A SYSTEM OF ACCOUNTING FOR COTTON. GINNERIES. 21 
OPERATION OF LEDGER ACCOUNTS. 
A. CURRENT ASSETS. 
CASH ON HAND (A1). 
Debit: 
1. With the total of undeposited checks 
and: cash on hand in the office as 
shown by the balance sheet at the 
time of opening the books. 
2. With the total cash received during 
the current period. 
Credit: 
1. With the total-cash receipts depos- 
ited in bank (at this time, debit 
cash in bank account). 
2. With the total cash disbursed direct 
from the office during the current 
period. 
The original amounts which are finaliy 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: 
1. With the amount of overdraft as 
shown by the balance sheet at the 
time of opening the books. 
2. With the total of all amounts dis- 
bursed by check during the 
period. 
3. With interest charged by the bank 
on overdrait. 
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: 
1. With the face value of notes of others 
on hand as shown by the balance 
sheet at the time of opening the 
books. 
2. With the face value of the notes 
received during the period. 
Credit: 
1. With amounts paid on notes by their 
makers, settlements made in any 
other manner or amounts charged 
to reserve for doubtful accounts 
as uncollectible. 
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 miscellaneous expense for the discount. 
