Practical bookkeeping; a working handbook of elementary bookkeeping and approved modern methods of accounting, including single proprietorship, ... commission, storage, and brokerage accounts

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1918 Excerpt: ...paid, and in discounting it we have created a liability to the bank. Remembering that one of the functions of bookkeeping is to exhibit the true nature of our assets and liabilities, we open a Bills Discounted account in the ledger. The entry is: Bank $99.50 Interest.50 Bills Discounted $100. 00 Discounted Smart's note due Oct. 10th. 90. When a Note Drawing Interest is Discounted. The above transaction-presupposes that the note is given without interest; but if it were given with interest, the bank would simply add the interest to the principal and deduct the discount from the total. In the case the sum of the principal and interest ($100.00 +.50 = $100,501 is $100.50, and the discount $.50, which would leave $100.00 as the net proceeds. If the amount of the note were larger or the interest was figured for a longer time, it would make a difference. Suppose the amount of the note to be $2,000.00, time 30 days, interest 6% per annum. Principal $2,000.00 Interest 30 days 10.00 Total $ 2,010.00 Less interest on $2,010. 00 for 30 days 10. 05 $ 1,999.95 Since the net amount realized is less than the face of the note, we need not consider the interest earned, but' the entry would be: Bank $ 1,999.95 Interest and Discount.05 Bills Discounted $2,000.00 91. When a Note Drawing Interest is Paid. But suppose Samuel Smart's note is $100.00 for 30 days, with 6% interest, and that the note is kept by us and the money is paid directly to us when due. We shall then receive the interest, in addition to the face of the note, making a total of $100.50. The entry would then be made in the cash book on the debit side, and would be: Bills Receivable $100. 00 Interest and Discount.50 Samuel Smart's note due Oct. 10, paid to-day. 92. When a Discounted Note is Not Paid. When we disc...