General Information.
The Banking Business may be conducted by an individual, a partnership, or a corporation. This business is so closely connected with the affairs of all business men; so much so. that the United States congress and state legislatures have enacted laws, for the purpose of making these banking institutions reliable. The law making power has specified certain privileges that the bank may enjoy, and has imposed certain restrictions upon its action. National banks are those banks
chartered under the National bank enactments of the United States congress. State banks are those chartered or licensed and controlled by state authority. There are many banks conducted by individuals, as are other business enterprises, having no special restrictions, and these are
called Private banks.
It is the business of a bank to provide a safe place for the deposit of money until such time as the owners shall order it expended, when payment is made as the depositor directs. From the deposits of many persons a constant fund is maintained, a portion of which the bank can loan on short time to persons offering security for prompt repayment.
REMARK- One of the principal services rendered by the banks to the public may be illustrated thus: Suppose 100 persons had $100 each in cash for which they had no immediate use. If the persons hoarded the money it would be valueless until expended; if, on the other hand, they deposited it to their respective credits in a bank, the bank would hold a fund of $10,000.00, of which a certain portion kept on hand, say 25 per cent, would ordinarily meet the demands of depositors. The remainder could be loaned on short time to business concerns needing more ready money than they had. By this means, i . e. combining credit with cash, a bank increases the circulation of cash in a community, making payment of debts easier, and also increases the purchases and sales of merchandise.
From constant acquaintance with all classes of local firms, as well as from continual correspondence with other cities, banks have become the most satisfactory agents for collecting claims in the form of notes, sight drafts, accounts, etc., payable either in the locality of the bank or in other cities.
Banks, as a result of their operations, having credits with banks in other cities, regularly sell drafts on their correspondent banks, to persons desiring to transmit money.
REMARK -Although the average bank in a town or city may make collections in numerous surrounding towns , for convenience the cash balances coming from each of the banks collecting are sent to one or more of the large cities that commercially control that point. Hence, we say that a bank’s regular correspondents are located in New York , Chicago, St. Louis, San Francisco , New Orleans , etc.
Banks also confer a benefit upon depositors by preserving and returning as vouchers, (ordinarily receipted by endorsements) the checks given by depositors to other persons.
Banks also act in an advisory capacity to other business men, particularly in regard to the financial rating, business ability, history, and all matters pertaining to the credit of business houses within the range of the banker’s observation .
As a bank does not keep any merchandise for sale, the outlays of cash in the conduct of the business are in the nature of Expenses. The principal outlays of this kind are cost of safes, vaults, counters, filing cases, desks, typewriters, check perforators, etc., grouped as Furniture and Fixtures; interest, salaries, rents, books, stationery, advertising, etc., grouped as Expense. Interest to depositors is frequently a large item.
The Sources of Gain comprise interest and discount for money advanced to customers, exchange fees for drafts sold, collection charges for services in collecting paper for others, commission, and profits on purchase and sale ot bonds.
A bank’s profits may be said to depend in a general way upon the amount of deposits it is able to attract and the amount of these deposits it is able to keep loaned at a profitable rate of interest.
( The matter in the text is divided into two sets of columns . In the columns to the left are given the student’s directions or routine .-References are made from the directions to the numbered information topics in the columns to the right. )
Directions.
March 1 ( Incoming Forms 1-12 .) You are to have charge of the books of Gage,
Needham & Co., private bankers of your local city in your state, just organizing. Although, as the work progresses, you will be called upon to perform the duties of a number of positions in the bank, you are to consider your work from the standpoint of the General Bookkeeper, as this position affords the best viewpoint for a mastery of all the details of the business.
The bookkeeping will begin with the first entry required in opening a set of bank books and will expand, adding successively the various features needed by the banking business in an important trade center.
When new departments shall be opened, such as, Discount Department, Individual Deposits Department, Exchange Department, Collection Department, Clearinghouse Department, Country Banker’s Department, etc., you as a student of banking methods, should view each department as it is added, first from the position of manager of that department, and later from the position of the General Bookkeeper, who daily enters in the general books the adjustment of each department to the other.
