The petty cashier in the meantime pays for tele grams, messengers, stamps and the like, taking re ceipts for these disbursements.
When reporting to the treasurer he submits a classified statement of his expenditures supported by his receipts and exhibits cash for his balance. We may suppose his expenditures to have been as shown on the petty cash record (page 342). The treasurer gives him a check for $99.50 and enters the columnar totals on the stub of his check and in the cash book.
8. The main cash we may deal with the main cash receipts and payments. The corpora tion starts on July 1 with a balance of cash in bank amounting to $26,500, of which $4,000 was turned over by the old firm and $22,500 was obtained in the sale of stock for the purpose of financing new con struction. Let us suppose the subsequent cash trans actions to be as follows: 9. Cash transactions.—In the first transaction we enter $15,000 in the "net cash" column as a debit to cash and also in the "accounts-receivable" column as a credit to the Minneapolis Steel and Machinery Com pany. The other cash receipts down to July 8 re ceive like treatment. On July 13, we receive the Toro Motor Company's check for $6,084.34 in pay ment of our invoice #1 for $6,145.80 (see Sales Book) but subject to a, discount of $61.46. We give the Toro Motor Company credit for the full amount of the invoice in the accounts-receivable column, debit cash discount offered on sales $61.46 in the discount on sales column and enter the actual amount of the check in the net cash column. The other receipts do not differ from the two illustrations given and are left to the reader's observation.
The second cash transaction is a remittance to a creditor on account. In our columnar cash book we enter $1,000 in the accounts-payable column as a debit to the Independent Oil Company, and in the net cash column as a credit to "cash in bank." The next three items are similar.
Check #5 is drawn and cashed to make up the pay envelops. We debit accrued payroll by enter ing the amount in that column and credit cash in bank by entering it in the net cash column.
On July 5, we close a deal for an additional foundry site and give the City Realty Company a check for $7,500. The account to be debited is land, which debit we effect by writing $7,500 in the miscellaneous column (since there is no special column for land) , writing the name of the account in connection.
The next check to merit attention is #15. Here we are paying for purchase invoice #1 which was for $408, but subject to a discount of $8.16 for cash in ten days. We debit the Independent Oil Company for the full amount of the invoice by writing that amount in the accounts-payable column; we credit cash for the actual amount of the check, $399.84, and cash discount offered on purchases for $8.16.
The treatment of check #36 to the petty cashier has already been described. By check #37 we ex tinguish the obligations for freight charges as re corded in the invoice register.
10. Journal.—Finally we come to the entries in the journal of which the opening entries have already been discussed. The journal becomes a book in which to treat miscellaneous transactions not assignable to the specialized books and in which to set forth, explain and show authority for the transfer entries used in closing the books. We shall suppose the following five miscellaneous transactions, three of which are to be recorded in the journal and two of which are cash transactions, additional to those previously listed.
July 10.—Receive the Brickstaff Company's 30 day note for $1,500 in full of account, the note-bear ing interest at 6 per cent per annum.
July 20.—Receive notice that the Brickstaff Com pany has confessed insolvency and that a meeting of the creditors has been called.
July p7.—Receive Gardner Hardware Company's note at 30 days from July 17 for $61.36 in full of in voice of that date.
July a composition with its creditors the Brickstaff Company pays seventy-five cents on the dollar. Received the trustee's check for 75 per cent of their note and accrued interest.