1. (a) A national bank is organized with a capital stock of $300,000. (b) The capital stock is fully paid in. (c) Also a surplus fund of $50,000 is created and paid. (d) United States bonds with a par value of $100,000 are purchased for $101,500 cash. (e) Circulating notes to the extent of $100,000 are received from the Comptroller of Currency and duly signed. (/) $5000 is forwarded to the Treasurer of the United States, as provided by banking laws, to redeem worn-out and mutilated circulating notes, (g) Disbursements ordered by the board of directors amount to $2900.

Required the necessary opening entries. Give them in ordinary journal form.

To the Student. - The above proposition gives a statement of the usual transactions resulting from the organization of a national bank. If you have the successive steps of organization well in mind you are now ready to study the following entries. To show the various debits and credits, the entries are all given in journal form. After a careful study of the entries for proposition No. 1, take a sheet of journal paper and make the entries for proposition No. 2.

Necessary Entries

(a)

Subscription

$300000

To Capital Stock

$300000

Cash

(b)

300000

To Subscription

300000

Cash

(c)

50000

To Surplus Fund

50000

Premium on U.S. Bonds

(d)

1500

U.S. Bonds to secure Circulation

100000

To Cash

101500

Cash

(e)

100000

To Circulation

100000

(f)

/

Redemption Fund with U.S. Treasurer

5000

To Cash

5000

(g)

Expense

2900

To Cash

2900

2. (a) A national bank is organized with a capital stock of $200,000.

(b) The first installment of 50% of the capital stock is duly paid.

(c) United States bonds with a par value of $75,000 are purchased for $76,000 cash. (d) Circulating notes are received from the Comptroller of Currency for $75,000 and duly signed by the president and cashier. (e) One of the stockholders makes a further payment of $20,000 to apply on the capital stock. (f) The necessary 5% redemption fund is forwarded to the Treasurer of the United States to redeem worn and mutilated circulating notes. (g) Disbursements ordered by the board of directors amount to $3100.

Required the necessary opening entries. Make them in ordinary journal form.

To the Instructor. - The instructor will find it a most helpful exercise to require the students to analyze fully each of the entries called for in the foregoing propositions. This will, at the outset, firmly fix in mind the fundamental principles in the organization of a national bank.