For the Sales-the several Purchasers are made Dr. to the article in Co., and when the Sales are finished, the entry is GOODS IN CO. Dr. to Sundries. To Adventure in Co. for the amount of that account. To Charges........for rent and incidents during the sale (if any). To each Partner....for his share of gain. To Profit and Loss..for your share of gain, (see set C.) If there has been a loss the necessary entries will readily occur to the young accountant. CHAP. IV. OF POSTING AND BALANCING THE BOOKS. The posting of the Ledger, is the transferring of the accounts in the Journal entries into the Ledger. The first step is to allot a space for each account. The room for every account cannot be exactly known, but must be conjectured from the number of the transactions which are likely to follow. The accounts may be opened as they occur in the Journal; or accounts of the same kind may be placed together. This last arrangement is more convenient in extensive business; where it is often necessary to look into several of these accounts at the same time. Next, an Index will be necessary for pointing out the folios of the Ledger where the accounts are opened. The titles of the accounts are entered alphabetically in the Index; that is, personal accounts by the first letter of the sirname, companies by the sirname of the person who stands first in the firm, and every other account by the first letter of the first word. In posting the Ledger, proceed in the following manner; First, turn, by the help of the Index, to the account that is Dr. in the Journal-post, where it is opened in the Ledger; then, on the Dr. side of the account, write the date on the margin, and on the same line say, To the Account, that is Cr. annexing a short narration if necessary; next insert, in the reference column, the page of the Journal from which you are posting, and the sum in the money column; then turn to the account that is Cr. in the Journal-post, and on the Cr. side say, By the account that is Dr., inserting the date, reference, and sum, as before; this being done, turn to the Journal, and mark on the margin, or in a column allotted for the purpose, the folio of the Ledger where the entry is posted. In complex posts, that is, where there are several Drs. or Crs. turn to each in their order, and enter the articles according to the foregoing directions. When the space allotted for any account in the Ledger is filled up, the account must be transferred to another folio; for this purpose write on both sides of the account opposite where the sums will be placed when the account is added, Transferred to Fol. and insert the folio where the account is opened anew. Then after writing the title of thə new account, and entering the new folio in the Index, write on the Dr. To amount brought from Fol. -, and on the Cr. By amount brought from Fol. , inserting on each side, the folio where the account was first opened. The sums of an account transferred should be left blank till the Books be compared, as an error in any of the entries will occasion an alteration in the sum. When either side of an account is full, both sides should be transfer. red, and a diagonal line drawn, to fill up the vacant space on the side which requires it. Having posted into the Ledger all the articles in the Journal, before you close the accounts, it is proper to make a Trial Balance, in order to try if the Dr. and Cr. sides correspond. For this purpose, prepare two sheets of paper, ruled with two money-columns, for Dr. and Cr.; write Profit and Loss as the title of the one sheet, and Balance as the title of the other; then leaving Stock, and Profit and Loss, open till the last, take the balance, or difference of every account, in the following manner : In the Cash Account enter the difference, which is the cash on hand, on the Dr. side of the balance sheet. In Personal Accounts, if the Dr. be greatest, enter the difference on the Dr. side of the balance sheet; but, if the Cr. be greatest, the contrary. In Bills Receivable, enter the difference, which is the bills on hand, on the Dr. side of the balance sheet. In Bills Payable, enter the difference, which is the sum owing in accepted bills, on the Cr. side of the balance sheet. In Goods, or other Property, if the whole be on hand, enter the amount on the Dr. side of a balance sheet. If all be sold, and the Cr. side of the account be greatest, enter the difference, which is gain, to the Cr. side of the Profit and Loss sheet; but if the Dr. side be greatest, the difference is loss, and is entered on the Dr, side. If part be on hand, enter the value of it, (estimated at prime cost, or at the current prices,) to the Dr. side of the balance sheet, and then ascertain the gain or loss on the part sold, which enter on the proper side of the profit and loss sheet. In accounts of Adventures, when no returns have been made, enter the amount which stands at the Dr., on the Dr. side of the balance sheet. If returns be made, and the account credited for the proceeds of the sales, enter the gain or loss on the Cr. or Dr. side of the profit and loss accordingly. In accounts subsidiary to PROFIT and Loss, such as Charges, House, or Proper Expences, Interest, Commission, and