You will consider that, at present, the banking force consists of the cashier, to whom for convenient reference we will give the surname, A. Cashier, and yourself, the general bookkeeper.
(Read in information column topic No. 1.)
You will be directed to receive papers from time to time. All incoming papers are to be found in the tablet of incoming forms and are numbered to correspond with the transaction numbers.
To remove the papers, insert a paper cutter under one sheet only, and detach the papers as called for, by separating on the dotted lines, or use a pair of scissors to separate the forms.
Thursday, March 1 .
The cashier hands you (from tablet) twelve debit and credit tickets (Forms Nos. 1-12), which represent the transactions carried out by him on the opening day. Four credit tickets represent the capital stock which has been paid in by the partners.
The debit tickets represent expenditures of cash for which the cashier retains receipted bills.
One debit ticket represents cash sent by express to your correspondent bank in Chicago. (Read Information 2, 3, 4 and 5.) Before enI.
Information .
The Cashier is the executive officer of the bank. In an incorporated bank, he is appointedby theboard ofdirectors and is their representative. He can make contracts for the bank, disburse its funds, indorse its papers, sign its
drafts, and perform all other actions of detail management. He has charge of the clerical force. He takes personal charge of loans and discounts, subject to the action of the board of directors . When the banking force is small, the cashier may attend to many of the duties performed by the department clerks in a larger
bank. The cashier should be so familiar with all parts of the bank management as to supply a temporary absence in any position.
The cashier directs the bookkeeper with reference to many entries on the general books. The latter should require of the cashier in each case a written ticket for his entries and should retain these tickets in a systematic way as vouchers.
- The title Expense is used to represent outlays for property or services that are to be used in the business within a limited period, say one year, from the time of purchase.
- The title Furniture and Fixtures represents expenditures for property that has a permanent value, used in the banking house. Among these would be included Desks, Safes, Typewriters, Shelving, Filing Cases, etc.
- The title Capital Stock represents the cash invested by stockholders or proprietors of the bank, for the conduct of the business. In a private bank, partners may be credited individually for their separate investments, as in any other business.
- Banks keep cash balances to their credit with other banks, called Correspondents, which are located in the centers of commerce.
By means of the correspondents, the local bank is able to cash, usually at par, all drafts drawn by any banks on the cities in which the correspondents are located, and mail these drafts to their correspondent banks for credit. The banks located in a large portion of the United States have correspendents in Chicago, and in New York. To the Chicago correspondent is remitted daily any checks or drafts that are payable in Chicago. To the New York correspondent are likewise remitted checks or drafts drawn on New York banks.
Frequently, cash is sent by express to the correspendent, or ordered from the correspondent bank when the conditions of trade make such action necessary.
Against the balances made by the above
Directions.
tering, arrange the debit and credit tickets in alphabetical order of the titles, placing the investment accounts first in opening entry, after which enter in the Journal as shown by the model form on page 7.
(Read Information 6.) After writing your
Journal, deduct the cash credit from the cash
debit, using a loose slip of paper for the compu-
tations. The difference should show the cash
balance. In the meantime the cashier has been
counting his cash on hand and finds that he has
$89042.31 . If your books show that he should
have that amount, you may consider the entries
of your Journal correct. You have “struck
balance” of the day’s work and can now pro-
ceed to
Extend your balances, ( Read Infor. 7.)
Turn to your Daily Balance Book, in which
you will find listed in alphabetical order all the
accounts usually needed in a Bank. Some of
these accounts pertain to a national bank only
and will not be used bythe student until he con-
verts the present organization into that of a Na-
tional Bank.
You are not supposed to understand fully
the meaning of all the titles there given, but the
five that you open today have already been fully
explained, and the others will be explained as
fully when they are opened.
Place your daily Balance Book to the right
of the Journal as close to the titles as possible,
laying the Balance Book over the Journal if
necessary, and extend as follows: Date the
first column Mar. 1 , at top. From the Journal,
combine the amounts credited to the several in-
vestors, and place the total opposite “Capital
Stock” title in the Daily Balance Book. Extend
the debit of Chicago, First National Bank into
the column in the first space opposite that title.
