Part 56

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.