A SYSTEM OF ACCOUNTING FOR COTTON GINNERIES. 



25 



F. CURRENT LIABILITIES. 

 Notes Payable (Fl). 



Debit: 



Credit: 



1. With amounts paid on outstanding 



1. With the balance of outstanding 



notes. 



notes as shown by the balance 



2. With the unpaid portion of old notes 



sheet at the time of opening the 



canceled by renewal. 



books. 





2. With all new notes issued, including 





renewals of old notes. 



Should a note be renewed, thus in effect giving a new note for the old note, debit 

 this account for the face value of the old note, ami credit, the account with the amount 

 of the new note. 



A careful record should be maintained of all notes given, showing date issued, to 

 whom, due date, and rate of interest. 



Accounts Payable (F2). 



Debit: 



Credit: 



1. With payments on account. 



1. With amounts due creditors on open 



2. With purchased goods returned for 



accounts at the time of opening 



credit. 



the books as shown by the balance 



3. With allowances and refunds on 



sheet. 



purchases. 



2. With the invoice value of merchan- 





dise purchased on credit. 



When the invoice has been credited to accounts payable the check given in pay- 

 ment of same must be charged to accounts payable. As the canceled check is a 



sufficient receipt, it is suggested that invoices be stamped "Paid , 19 . . , " and 



filed alphabetically for future reference. 



A method much to be preferred to that just described, especially for the larger 

 organizations, is the use of a voucher payable register, description of which may be 

 found in most books on accounting. 



Care must be exercised when entering checks to ascertain whether they should be 

 charged to accounts payable when goods are purchased on credit, or to an inventory 

 or expense account when goods are purchased for cash. 



Separate accounts should be opened for firms with which a credit business is con- 

 ducted currently. 



It is not the intention to carry individual ledger accounts with all the various 

 creditors because in many cases only a single purchase will be made from one concern 

 and practically all invoices will be paid during the period. 



Dividends Payable (F3). 



Debit: 



1. At the time of payment with the 

 total of checks paid to the stock- 

 holders as dividends. 



Credit: 

 1. At the close of the period with the 

 annual dividend payable to the 

 stockholders. (Debit Surplus ac- 

 count). 