Likewise extend the amounts of Expense and
Furniture and Fixtures.
Cash, it will be remembered, reverses, that
is, although the excess is on the right, the dif-
ference is a debit, and enters in the ” resources”
column. Having completed the extensions, you
may foot the columns to see that the totals are
equal.
REMARK- Ordinarily the daily balances need
not be footed until the posting is done, as the ex-
tended balances of accounts changed during the
day serve better as an index to the Ledger for post-
ing purposes if they are not accompanied in the same
column by the amounts of accounts that do not
change. After posting, it is an easy matter to copy
the unchanged balances into the current column and
then prove.
Posting the Ledger. (Read Infor. 8.) Pro-
ceed as follows: With the General Journal to
Information.
means, the local bank draws drafts on its correspondent, and sells these drafts to customers who desire to transmit cash through the mails. The correspondent bank allows interest on the average daily balance of the local bank, making
an interest credit monthly.
- The General Journal contains all entries affecting the general accounts of the
bank, and is made up from tickets and vouchers
received by the general bookkeeper from the
various departments. The ruling is so arranged
that the titles appear in a vertical column, near
the center of the page, to the right and left of
which are the debit and credit money columns.
To the right and left ofthe latter are explanatory and listing columns, the use of which can
be determined from the model form. One principle of vertical listing in all blank books must
not be overlooked, viz : where several items are
listed the first item of any one account must be
placed on the base line (opposite the title) and
subsequent items listedfrom below upward.
In posting from this journal, the left hand
amounts are debits and the right hand amounts
are credits, with the exception of the last title,
Cash. In this account, the total to the left
posts to the credit, and the total to the right
posts to the debit of Cash account in the ledger.
The General Journal is ruled at the close of
the day’s work as shown in the model .
By - The Daily Balance Book contains
all the accounts of the general books with sets
ofcolumns to the right for the extension of the
daily amounts in continuous balances.
some bookkeepers the accounts are mixed in
such a way that resources and liabilities inter-
mingle, necessitating the use of red ink for credit
balances and black ink for debit balances, or
the use of two columns-one for debits and the
other for credits. The best method is to group
the resource titles separately from the liability
titles, as shown in form at close of this day’s
work,
Note that the ledger folios appear on the
Daily Balance Book immediately after the title.
The Daily Balance Book thus becomes an in-
dex to the ledger accounts when the posting is
done.
Such accounts as are affected by the day’s
work should be extended on the balance book
at the close of the day. The ledger can very
well be posted the following day. After post-
ing the ledger, transfer to the following columns
of the Daily Balance book the balances that do
not change, and prove the work by footing. - The General Ledger is ruled with
date column to the left and with four money
columns headed as follows :
Directions .
left before you, place the General Ledger to the
right upon it as close to the title column as
possible, having the Daily Balance Book to the
right of the ledger. Placing a ruler or blotter
on the Balance Book as a guide, lower it until
you come to the first account showing an ex-
tension-the cash account. Turn to the page
of the Ledger there indicated (page 2) and open
with cash. Enter the cash debit, $ 100,000.
(Remember cash on the Journal is the reverse
ofall other titles) in the debits column and place
a check mark in the Journal to show that the
posting has been done. Then enter in the credit
column $ 10957.69 and check as before. Men-
tally, if possible, (if you cannot mentally, use a
piece of paper) compute the difference between
the debit and credit balances and extend the
amount in the debit balance column. Compare
this balance with the balance already extended
in the Daily Balance Book. If the amounts
agree, the work may be considered verified.
Now slip the ruler on the Daily Balance Book
down to the next account, which shows an ex-
tension. Chicago, First National Bank account
may be opened on the page there indicated.
Post the debit found in the Journal to this
account and extend the balance (which is the
same as the entry) to the debit balances column.
Compare the amount there extended with the
extension shown in the Daily Balance Book.
If the amounts agree, proceed by slipping the
ruler down to the next account showing an ex-
tension, namely, Expense, which open on the
page indicated. Proceed likewise with Furni-
ture and Fixtures.
