A SYSTEM OF ACCOUNTING FOR COTTON GINNERIES. 



21 



Operation of Ledger Accounts. 



A. CURRENT ASSETS. 

 Cash on Hand (Al). 



Debit: 



With the total of urrdeposited checks 

 and cash on hand in the office as 

 shown by the balance sheet at the 

 time of opening the books. 



With the total cash received during 

 the current period. 



Credit: 



With the total cash receipts depos- 

 ited in bank (at this time, debit 

 cash in bank account) . 



With the total cash disbursed direct 

 from the office during the current 

 period. 



The original amounts which are finally entered in this account are found in the 

 cash receipts book (Form 4), the totals of which are recorded daily in the cash journal 

 (Form 5) where the amounts are distributed to the proper columns. 



Cash in Bank (A2). 



Debit: 



1. With the balance in the bank as 



shown by the balance sheet at the 

 time of opening the books. 



2. With the total of all deposits during 



the period. 



3. With interest credited by the bank. 



Credit: 



With the amount of overdraft as 

 shown by the balance sheet at the 

 time of opening the books. 



With the total of all amounts dis- 

 bursed by check during the 

 period. 



With interest charged by the bank 

 on overdraft. 



This account will appear in the ledger under the name of the bank and should be 

 debited with the amount of cash on deposit at the beginning of the period. This 

 balance is determined by taking the balance rendered by the bank and deducting 

 therefrom the total of all outstanding on uncanceled checks. Normally the balance 

 shown by the bank will be in excess of that shown by the records of the organization. 



Debits and credits to this account for interest receipts and payments and exchange 

 charges will arise from debit and credit memoranda submitted by the bank at the 

 time of rendering its statement. 



Notes Receivable- (A3). 



Debit: 



Credit: 



1 . With the face value of notes of others 



1. 



With amounts paid on notes by their 



on hand as shown by the balance 





makers, settlements made in any 



sheet at the time of opening the 





other manner or amounts charged 



books. 





to reserve for doubtful accounts 



2. With the face value of -the notes 





as uncollectible. 



received during the period. 







It is sometimes the practice to allow customers to make settlement of their accounts 

 with a note. In such instances the face value of the note should be charged to this 

 account and credited to the customer's account in the ginning (accounts receivable) 

 ledger. If these notes are discounted at the bank before maturity this account would 

 be credited with the face value of the note, charge being made to the bank for the 

 proceeds, and to miscelHneous expense for the discount. 



