50 THE HOME, FARM AND BUSINESS CYCLOPEDIA. 



135 Directions for balancing tlte Bills Payable account at the end of 

 the year : 



1st. Find the difference between the two sides of this account, and then 

 write on the debit side, in red ink, " To Balance" for that difference, which 

 will make the account balance. 



2nd. Now rule the closing lines and bring down the total amounts be- 

 tween the lines. 



3rd. Write on the credit side, below the closing lines, " By Balance," 

 in black ink, for the difference above found, which difference should ex- 

 actly agree with the notes and acceptances we owe. 



136. EXPLANATION. Bills Payable account is an account of Notes and 

 Acceptances given by us, and consequently payable by us ; hence, Bills 

 (or Notes') Payable. We credit Bills Payable when we give a note or 

 accept a time-draft ; and when we pay that note or draft we debit Bills 

 Payable. 



137. This account is, in effect, like a personal account we owe ; for 

 when we give a person a note, or accept a time-draft which he draws on 

 us, we debit this person's account, and transfer the credit which hereto- 

 fore existed on same to the credit of Bills Payable account ; so that, illus- 

 trating the account in this manner, we are now owing " Mr. Bills Payable" 

 instead of this person. Now, when the amount becomes due, this " Mr. 

 Bills Payable " " comes to us in such a questionable shape," being in the 

 form of a note, that we must pay him. We then debit " Mr. Bills Pay- 

 able," in order to show that the debt exists no longer, in so far as that one 

 amount is concerned. 



138. The difference between the two sides of this account should at 

 any time exactly agree with the notes and acceptances we have out- 

 standing, or the notes we have given arid the time- drafts we have accepted 

 which still remain unpaid. 



139. When we make an entry on the Bills Payable account, we always 

 write in the explanation column the name of the person to whom we gave 

 the note ; the date of the note and time may also be added, so that if 

 there be a mistake in this account, i.e., if at any time the amount of our 

 notes outstanding does not agree with the difference between the two 

 sides of this account, we may then check from the debit side to the credit 

 the notes that have been paid, and in this way find the mistake. 



140. The reason we give notes and accept time-drafts is, because the 

 parties from whom we buy request us to do so, with the same objects in 

 view which we have when we take notes from our customers. (See 122.) 



