15. Notebooks.—When the notes are numerous, it will be desirable to have a special record of them; in almost any stationery store a notebook suitable for this purpose can be purchased. The ordinary method is to list the notes, in the order in which they are re ceived, in a book which has columns enough to show the following information: date received, date of in strument, name of payer, name of indorser, where payable, interest rate, twelve columns, one for each month of the year, the amount, the date of payment and remarks. The columns for the months of the years, above referred to, show the day of the month on which the instrument is to be paid. When the note is paid, the date of payment will be entered in the column provided for that purpose. At this time, also, the entire transaction relating to the note will be ruled off in red ink to indicate that it is closed.
This book is, of course, strictly a memorandum book, designed merely to supplement the notes-re ceivable account in the general ledger by giving a de tailed history of each note. Notes payable will be handled in the same manner, except that the record of them will supplement the notes-payable account in the general ledger. In one sense, notes-payable or notes-receivable accounts in the general ledger, when handled in this manner, become controlling accounts.
16. Notebooks as books of preparatory entry.—Of course, notebooks as books of preparatory entry are unnecessary unless many transactions are involved.
This form of book, however, may be conveniently used, even to record few transactions, provided more col umns than those already mentioned are used. Such a book will have columns for the name of the custo mer's account; a folio or posting columns for a rec ord of the entry in the ledger account with the custo mer; and a column for interest, which will receive credit for any interest included on the face of the note.
The total of the amount column will be posted to the debit of the notes-receivable account in the gen eral ledger at the end of each month, and the total of the accounts-receivable column will be posted to the credit of the general-ledger controlling account. During the month the accounts of the customers will be posted individually at frequent intervals, to indi cate the credit for the note which they have given. The notes payable, if they are many, will be handled in the same manner.
17. Payroll book.—When a business has an exten sive payroll that includes accounts with numerous de partments and individuals, it will be found advisable to transform the payroll book into a book of prepara tory entry, and to charge the salaries directly from this book to the expense accounts to which they be long. For instance, the payroll book will show the
name of each employe, the amount paid him each week, and the distribution of his salary over the va rious accounts which should be charged with it.
If a salesman spent half of his time selling oats and half of his time selling wheat, half of his salary would be charged to an account which might be designated "salary of oat salesmen," and the other to "salary of wheat salesmen." The credit to offset these charges represents a liability and must be expressed as such on the books. It is customary to credit an account called "accrued salaries" or "accrued payroll," and when any salaries are paid, either on a weekly or monthly basis, to charge this account thru the cash book; by this method the liability expressed is reduced.
It will frequently happen that the month will end within the middle of a salary period. Of course, the men are entitled to salary for the time that they have put in, and the business must stand the expense in the period in which it was incurred. All salaries for the month are charged to the expense account. In the early part of the next month, the next cash pay ment will wipe out this liability. The balance in this account will represent a liability of the amount of the payroll due and not yet paid.
18. Petty cash book.—The petty cash book, which we have previously discussed, can be very satisfac torily operated by properly using separate columns in connection with each of the frequently appearing items. There may be either one column for each class of transactions or one for each account affected. For instance, the general expense account will include many small items such as lunches, carfares and minor supplies.
If any good purpose can be served by keeping a separate record of the petty disbursements on account of such items, they may be grouped separately in col umns and then posted to the one account in the ledger. All other transactions which occur frequently, and which are represented by accounts in the general ledger, will be columnarized and posted in total. It will probably be necessary to make use of a sundries column in this, as well as in other books, in order to take care of the accounts which occur only infre quently.