On June 30, C. E. Adams tenders for discount the ninety-day note of J. M. Barber, dated May 31. The amount of the note is $1,800. The general ledger entries would be as follows:

Debit: Bills Discounted (2).........

$1,800

Credit: Due to Depositors (37) ....

$1,782

Credit: Discount (31)............

18

If the note were interest-bearing the interest would be added to the face of it, and it would then be discounted for the gross amount.

Auxiliary Record Entries

Auxiliary or department entries are made in the discount register or journal, the discount ledger - a record classifying discounts by borrower - and in the maturity tickler which shows the notes maturing each day.

1. The Discount Register would contain:

Date discounted

June 30

For whom discounted

C. E. Adams

The payer

J. M. Barber

Where payable

First National Bank, City

Indorsers

C. E. Adams

Number of the note

209

The time or tenor

90 days

Maturity date

August 29

Days to run

60 days

Amount

$1,800

Rate of discount

6%

Amount of discount

$18

Exchange charges Revenue tax stamp charges Proceeds

$1,782

2. The Discount Ledger would include:

Name of borrower (at top of page)

C. E. Adams

Date discounted

June 30

Paper

J. M. Barber

Indorsers

C. E. Adams

Due date

August 29

Discounts made (a money column)

$1,800

Discounts paid (a money column) Balance of discounts

$1,800

3. The Discount Tickler would show the following under the date of August 29:

Date discounted

June 30

Rate of discount

6%

Discounted for

C. E. Adams

Drawee

J. M. Barber

Where payable

First National Bank, City

Amount

$1,800

Proofs

The discount ledger and the discount tickler should agree in grand total with the balance of the bills discounted account on the general ledger. Proofs should be made frequently. The total of the bills discounted each day shown by the register, added to the balance of the general ledger account as at the close of the preceding day less discounts paid on the current day, should equal the general ledger closing figure; and finally: Amount column of discount register should equal the sum of all the other money columns.