Insurance, enter the difference on the proper side of the profit and loss sheet. When you have in this manner collected all the balances, add the profit and loss sheet, including the sums which stand at that account in the Ledger. The difference is the net gain or loss: To this, add the difference of the Stock account, and the sum exhibits your net stock or capital, and which will correspond to the difference of the balance sheet, if the books be correctly posted, and the balances exactly collected.The reason of this will appear from what follows: The Balance account contains on the Dr. the cash on hand, the value of the goods, or other property which belongs to you, and all debts due to you. The Cr. contains the sums you owe in open accounts and in accepted bills. The difference of Balance, therefore, exhibits your net capital at present. The Stock account contained your effects and debts at the commencement of the Books; therefore, the difference shews your net capital at that time; and when your profits are added, or losses subtracted from this sum, it will, of course, also shew your net stock or capital. Hence, the proof of Book-keeping by Double entry, consists of two methods of ascertaining what your net stock or capital is: the one from a view of your present effects and debts; the other, from your former stock, allowance being made for your profits and losses; and both will correspond, if the Books be correct. The difference of Stock and Balance being found to agree, your next work is to close the several accounts. For this purpose, transfer the sum or difference of each account to its proper place in the Ledger, or as is done in set B.; or if the particulars of the profit and loss and balance sheets are to be inserted in the Journal, as is done in set C. make the following entries : 1st, Profit and Loss Dr. to Sundries, viz. the several accounts on the Dr. side of the profit and loss sheet; and, 2d, Sundries Drs. to Profit and Loss, viz. the several accounts on the Cr, side. 3d, Balance Dr. to Sundries, for the cash and goods on hand, and debts belonging to us-the particulars of the Dr. side of the balance sheet. 4th, Sundries Drs. to Balance, for the debts owing by us on the Cr. side. When the articles, which are comprised in these entries, are posted into the Ledger, all the personal, real, and subsidiary accounts, will balance, and you may add them as they are posted. The only accounts that remain open are Stock, Profit and Loss, and Balance. To close these accounts, transfer the difference of Stock to the Cr. of Balance, as in set B. In set C. every article in the Ledger is posted from the Journal; and therefore the following entries are made to close the Books: 1st, Profit and Loss Dr. to Stock, for net gain; or, Stock Dr. to Profit and Loss, for net loss. 2d, Stock Dr. to Balance,.......for net capital. The reason of the difference of stock agreeing with that of Balance, may be explained in a different point of view. It was formerly observed*, that the whole sums of the Dr. and Cr. sides of the Ledger are equal; and therefore, if the sides of every account, except one, be balanced, that one will balance of its own accord. The Balance account alone remains open, and upon trial, you will find that both sides are equal. It is not necessary to begin new Books after balancing, nor to open the accounts anew, unless the present folios be filled up. The balances may be brought down, and the accounts continued in the same folios; but it is best to begin a new Ledger, if the present one appear to be insuf. ficient to contain the business till another Balance. The articles of the balance sheet supply materials to begin the new Books, and these are made the first entries in the Journal. † When a person in the course of business comes to have several sets of Books, it is usual to distinguish them by the letters of the alphabet. The first set is marked A, the second B, and so on. * Vide p. 22. + Compare the balance of set B., with the first entries in the Journal of set C. WASTE-BOOK AND JOURNAL. The Learner in transcribing this Book for the Introductory Set, omits the Initials at the beginning of each Entry, as these are only given to direct him in forming this Set with Subsidiary Books. D. B. stands for the Day-Book Entries. B. B.. ....for the Bill-Book Ditto. N. B. The Particulars and Prices of the Purchases and Sales are not given, because these afford the Learner no information respecting the Journal Entries, and would extend the Transactions to an improper length for School. D WASTE-BOOK (B). Containing an Inventory of my Subject, and the Daily Occurrences of my Trade, from 1st January to 1st April, 1809. LONDON, 1st JANUARY, 1809. I have in Cash... (A. B.) Bills Receivable.. for the following Bills in hand, viz. 159, 163, Ord & Davis. Madder........for 10 Casks Spanish, Inventory... ditto... £ s. d. 1032 10 2 647 78 354 9 4 254 7 3 Cotton Yarn....for 220 Bundles Water Twist, ditto... 293 10 6 Cotton Wool....for 14 Bales Pernam. To Bills Payable, for the following Bills accepted by me, and unpaid, viz. 436 17 8 8 4 0 370 10 112 15 0 29019 6 C. B. Received Payment of H. Gay & Co.'s Bill, No. 157 289 10 0 |