When the Capital Stock credit is posted, reserve the page there indicated, but under the general heading Capital Stock, sub-divide the page into four equal parts, opening an account with each of the four partners and posting the
amount invested by each regularly to his credit.
Having posted your ledger and taken your daily balance, the bookkeeping of the day’s work is completed. The tickets from which the made in the General Journal should now be placed in the general bookkeep entries were er’s file.
(Read Infor. 9 and 10.) In this and the following dates, the blank forms and rulings developed in any one date may be found on the pages immediately following the development.
See General Journal, General Ledger, and Daily General Balances, pages 7 and 8.
Information.
“Debits, Credits, Debit Balances, Credit Balances.” The debits and credits of a single day are placed in the respective columns of one line, and the balance of the account, if a debit, is placed in the Debit Balance column, and if a credit, is placed in the Credit Balance column.
In some banks, three columns are used, the third column for extensions of the balance in black ink if a credit, and in red ink if a debit. But it is much more advantageous to use an extra column, and avoid the delay and inconvenience
of changing colors.
Posting occupies a large portion of the
bank bookkeeper’s time. Methods to reduce the
labor of this process should be studied. It is of
first importance that all accounts should follow
in a uniform and recognized order for both journal and ledger. An alphabetical order is the
best. If ledger accounts are paged, the pages
can be found most readily, while posting, from
the trial balance book, the balances of which
should be compared with the extensions on the
ledger at the time when the posting is done. It
is not necessary to transfer journal folios to the
ledger or ledger folios to the journal to indicate
posting. A check mark in the journal is sufficient.
- The method of keeping bank accounts on
a special journal, balance book, and ledger is
known among bankers as the Three Book
System . It is applied by many banks to
not only the general accounts of a bank but also
to the individual depositors’ accounts. This principle is used generally in savings banks. The
student will have opportunity to compare this
method with the one book or Boston method
used later. The bookkeeper can now advantageously fix in mind the following order for
operating the Three Book System:
(1) Enter all accounts alphabetically in
journal. (2) From the journal extend in the
Daily Balance Book, such balances as are affected in the day’s work. (3) Using the Daily
Balance Book as an index, post the journal entries to the ledger, comparing extensions. (4)
Transfer such balances on the Daily Balance
Book as were not affected in the current day’s
work. (5) Foot the Daily Balance Book, and
compare footings. - Tickets. The only correct way to pass entries or amounts from one department to another is to send original vouchers or tickets made by the one transferring. The use of debit and credit tickets as summaries of the work in the different departments, when the amounts are to be transferred to the general books, should be strictly adhered to.
Directions .
March 2 ( Forms 13-29 .)
Loan and Discount Department Opened .
Remove from tablet four sheets and divide
the sheets into 5 tickets and 12 notes.
CAUTION- The collateral note No. 25 extends
from the number to bottom of the page. Keep the
entire form intact.
You will now discontinue your work as gen-
eral bookkeeper for the time, in order to open
the books pertaining to loans and discounts .
Leave the 5 tickets at the general bookkeeper’s
desk. (See “desk” in stationery outfit.) (Read
Infor. 11-12.) Examine the form, signature and
endorsements of the notes before you. The
forms of the notes made payable directly to the
bank are presumed to be filled by the cashier
and signed by the borrower. The student will
observe that they contain the usual waiver and
collection clause used by banks. The collateral
note form will repay careful reading. You will
find two notes given to the Case Machine Co.,
which they have endorsed to the bank. Six
notes signed in various ways are given to the
bank, of which one is a demand note, and one
is a note carrying with it, as collateral security,
four notes belonging to the signer. The cashier
has given cash for each of these notes except
the four attached collateral notes, comput-
ing the proceeds to be paid as follows:
The exact number of days from date of ma-
turity comprise the discount period. The rate
taken is 6 per cent for that time, considering
each day 1-30 of a month which is 1-12 of a
year. Discount is computed on the amount of
notes, at maturity; i. e., the face of notes not
drawing interest, or on the face plus interest of
interest bearing notes, the interest period of in-
terest bearing notes being found by compound
subtraction . On loan and demand notes cash is
given for face.
