BOOKKEEPIM; 



816 



BOOKKEEPING 



trade, or any one that he wishes to learn his 

 rvict profit* in, he may open separate accounts 

 for them. Thus, for instance, he may keep 

 his groceries and his hardware apart from the 

 rest. In the present instance we shall assume 

 that everything is merchandise. 



Our first entry in the journal will appear as 

 follows: 



Feb. 27 



Dr. Cr. 



The first column is headed Dr., an abbrevia- 

 tion for debtor, and the second Cr., which 

 signifies creditor. The columns in a journal 

 are in reality seldom lettered, but the first one 

 is always to be used for the debit figures, the 

 second for the credits. 



Our next item is a receipt of cash. In this 

 case on account shows that the money is to 

 be applied to the account of goods charged 

 some time ago to Mr. Watts. He ceases to 

 be responsible to us for $10, and the fictitious 

 boy in charge of the cash, or the cash account, 

 accepts the responsibility. So we have: 



Cash 



to Hiram Watts 

 On Account 



10 



The third item is really two. We bought 

 eggs from Mr. Henderson and he bought shoes 

 from us. No cash is recorded in either sale. 

 So we write: 



10 



Why can we not save time and space by 

 consolidating the two items into one, George 

 Henderson to Merchandise $0.60, since the net 

 result of the transaction is that he owes us 

 60 cents and we have 60 cents worth of mer- 

 chandise less than before? We can, but there 

 are a great many reasons why we should not. 

 Suppose we do, and at the end of a few 

 months Mr. Henderson comes in to pay his 



bill. We copy the ledger page, or show it to 

 him, and he says, "But you have not given 

 me any credit for those eggs I brought in." 

 Then we have to take time to turn to the 

 journal and show him that we have, and if 

 he does not know much about bookkeeping 

 he will still think we are cheating him. So 

 the extra step now saves many later. Fur- 

 thermore, at the end of the year we shall want 

 to know how many dollars' worth of goods we 

 have sold. If we only credit Merchandise 

 with 60 cents, our report of total sales as taken 

 from the credit columns of the Merchandise 

 account will be $2.40 too small. 



So far each of the items we have journalized 

 has concerned only assets and liabilities. Now 

 we come to a different kind. When the store- 

 keeper bought eggs he intended to sell them 

 later. Now he buys coal for heating his store. 

 Though the coal is an asset in a sense, as he 

 could at any time sell it again, in fact he does 

 not intend to do so, but will soon use it up, 

 and will get no financial return. It is one of 

 the expenses of conducting his business. In a 

 larger business, where it is important to keep 

 count of the cost of heating, coal would have 

 an account of its own, but in this case we class 

 it as expense. 



We credit cash in this instance. The imag- 

 inary cash boy to whom we entrusted our 

 money is now relieved of the responsibility 

 of caring for $17.00. Our journal entry reads 



17 



In the last item on our day book page we 

 have two credits to Mr. McKenzie, one for 

 butter and one for cash. It is plain that we 

 can combine the two in this case without 

 affecting our totals. In the entry for Mr. 

 Henderson we could not combine without sub- 

 tracting, and in double-entry bookkeeping it 

 is never permissible to subtract. We write 

 in the journal, with two debits balancing the 

 one credit: 



11 



For a bookkeeper thoroughly familiar with 

 the principles of debiting and crediting it is 



