4. Posting.—At the end of each month all money columns are footed. Since each transaction involves a debit and a credit of equal amount, the sums of the debits must equal the sums of the credits. Thus, in the case illustrated, there would be a total charge to oats purchases of $3,500; to hay purchases, $8,800; to corn purchases, $2,100; to bran purchases, $2,000; and to sundries, $3,090. This total of purchases would be credited, in one sum, to the creditor's con trolling account. The charges to the various pur chase accounts, indicated in their respective columns, would be made in total. The charges from the sun dries column will have been posted individually to each separate account affected, and therefore need not be posted again.
When the debit postings have been completed by the charges to the various purchase accounts and the one credit has been made to the creditor's controlling ac count, the equilibrium of the ledger is still unchanged. From the amount-credited column, the individual amounts must be posted to the credit of each creditor —$500 to the credit of J. Austin, and so on down the list. These are simply memorandum postings to the individual subsidiary accounts, which have already been referred to, made so that the subsidiary accounts will agree with their controlling account.
5. Columnar sales columns are often essential in a sales book, not only as a means of separating the sales of several kinds of accounts, but also as an aid in recording other facts. Thus the vendor frequently prepays the freight on goods sold to a customer and adds this freight on the invoice. The illustration on page 120 shows a sales book in which a column for prepaid freight is used.
Every sale is indicated by an entry of the date, the name of the customer to be charged, any necessary ex planation, the bill number, the amount to be charged, and the distribution of this charge. For instance, R. Shortt, bill No. 95, received $100 worth of oats; $390 worth of hay; $50 worth of corn; $55 worth of bran; and prepaid freight to the amount of $67. The total amount of $757 is charged to Shortt, and this amount is distributed over the various sales accounts and the prepaid-freight account.
6. Prepaid freight.—The explanation of the credit to prepaid freight is this: According to the terms of the contract with Shortt, the business is to prepay the freight and add it to the invoice that is sent to him.
Having delivered the goods to the transportation com pany, the business owes that company $67 for freight age. Hence the credit to the prepaid-freight account represents a liability.
This may be paid immediately, or, if the business is on the transportation company's accommodation list, it may be paid at the end of the month. Whenever it is paid, that payment results in a charge to the pre paid-freight account thru the cash book, thus the credit previously made is extinguished and the liabil ities of the business are reduced.
7. Posting from the sales book.—Before these many charges and credits are posted at the end of the month, each column is footed, as in the illustration. Again, since in each transaction, the sum of the debits equals the sum of the credits, the footings should show the same result. The footing of the amount-debit columns should equal the sum of the footings of all the other columns. When this test has been satisfac torily completed, the footings of each column may be posted to their respective accounts in the ledger.
But the individual amounts in the amount-debit column must be posted to the corresponding accounts named in the account-debit column. If, as is cus tomary, these accounts are kept in a separate ledger with a controlling account, the total of the amount debited column will have been posted to the control ling account, and the individual amounts must be posted to the individual accounts only.
8. Cash sales.—In the discussion of the old-style sales book it was found that the debit phase of cash sales was not recorded except by a charge to cash. If the modern sales book is to record all sales, and if it is nevertheless the charge thru the cash book in the case of cash sales, a separate column must be provided for that purpose. Thus, the charges from the sales book are made up of the debits to customers on ac count, and the debits from those cash sales which are not posted. The item of $220 is picked up as a credit to the various sales accounts, while the charge is a charge against "cash" from the cash book. In the cash book a separate column will show the total cash received from cash sales for the month. The total of the credit column in the cash book should agree with the total of the debit column in the sales book, If the cash sales are few, they may be separated at the end of the month, as indicated in the illustration.