Preparatory to entry in the books, compute
the amount of discount allowed on each note,
also the interest, if any, and place these amounts
in pencil on the back of each note. (Make no
computations on the four attached collateral
notes at this time.)
(Read Infor. 13 , 14, 15.) Enter the notes in
the Discount Register, beginning with Millard
and Long’s note.
In the column “when received” enter the cur-
rent date; in “customer” column write name of
person for whom discounted; in “payer” column
write “same,” as the customer and payer are the
same in this case; in the “where payable” column
write ” local.”
II.
Information.
Loans and Discounts. Banks
derive their principal profit from discounting
time notes and drafts and from loans on time or
demand notes. Banks prefer to loan money to
their regular depositors. After the depositors’
demands are supplied, loans are made to other
persons giving satisfactory assurance of repayment ,
It is usual for customers to borrow money
on their own notes. Notes discounted at a
bank do not draw interest until after maturity,
at which time they are supposed to be paid.
The amount at maturity is simply the face of
the note. Loans are also made to customers
on interest bearing notes.
Frequently business men receive notes from
their customers and offer these notes to the
bank for discount. Before computing discount
on such notes, the amount at maturity (principal plus interest) should be found and from this
amount the bank discount should be deducted .
Ifthe notes are payable in other cities, a col-
lection fee may be deducted from the proceeds
in addition to the discount. If collection is to
be made at some distance, the time ordinarily
spent in securing returns is often added to the
discount period.
Demand Loans are in the form of
notes given by customers payable on demand
of the bank, and drawing a specified rate of
interest. The statutes relating to their collect-
ion differ in different states, but as a rule the
borrower is allowed one day’s notice before
making payment. Interest from the date of
the loan is computed when payment is made.
- The security demanded by a bank for the repayment of loans, differs . Much
money is advanced on the simple note of a single signer. In other cases several signers to a note are required; again, the borrower may be required to pledge certain other notes or securities he may hold as collateral security for the payment of the sum advanced. Many ofthe loans made by the smaller banks are secured by chattel mortgages. It is not considered good
practice for commercial banks to take real esstate security. National banks, (which are one variety of commercial banks) are forbidden to do so by law. - The Ledger Titles of Loans
and of Discounts . With ordinary dis-
counted notes, i. e., notes not drawing interest
until after maturity, two titles in the general
ledger are concerned. Bills Discounted account
is debited with the face, Interest and Discount
10 GOODYEAR’S BANK ACCOUNTING
Directions .
NOTE -Throughout this text the word ” Local”
is intended to supply the name of your own town .
Your own state may be inserted after it.
Begin the discount numbers with No. 1001,
which place in the column and on the note.
Pass the collection column . Under date of
paper, place the date appearing on the note.
In time column, place the number of days or
months the note runs . In the due column
write the date plus the term, 3-22 . Next
fill the “discount period” column with the
term which in this note equals the time of the
note. Next place the face of the note in the
“Bills Discounted” column, and the discount for
the term at 6 per cent in the Discount Column.
The difference between the Bills Discounted and
the Discount is placed in the proceeds column
followed by ” C,” as cash was paid for the
proceeds. Place the due date on the note.
Enter the note signed by Daniel Bennett in
like manner. Enter the note signed by Gage
Grocery Co. Observe that the date discounted
differs from the date of the paper.
Enter the Zigelfoose & Co., et. al. (and
others) note as before; enter the note of D. B.
Isaacs; the four collateral notes attached will be
sent out for collection later, hence if they are
properly described on the face of the principal
note, pass them to collection desk for the present.
Enter the demand note of Osmond Iron Co., the
face of which will be entered in the ” Loans Dr.”
column. Enter Sprague & Co.’s note which was
discounted for Case Machine Co. Show that it is
payable out of town. The date is December 9th
of the previous year. The discount period is
exact days from March 2nd to April 9th. Place
the face $327.80 in ” Bills Discounted” column
and the interest from date to maturity in the
” Interest Unearned” column. Then compute the
discount at 6 per cent for 38 days on the sum
of $ 327.80 and $6.56, which amount place in
the ” Discount” column. The proceeds $ 332.24
in the ” Proceeds” column followed by ” C” as
usual.
