Calculating Proceeds Of Casual Bill

Satisfied as to these points, the clerk may proceed with the calculations. The due date is the first essential. When found, it is plainly marked on the bill. If it is a local bill, this establishes the date on which the bank may expect to get its money back. Then the number of days between the date of discount and the due date is arrived at. A glance at a book with printed tables establishes this.

Now, the discount can be calculated. Interest tables are used for this. Interest is taken, at the rate specified by the manager's marks or signs, for the number of days unexpired, on the face amount of the bill. This may be set down in pencil lightly upon the bill, or on a slip of paper pinned to it. If commission is to be charged - a reference to the signs informs the clerk as to this - the amount of the commission is set down under the interest. If any other charge is made, for notification or for something else, it also is set down, and all the charges-interest, commission, and special-added together. When the total is deducted from the face amount of the note the proceeds are left. For his own and for the bank's protection it is desirable that the clerk should have his calculations checked by another officer before permitting a casual customer to draw his proceeds in cash. An over-payment might be difficult to regain. The calculations being made and checked, the customer may be permitted to draw what is coming to him. The bank desires to be able to prove that it paid him cash for the bill or bills it has just discounted. The amount of the proceeds is written into a cheque form, and on his signing it and on its being certified at the ledger the cheque is good for cash at the teller's wicket.

How To Make The Book Entries

With regard to the book entries, theoretically necessary whenever a bill is discounted, they can be shown by an illustration. Suppose a bill for $100 is put through. on which the discount is $1.80, the exchange 25 cents. First of all the whole bill must be debited to "Bills Discounted," "Loan Bill," or whatever is the heading of the account to which it belongs. The credits to counterbalance this would be:-

A special place in the deposit ledger is reserved for transactions such as this, in which two entries, one extinguishing the other, are made. The proceeds, $97-95 go into the credit side of the column; the cheque cashed by the teller, drawn for the same amount, goes into the debit side, and no balance is shown.

Discounts For Regular Customers

The bills lodged by regular customers are treated in the same way except that the proceeds are carried into their current accounts, covering or reducing their overdrafts, if the accounts are overdrawn, and if they are not, providing funds that can be operated upon by cheque or in any other method which the owner may select. Each bill is subjected to the same treatment as that already described.

When a customer deposits a batch of bills, it is possible to economize the entries and the work of calculating interest, etc. The particulars of all bills discounted must be recorded in the discount book or register. The book must contain the names of all the parties to each bill, and every particular that would be required to produce a duplicate in case of its being lost or stolen. In addition, it should have the particulars of the charges (interest, commission and other) that are made against it, and the proceeds credited to the customer.

In the case of bills left by regular customers which are put through at the clerk's leisure, or at the end of the day, the calculations can, of course, be done direct into the discount register. The approved method is to enter all the bills in the class to which they belong in the register. After arranging them in convenient order for entering, first, each customer's bills all together, next probably, according to due date, the earliest maturities on top, everything is entered but the number of days to run, the charges and the proceeds. Then to take the time-table of days, and, running down the column, to enter on each line the number of days between the date of discount and the due date shown thereon.

After that is done, the interest tables can be taken and the interest calculated, beginning at the smallest number of days and working up to the largest. If a customer has more than one bill, on each of which the same number of days are to be charged at the same rate of interest, the bills can be added together and the interest on the total amount calculated and set down. The commission and other charges to be made against each bill can now be put down in the columns provided for the purpose. This done, the proceeds may be calculated. Unless there are special instructions to the contrary, the proceeds of all the bills belonging to the same class of bills deposited by any customer may be entered in one amount.

The total of the face amount of his bills is first arrived at, and from it is deducted the summation of the totals of the interest, commission, and of the other charges on his bills, the difference being the proceeds, or the amount which the bank pays him for them. When the calculations of all proceeds are completed they can be proved by carrying the additions of the several columns in pencil down through the last bill on the day's list. The grand total of all interest, commissions, other charges, and proceeds should equal the total of bills. The proceeds can now be entered in the book kept for that purpose. In this it is only necessary to put the customer's name and the amount of his proceeds. From this book the deposit ledger-keeper posts them into his ledger.