to record. All moneys entered on the left-hand side of the Cash book might be posted direct to the Cr. side of those Nominal accounts in respect of which they were received. Likewise, all moneys entered on the right-hand side of the Cash book might be posted direct to the Dr. side of those Nominal accounts in respect of which they were paid. In fact, this rule is followed in nearly all transactions where no credit is given : e.g., Jones, Thos., for waste (see Cash book, page 34 and Private Ledger page 51, folio 15), Wages (see Cash book, pages 35 and 37, and Private Ledger, page 48, folio 11), also Warehouse and Office Salaries, Incidental Expenses, &c., &c.

Buying and selling on credit, however, create the need for the employment of the Purchases and Returns Day Books and Purchases Ledger on the one hand, and the Sales and Returns Day Books and Sales Ledger on the other hand, for the sole purpose of keeping personal accounts. It appears therefore that, (i.) In ready-money transactions (y) the cash is usually posted

direct from the Cash book to the Private Ledger. (ii.) In Credit transactions the cash is usually posted to the

personal accounts in the Purchases or Sales Ledger, and, in lieu of the cash, the quarterly totals of the Day Books

are posted to the Private Ledger accounts. (iii.) All transactions find their way ultimately into the Private

Ledger, either directly in individual items from the Cash book as in Ready-money transactions, or indirectly in totals posted from the Day books as in Credit transactions: the Purchases and Sales Day Books and Ledgers acting as auxiliary books for the sole purpose of keeping personal accounts.

(x) In Set II. The Private Ledger is subdivided to allow the ordinary business accounts to be balanced by the book-keeper without reference to accounts of a private nature.

(y) It is convenient in some instances to open personal accounts for ready-money transactions as though credit were given, and, conversely, it is sometimes convenient to treat small credit transactions as though they were for Ready-money. The experience of the book-keeper will enable him to judge in what cases it may be expedient to do so.

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