Finally enter B. Jones’s note as above.
Having entered, foot the money columns, rule
and enter footings. If correctly recorded, the
total of the columns headed Loans, Bills Dis-
counted, and Interest Unearned should equal the
total of the footings of columns headed Discount
and Proceeds.
Make four tickets similar to the tickets made
out by the cashier in yesterday’s work, debiting
Loans, Bills Discounted, and Interest and Dis-
Information .
is credited with the difference between the face and
the cash or credit given for proceeds .
When interest bearing notes are discounted,
Bills Discounted account should be debited with
theface only and Interest and Discount account
should be debited with interest from date to
maturity. Interest and Discount account should
then be credited with the discount on the amount.
Thus the account, “Bills Discounted” will repre-
sent on the ledger the aggregate face ofall notes
discounted.
Formerly, among many banks, and at present
among some small banks the rule has been fol-
lowed to charge Bills Discounted account, with
face plus interest to maturity, but at the present
time this is not considered good practice, for the
practice may result in an appearance of profit
before realization .
Loans are charged in a separate account from
Bills Discounted, as they are represented by a
different sort of notes, the interest of which is
frequently at a different rate from time discounts
and is not entered until payment is made. - The Care of Notes and other dis-
counted paper is of supreme importance. All
notes received in any given day are at the close
of the day entered in the Discount Register by
the discount clerk, who verifies the computa-
tions made by the cashier when the loans were
made. They are numbered consecutively and
are afterward referred to by their numbers on
the discount register. After the entry by the
discount clerk, they are returned to the cashier
or his assistant. It then becomes necessary to
classify them in two ways, first in the Customers’
Liability Ledger, under the names of the per-
sons for whom discounted; secondly, they are
classified in the order of maturity for the pur-
pose of collection, or other attention when due,
upon maturity memo tickets, or on a Tickler.
After being entered thus, the notes are filed nu-
merically until called for. When Maturity
Memo tickets are used, (see form on page 13)
a description of such matters relative to the
notes as demand attention is placed on the
tickets and these tickets are kept by the cashier
in the order of the maturity of the notes. These
tickets are referred to instead of handling the
notes . - The Loan and Discount Reg=
ister contains a daily tabulation of a number of
matters pertaining to notes discounted, ending
with five columns for amounts . After all entries
are made for the day, and the notes numbered to
correspond with the numbers in the abstract, the
columns are footed, and the sum of the footings
GOODYEAR’S BANK ACCOUNTING 11
Directions .
count, and crediting Interest and Discount with
the totals shown on the register and place these
tickets on the general bookkeeper’s desk.
(Read Infor. 16.) Enter the following list of
customers in the Customer’s Liability Ledger,
using the order there given and inserting the
maximum credit rating of each.
A. H. Avery, $500; Daniel Bennett, $4000; D. C. Bennett, special; Case Machine Co.,
$ 5000; Gage Grocery Co., $ 1000; Goodyear Marshall Publishing Co., $ 10000; D. B. Isaacs, $2000; Millard & Long, $3000; Osmond Iron Co. , $ 10000; Talbott-Amand Co., $ 3500; W. C. Zigelfoose & Co. , $ 1500.
Having opened the accounts, sort the notes alphabetically and enter. The two notes received by endorsement are sorted in the customer’s, not the the maker’s account. First the note discounted for Daniel Bennett. Enter in ” Register No.” column, the number; in ” Payer” column, enter name of the signer in the space between blue lines. Address is local, leave security
space blank and enter in maturity column the maturity date, 5-31 , and the amount $3000 in the amount column. Likewise, enter the other notes, observing that some of the notes will require security columns to be filled, as the Case
Machine Co. notes and D. B. Isaacs’ note.
Write ” Demand” in the maturity date column
of the Osmond Iron Co., write ” Four Collat.
Collection Nos.” in the security column of the
D. B. Isaac’s account. Examine the credit rat-
ings and see if any of the loans exceed the credit
limit.
