190 Dr. Cr.

April 2. " 5. " 26.

To H. F. B., " Note, " Sundries,

4000.00 500.00 500.00

April 5. " 15. " 24. " 30.

By Interest,

" S. Conrad,

" Expense,

" Balance, (in red)

60.00

60. 00

90.00

4800.00

5000.00

April 30.

To balance,

4800.00

5000.00

than has been received. To close the cash account write on the credit side, in red ink, the total amount on hand and the word balance, and bring the balance down on the opposite side in black ink, as above:

Diagram I.

Dr. Cr.

Jan. 2.

To Cash,

100.00

Feb. 4.

By Expense, " Balance,

80.00 70.00

100.00

100.00

As can be seen, the balance is obtained by adding the amount paid out, $200.00, and deducting from the total amount received, $5,000.00, the remainder being the amount on hand, $4,800.00.

Diagram II.

Cash.

Dr. Cr.

Jan. 1. " 1. " 1. " 1.

To Invest Account, " Cash, " Sales, " Note,

1000.00

2000.00

500.00

500.00

Feb. 20.

By Repairs, " Paper, " Labor, " Expense, " Presses, " Equipment,

150.00

100.00

500.00

50.00

2,000.00

1,200.00

4000.00

4000.00

A person doing a strictly cash business needs only one book, the cash book, and on its proper side all transactions are written. For instance, in Diagram I, his cash book shows, on the debtor side, a transaction of $100.00, and on the credit side $30.00; the difference is $70.00, the sum he should have on hand. In Diagram II the record of transactions appears complete, and no other book is required for the business.

Suppose, however, you are a merchant and your customers keep running accounts. You will then find it necessary to have a day book, cash book, and ledger. For example, a customer, Mr. J. G. Howard, comes in and asks for a statement of his account. Looking up the name in the index to the ledger, we find Mr. Howard on folio 78. Turning to his account we discover the following, as in Diagram III.

The debtor side, or what he owes you, is $288.50; the credit side, or what you owe him, or what has been paid, is $260.00, the difference being $28.50, this being in your favor and, therefore, is debit to you; if he pays the $28.50, enter it on creditor side of ledger, By Cash 28.50, debit your cash book, and then rule off the account with two parallel short lines in red as both sides of the account will then be the same.

Diagram III.

J. G. Howard.

1001

Dr.

1901

Cr.

Jan. 1.

To Mdse.,

$200.00

Jan. 1.

By Cash,

$60.00

" 15.

" "

30.00

" 14.

" Note,

100.00

" 25.

" "I

58.50

" 17.

" Cash,

50.00

" 10.

" Note,

50.00

" Balance,

28.50

$288.50

$288.50

To Balance,

$28.50