July the Gardner Hardware Com pany's note at the bank, proceeds credited.
The first case is simple and is left to the reader as also is the third (see journal). In the second case, we receive nothing and give nothing. But the debt has changed to the doubtful class and we debit doubtful debts and credit notes receivable to record the re-classi fication.
In the fourth case, the amount of our claim, princi pal and accrued interest is $1,505.25. We receive a check for 75 per cent of this or $1,128.94. In the cash book, we indicate a debit to cash and a credit to doubtful debts of that amount; in the journal, we make an adjusting entry to transfer the uncollectible balance of the note of $1,500, or $371.06, from doubt ful debts to bad debts.
The last transaction is recorded wholly in the cash receipts book. "Notes receivable discounted" is cred ited for the face, $61.36, instead of "notes receivable" so as to defer the latter credit until maturity of the note and in the meantime make our ledger accounts re mind us of our contingent liability as endorser.
11. to the detail ledgers should occur day by day in order to keep these accounts up to date. Only one detail ledger, the accounts-receiv able ledger, is reproduced in this volume (page 348) .
We shall leave the reader to compare in detail the en tries affecting customers' accounts in the sales book, cash book and journal with the corresponding items in those customers' account. The ledger page num bers in those media and the corresponding "S," "C" and "J" page numbers in the ledger accounts, which are used as posting checks, will enable him to do this readily. We shall simply point out that the items in the accounts have been posted in chronological order and that after each new posting the new account balance has been computed and written in the third or "balance" column.
12. Posting to the general ledger.—Except for the miscellaneous columns this posting is done almost entirely by posting column totals. Before posting from any columnar page, it is necessary to foot each column, to add all the debit footings together and all the credit footings together and to see that the two totals are equal.
The reader will observe that the page to which a column total has been posted is always indicated by inserting the general ledger page below the footing in question. The postings from all but the journal may very well be left to the reader to trace.
Items are posted from the journal to the general ledger. But it will be noticed that in two instances there is a double posting of an item, once to the con trolling account in the general ledger and once to the individual account in the accounts-receivable ledger. The purpose of this double posting is to have both ledgers balance. This procedure involves two en tries in the controlling account of the general ledger, and multiplies entries in this account. This result is sometimes avoided by the use of a columnar jour nal allowing a footing of the several items which enter into a controlling account.
13. Trial balance before adjusting and closing.— We are now ready to test the accuracy of our posting by means of a trial balance. Altho it is unnecessary to close the books until December 31 or June 30, the next year, we nevertheless shall close them at July 31 of this year, in order to illustrate the proc ess. Hence we shall take a trial balance of balances on an analytical working sheet for convenience in the statement compilation to follow.
In our illustrative ledger, as shown, all the entries marked in the explanation columns with the names of opposing accounts, except those marked "P. W. & A., Vendors," and all "balances brought down" and "inventories brought down" were made in the sub seqUent adjusting and closing process and are not included in the trial balance that we are taking at this point. We shall leave it to the reader to verify the balances exhibited in the trial balance (see Analytical Working Sheet, page 387) .
14. Adjustments preparatory to closing.—After proving the trial balance, our next concern before making statements or closing the books is to ascertain and insert the omitted items and the inventories.