THE BOOKS OF SET II.

51. The Books of this Set exemplify, on a limited scale, the operations of an Export and Import trade, upon which Adam Blair enters on receiving a partner with a larger capital than his own. With this partner it is agreed that the profits shall be equally divided, in consideration of Adam Blair having the chief management. The transactions of the former business are necessarily mixed up at first with those of the new, as the goods remaining on hand must be disposed of; but nothing new in that line of business is undertaken. The Cash-Book, Bill-Book, and Day-Book are made out, as in the first Set, from a series of "Transactions," which the student will understand are to serve to him instead of the actual daily business of an office. The mode of expressing a few of the more difficult of these by Dr. and Cr. entries, is indicated in notes at the end. The Journal is constructed on Jones' plan. This is a decided improvement on the old method already exemplified in Set I., as it renders the Journal more thoroughly preparatory to the Ledger, diminishes the chance of errors. in posting, and serves also as a check on the accuracy of the posting from time to time, as the work proceeds. The plan simply is to keep the sums which are to be posted to the debit sides of the Ledger accounts, and which may be called the Debit Amounts, or "Debit Posting Amounts," separate from those which are to go to the credit sides. For this purpose there must be two sets of money columns, and the Dr. and Cr. in each entry must occupy separate lines.

Thus, taking the first entry in the Day-Book, we open the Journal with the entry

So also all the entries under the month, in which Flaxseed is Cr., are arranged in the Journal as follows :—

Each

This arrangement presents more distinctly to the eye the sums which are to be posted to the respective sides of the Ledger accounts, and thus diminishes the chance of posting an amount to a wrong side. The name of the Cr. in each entry, since it stands by this arrangement in a less conspicuous position, ought to be written in a bolder hand. personal account is here debited To Flaxseed, while Flaxseed is credited By Sundry Accounts in one sum; and the same is done in other cases, although the word "Sundries" does not occur in the title. It is obvious that the summation of the two sets of money columns in the Journal ought always to give the same amount. The sums are carried forward from page to page, and can thus be readily brought into totals for any period, as a month, two months, &c., that may be required; and the agreement or disagreement of these sums with the summation of the two sides of the Ledger accounts for the same period, will form an admirable check on the accuracy of the posting.

52. We owe also to Mr. Jones a much improved form of the Trial-Balance Sheet. This "Balance Book," as it may be called, exhibits a complete analysis of the Ledger at any period, being a sort of abstract of all the accounts. It is divided into as many broad vertical columns as there are abstracts made in the year, or other period for which a balance is taken, with vertical columns besides on each page, for the balances from the former Ledger, for the "finishing entries" at the general balance, for the total amount of each account, and for the Debit and Credit Balances due to or by the merchant at the time of closing the books. The names of the Accounts are placed in the middle of the sheet, and beside them a narrow column for reference to that folio of the Ledger in which the Account is to be found. All the sums which come from Debit sides are of course placed in one or other of the columns on the left side, and those from Credit sides on the right. If a general balance is made once a year, it will be advisable to form a quarterly abstract or analysis by the Balance-Book, and there will then be four principal columns for the four quarters. But as our Second Set runs through six months only, we divide this into three periods of two months each, in order to limit the range over which an error will have to be traced, should such occur. The "old Balances" of the former Ledger, which come under the entry "Balance Dr." in the end of the Journal of Set I.—that is, the Debit Balances-are entered in the column on the extreme left; those under "Sundries Drs. to Balance," or the Credit Balances, in that on the extreme right. The next three columns are formed by adding the sums for April and May ("first two months") in each account. Thus in the Goods Account there are two entries for April, and none for May, the sum being £1079:13: 4 + £93 : 15 : 0 = £117384, the Balance, entered in another column, not being included. For June and July there are three entries amounting to £1395:10:9. For August and September

The columns on

there are three items, making £14 : 16 : 5. the right side are filled up in the same manner. The finishing entries" of the next columns are those which are made at balancing, and appear at the end of the Journal; they are entered from the respective sides of the Ledger Accounts, or from the Debit and Credit entries of the Journal. The "total amounts," debit and credit, of the next columns, are had by adding the sums in the several columns horizontally across the page. The differences of these total amounts form the Debit and Credit Balances of the two inner columns. Thus, in the case of W. Jones and Co., this difference is £17010, the excess of the debt due them by A. B. and Co. above the amount of the bill for £100:9: 8 remitted in part payment, being the balance still standing against A. B. and Co. So also in the case of R. Williams, this difference is £120, being a balance due by him to A. B. & Co. These columns show also the amount of cash on hand, of bills (including profit on them by discount), and by means of the Inventory Account, of general goods, ships, &c. These columns may be compared with the Balance Account in the ordinary form.

It will be seen, by looking to the summations of the several columns in this Balance-Book, that the amounts are the same as those in the bi-monthly summation of the Journal entries for the three periods, and in the amount of the finishing entries; and this, as already pointed out, constitutes the leading recommendation of a Journal and BalanceBook, in the form suggested by Mr. Jones.

53. The directions for balancing, already given (Arts. 46-49), apply to the Ledger Accounts of this Set. With some of them a slightly different method is required in consequence of the partnership here existing. Instead of one Stock Account, there is now a Capital or Stock Account for each partner, the joint balances of which represent the total Capital

Stock of the company. Each partner has, besides, a private account, in which all monies drawn for other than business purposes are entered. These accounts are usually kept in a private Ledger. Before closing the books they are debited "To Profit and Loss" for interest on the money paid to these accounts; they are then closed "By the Stock Accounts" of the partners to the debits of whose "Capital Accounts" in the Ledger the amounts are then posted from the Journal, in which, of course, they are first entered. The Stock Account of each partner is credited with the interest on his capital since the period of the last Balance. The various gains and losses found by balancing Goods, Bills Receivable, the Adventures, Ships, Charges, &c., as already explained for Set I., being entered in the Journal under the titles "Sundry Accounts Dr to Profit and Loss" and "Profit and Loss Dr. to Sundry Accounts," these items are posted to the Ledger accounts in the usual way; and the Profit and Loss Account will then show the net gain on the business for the six months. The account is closed by entering, To Sundries, £164098; the Sundries being the names of the partners. This entry being made in the Journal, each partner is credited with his share of the profit, and the partner's Capital Accounts are then closed with Balance for the present net capital of each. This method of closing the Profit and Loss Account, and the keeping of two accounts for each partner, as above explained, constitute the only peculiarities of the books of a partnership Concern. To ensure accuracy, and for the sake of future reference, the student should be careful, in conducting a general balance, to pass all the finishing entries through the Journal, before posting them to the several Ledger Accounts.