

INTEREST (OR USE OF MOXEYV (J53 



:ind. Rule the closing lines and write the total amounts between the 

 lines. 



:>rd. If there be a gain, cany amount gained over to the " Loss & Gain 

 account," writing on the civdit side of that account, in black ink, "By 

 Interest," for amount of the gain. If a loss, carry amount lost to the 

 debit side, writing "To Interest" for amount of the loss. 



!>!. EXPLANATION. Interest is simply a term used for the use of 

 money. When we pay for the use of money, we debit " Interest" for the 

 use of the money which we receive, and credit " Cash " for the cash we 

 for the use of that money. (See 144 and 146.) When we are paid 

 for the use of money which we have tfiven, we debit " Cash " for the cash 

 we receive, and credit " Interest" for the use of the money we give. 

 II") and 147.) Interest does not arise from notes only; for, when we 

 have an account which is past due against a customer of ours, we charge 

 him for interest. When this is done we debit the person and credit 

 14 Interest," as we, in reality, give to that person the use of the money for 

 tin.' length of time that his account is past due. When we allow an ac- 

 count which we are owing to go past due, we are sometimes obliged to 

 pay for interest ; we then debit " Interest " and credit the person to whom 

 we owe the account, as we, in reality, receive from the person the use of 

 the money which should have been paid when his account was due, up to 

 the present time. 



ltl. DISCOUNT. Discount is another term for the use of money ; there- 

 fore, both being the same in effect it is not necessary to have an account 

 for each, so we call interest and discount the same, arid keep only one 

 account on the Ledger, namely : " Interest." 



I.1SJ. When we are in need of money, we take some of the notes which 



we hold against other parties (Bills Receivable) to the bank and get them 



>unted." It tin-so notes are not drawing interest, the banker deducts 



.'-o of the note a certain rate per cent, per annum for the i 

 th'- note has yet to run before due, anil hands us the balance in cash. 

 This amount which he deducts from tin- f.-in- of the note is the " di^c-mnt " 



the amount we pay him for the use of that money which he hand 

 tin- uin'X|iiivd time on the not.-. unple : If \\v h.ild ;i 



$100 which is mad'- without interest and h lys to riu 



due, and we get it discounted in the Lank, the hanker, d.-duetin^ SI for 



count, hand and intend 



a $1 and I the note 



$100. (See , 190 and (12 