(Read Infor. 17.) Make out maturity memo
slip for each of the notes. For illustration, take
your number 1007 signed by Sprague & Co.,
first placing on memo slip in the space provided
for the due date, “April 9th,” then name of payer,
Sprague & Co. , address “Springfield, Ill.” Loan
and Discount number ” 1007 ,” cross out “collec-
tion,” amount $ 327.80.
Interest at 6 per cent from December 9, 190 ..
Under ” remarks” make notation, endorsed by
Case Machine Co.
After making out slips for all of the notes,
place the notes in numerical order in the file for
Loans and Discounts and maturity memo slips
in the order of dates, the demand notes followed
by earliest due date at top in the file for ma-
turity memos.
(Read Infor. 18.) Return to general book-
keeper’s work. Find at the desk nine tickets
comprising the day’s work. Five came from
the cashier, and four from the discount clerk’s
desk. Arrange these tickets in alphabetical
Information .
of the three debit columns is compared with the
footings of the two credit columns as a proof.
The columns are then ruled and credit or
debit tickets to correspond with the column
totals are inade out, and handed to the general
bookkeeper. - The Customers ‘ Liability
Ledger provides for the classification of loans and discounts under the names ofthe customers.
This book is frequently kept personally by the cashier. The titles of the accounts are the names of customers for whom paper has been discounted. This ledger should be kept by one ofthe standard methods allowing alphabetical
arrangement ofcustomers’ names. The looseleaf self indexing Ledger is desirable. To the left of the customer’s name on each page is a space for placing the maximum amount of crediwhich the board of directors would ordinarily allow the customer. As notes are received, they are entered in their accounts beginning with Discount Register number, name of payer, which is frequently different from that of customer, address of payer, and a large space for memo of security or other remarks. Maturity date and amount columns followed by payment date and amount columns. When partial payments are made, the amount of the first payment should not be entered on the base line but at the top of the space, other payments being placed below. The final or total payment only is placed on the base line. After this book has been kept for one or more years in a bank, it becomes ofgreat value to the cashier, as a history of past transactions, and he refers to it con-
stantly, in accepting or rejecting new paper offered. The balance shown by an abstract of this ledger should agree with the balances of Loans and Bills Discounted in the general ledger.
The Maturity Memoranda placed on slips of paper, one slip representing
each note. Conspicuously at the top is the maturity date which governs the filing. It contains space for the description of the note together with statement of credit, for use when this memo goes to the bookkeeper as a credit ticket are If a partial payment is made, the ticket can be sent in and a new one made for the balance.
Each day after making out the maturity memo slips they are sorted among the memo slips previously made out, care being taken to have the earliest date at the top, the others following in order of maturity of the paper represented.
The Entries in the General
Journal are taken from tickets of original COMPANYS BANK ACCOUNTING order as on the previous day and write up the day’s work.
excess .
The difference between total debits and total credits on Journal is $ 15338.48, cash credit Deduct this in the explanatory space of Journal from the cash balance of March ist, leaving a remainder of cash, $73703.83 . Compare this balance with balance of cash as counted by the cashier. His balance is $73703.83. You therefore consider the day’s work correct. File
the debit and credit tickets in General Bookkeepers file.
Extend the Daily Balance, post the Ledger.
Remember to use the Daily Balance Book as an index to Ledger. Take proof of Daily Balance footings.
CAUTION .- Balances of accounts not affected by
the day’s transactions , should be extended with the
other balances, transactions and of summaries derived from such
other books as group original entries of the same kind, such as Loan and Discount Register, Individual Ledger, etc. It will be noted that entries made from other books require simply a reference to the book from which the entry was made. Entries made from tickets of the original transactions, are
usually itemized together with more or less explanation in the journal. Thus, Bills Discounted would be debited in one item for the entire number of bills recorded on the register, but the credits of this account, being from tickets
of single transactions, would be itemized in the
journal.
The entries of this Journal cannot be completed until all other departments have completed and turned in their work, hence it is the last book on which a balance is taken, before balancing the business of the day. The difference between the debit and credit totals of the general journal, represents the excess of cash received or paid for the day.