The method in general use among New York banks for com puting interest on daily balances is as follows: to deduct from the balances at the commencement of business each day all drafts paid against the account; to credit all remittances to an account immediately upon receipt, but not to enter the interest balance until the following day, thus allowing time to collect the remit tances and convert them into loanable funds; in case of remit tances which include country items, to defer the interest on any such items for the number of days necessary to collect them.
After the interest statements have been checked and entered, the interest balance book is footed to determine the total amount of the balances upon which interest is due and the amount of interest payable daily. The interest period on balances will be set by the bank, say, from the 26th of one month up to and in cluding the 25th of the next month. In such case, on the 26th of the month, after the interest statements have been footed by the bookkeepers and proved by the interest clerk, they are turned over to the general bookkeeper, who, with the assistance of every one else in the department, figures the interest on each statement. After the statements are checked for special interest arrangements and proved, they are listed on posting sheets, footed, proved, and called back, and on the last day of the month the posting sheets are sent to the bookkeepers.
The interest statements are carefully scrutinized to detect any large decrease in the balance of the account, and where an account is found to be running down it is turned over to the analysis department for investigation.
The Suspense Ledger When the bank sustains a loss, it is charged to Suspense and the proper entries with a description and a record of all collateral security are made. If the probability of prolonged litigation makes the recovery of the loss a matter of the indefinite future, the amount is charged to Profit and Loss, and Suspense is credited. If an early settlement in full is expected, items placed in Suspense are sometimes not charged out immediately.
The usefulness of the suspense ledger may be illustrated as follows: Suppose bank X owing bank Y fails and is put into the hands of a receiver, and that bank Y has a long list of bills re ceivable as collateral for the loan. These receivables are paid off by instalments, and as each instalment is paid the receiver is at once notified. The mass of this detail must of necessity be
very accurately kept by Y, for when the final liquidation of X is made Y is called upon to file a proof of claim, and much depends upon the records Y has kept to show the original loss, the payments received. and the receivables still uncollected.
The General Journal All double tickets made by any department of the bank are sent to the general bookkeeper's department after they have been approved and signed by an officer or someone else having the necessary authority. These tickets are numbered and listed on the journal sheets under their proper ledger titles and are sent to their respective bookkeepers. A double ticket (Figure 31) consists of a debit side and a credit side separated by a perforated line; the two sides are usually printed in different colors to pre vent confusion, and a color scheme may be used to indicate the department of origin.
The journal sheets are then totaled and proved, and the proof is handed to the recapitulation clerk. The proof (Figure 32) is somewhat as shown on page 763.
The Recapitulation Book The recapitulation book is divided into debit and credit and ruled in columns somewhat as follows: The object of this book is to condense posting into the general ledger. A very necessary and helpful work to this end is the assembling and recapitulating of the proofs of the second, third, fourth, fifth, and foreign tellers, general journal, the certification department, the check desk, and the transit department. These proofs are supposed to be given to the general bookkeeper's department early each morning. They represent, in total. the extent to which the general ledger accounts have been affected by the preceding day's transactions. Descriptions of these proofs are given under the respective departments in this and the remaining volumes.
The General Ledger The general ledger is the controlling book of the bank. It contains the same accounts as the statement book, with the exception that in some cases the accounts arc subdivided.
The ledger clerk begins his day's work by posting the debits and credits to their respective accounts. These postings are made from various sources. The balances on the general ledger are then extended, proved, and copied into the statement book.