C52 



THK HOME, FARM AND BUSINESS CYCLOPAEDIA. 



this: "Ace. St. Draft," to show that we have accepted such a draft 

 and when the paper becomes due we pay it and charge the person direct, 

 as we would have done had he drawn a draft " on demand" and we paid 

 it at once. When drafts are drawn in this way, and are accepted by us, 

 the bank to whom the draft is made payable leaves a "notice" with us 

 showing when the paper falls due, the amount of same, also collection 

 charges, if any. When due, we pay the draft, charge the person and 

 credit Cash, as it is a cash transaction. The object in drawing drafts 

 " at sight," or " at one, three, or five days' sight," is so as not " to take 

 the person by surprise," but to give him a little time in which to meet 

 the obligation ; there being thus more certainty of the draft's being paid- 

 Drafts drawn in this way have three days of grace in addition to the 

 time given. It is not deemed advisable to run the entries through the 

 Bills Payable account when we accept a draft drawn on such short time ; 

 but when drawn on ten days or longer time, we call it a Time-Draft, and 

 make the entry to the Bills Payable account. 



INTEREST (OR USE OF MONEY). 



144. Debit for all cash we pay 

 out for interest on the notes which 

 we have given to other parties. 



146. Debit for amount deducted 

 by the bank from the face of a note 

 which we have had by them dis- 

 counted. 



148. Debit at the end of the year 

 for the accrued interest to date on 

 the interest-bearing notes we owe. 

 (See 160 and 163.) 



145. Credit for all cash we re- 

 ceive for interest on the notes which 

 we have received from other parties. 



147. Credit for discount allowed 

 to us by other parties for paying 

 our notes before due. 



149. Credit, at the end of the 

 year, for the accrued interest to date 

 on the interest-bearing notes we 

 hold against other parties. (See 

 155 and 158.) 



15O. Directions for closing the Interest account at the end of the year : 

 1st. Find the difference between the two sides of this account. If the 

 credit side be the larger, the amount the credit exceeds the debit is the 

 gain on Interest ; we then write on the debit side of this account, in red 

 ink, "To Loss & Gain" for amount gained. If the debit side be the larger, 

 the amount the debit exceeds the credit is the loss on Interest ; we then 

 write on the credit side of this account, in red ink, the amount lost, which 

 in either case would make the account balance. 



