In a large index, one or more pages are used for a letter; while in a small index, several letters may be placed on the same page.
=25.= The following sample transactions are carried through the books described in this section, showing the proper entries and postings (see pp. 40-43). The day book has been omitted, as it is practically obsolete, not being used by progressive bookkeepers.
I, ROBERT B. ROBINSON, have this day commenced business as a wholesale dealer in groceries and provisions. I have rented the store located at 68 Pine St., from Geo. Baker, at $40.00 a month. My resources and liabilities are as follows:
Cash on hand $2,462.50 Merchandise per inventory 1,147.20 Due me from Roger Bros. 219.40
C. B. Whitney, Grand Rapids $ 126.90 My net investment 3,702.20
Bought from Grand Rapids Gro. Co., Grand Rapids, Mich. On account 10 cwt. sugar $4.85 $ 48.50 10 bbls. flour 5.25 52.50 150 " salt 1.10 165.00 2 " molasses 48 50,98 gals. .30 29.40 $295.40
--1-- Paid Geo. Baker For 1 month's rent Cash 40.00
--2-- Sold to Geo. Wiggins, 110 Ottawa St. On account 1 box B. B. soap 3.75 1 case X. X. corn 1.60 100# soda biscuit 4.25 9.60
--3-- Sold to Smith & Nixon, 262 Western Av. On account 2 bbl. flour 6.15 12.30 2 cwt. sugar 5.15 10.30 1 bbl. molasses, 48 gal. .35 16.80 39.40
--5-- Bought from William Bratton, 48 Jefferson Av., Detroit On account 10 sacks Java coffee, 1,000# .25 250.00
--6-- Sent to C. B. Whitney, Grand Rapids Draft to balance account 126.90
--7-- Sold to H. A. Brainerd, 961 Lake Av. On account 2 bbls. salt 1.35 2.70 10# baking powder .42 4.20 6.90
--8-- Charge Grand Rapids Gro. Co. 1 bbl. flour received in bad order 5.25
--9-- Sold to Bryan Bros., Lakeside On account 2 bbls. salt 1.35 2.70 20# raisins .08 1.60 4.30
--10-- Bought from H. A. Edwin, Chicago On account 20 bbls. pork 10.30 206.00
--12-- Sold for cash 3 bbl. pork 11.35 34.05
--13-- Sold to R. C. Ellison, 10 Jefferson Av. On account 2 bbl. pork 11.40 22.80 5 bu. beans 2.10 10.50 33.30
--14-- Received from Geo. Wiggins Cash to balance 9.60
--15-- Sent to Grand Rapids Gro. Co. Draft to balance 290.15
--17-- Received from Smith & Nixon Cash on account 25.00
=26.= A promissory note is a form of commercial paper much used in business. Goods are sold on specific terms--that is, to be paid for in a certain time after date. Profits are based on the supposition that the bills will be paid when due. When not so paid, the debtor is virtually borrowing money from the creditor, and should pay interest for the use of that money just as he would if he had borrowed it from a bank. To settle the account when it is not convenient to pay cash, it is customary to give a promissory note for the amount, plus interest, payable on a certain date. The promissory note is more convenient for the creditor; for when it bears his endorsement, his bankers will discount it, thus giving him the money for use in his business. Even though he may not discount it, the promissory note is better for the creditor, as it gives him a definite promise to pay, which he does not have when the debt is represented by an open account.