Collection and Exchange are items of expense, and an account is kept that it may show the cost to collect accounts, notes, drafts, etc. It is debited for all cash paid for collecting drafts, notes and accounts, and for exchange on bank drafts, etc. It is credited for rebates, if any, and closed into Loss and Gain.

Commission and Brokerage are other items belonging to expense, and an account is kept to show the Loss or Gain in this particular branch. It is conducted and closed precisely the same as the Interest and Discount account. When the books are closed there is frequently commission due on shipments partly sold, for which an account sales. has not been rendered. This is a gain which is not, but should be, shown in the books the same as Accrued Interest in Lesson 21, p. 147.

Freight, Express and Custom-House Charges are not practically items of expense, but it is the usual custom to close this account into Loss and Gain. This account is kept that we may know the amount paid for receiving and shipping goods. It is debited for freights, cartage, expressage, etc., and credited for rebates or overcharges, if any. This account should always be closed into the Merchandise account when the books are closed. The reason for this is, that it is an additional cost, also that Merchandise gets credit therefor by a certain percentage being added to the invoice price. In case of fire the amount of this account should be added to the loss, etc.

Advertising. In some branches of trade this is a very large account. It is kept, of course, to show the annual cost to advertise the business. It is debited for all cash paid for advertising, and credited. for any unexpired contracts when the books are closed. It closes into Loss and Gain.

Litigation. This is a very extensive account, especially with Railroad and Insurance Companies. The account is debited for all cash paid for Law and Court Fees. Usually there are no credits. It closes into Loss and Gain.

Traveling Expense. This is an extensive account with large wholesale houses and manufacturers who employ commercial travelers. The account is debited for all money paid for traveling expenses, baggage, etc. It closes into Loss and Gain.

Suspended List. This is an account which is kept to show the amount of all doubtful accounts. All accounts which are not considered bad, but doubtful, should be closed into this account, giving name, amount of each and Ledger page. This account is debited for all accounts considered doubtful, and credited for all payments subsequently made. When any accounts are paid which have been closed into the

Suspended list they should be re-opened, then credited for the payments: this will show the customers who will pay in time. If any of the accounts in the Suspended List cannot be collected, they should then be charged to Loss and Gain and credit Suspended List for the amount.

A Furniture and Fixtures account is kept by most all business houses, that they may know the amount invested therein, or what is required to conduct the business. The account is debited for the amount on hand at the beginning, and for all that is purchased thereafter, and is credited for the sales, if any. When the books are closed a certain percentage should be written off for depreciation in wear and tear; the account is then closed "By Inventory" the same as the Merchandise and other property accounts.

Insurance. An account is kept with insurance to show the amount of premiums paid for insuring goods and property against loss by fire, water, etc. The account is debited for all cash paid on premiums, and when the books are closed this account should be credited for the unexpired premiums, and is then closed into Loss and Gain. Some business houses do not inventory unexpired premiums, taxes, etc., but call the whole amount a loss at once. In case of loss, and as soon as the insurance has been adjusted and the claims acknowledged, the Insurance Companies should be charged with the amount of the claims, and credit merchandise, property, or whatever the loss consisted of.

Machinery Account, in some branches of trade, is an extensive one, and is debited for the amount on hand at the commencing, and for the amount of new machinery purchased thereafter. This account should not be charged for repairs or for machinery replaced, but should be charged to Repair account, which account is closed into Loss and Gain. Any additional machinery required by reason of increased trade should, however, be charged to the Machinery account. When the books are closed, a certain percentage should be written off for depreciation in wear and tear. It would then be closed "By Inventory," which would represent the actual value. This inventory balance, of course, is then brought down to new account. Repairs on machinery, etc., do not add to its value, therefore they should not be charged to represent value.

teams.

A Horse and Wagon Account is kept by those having their own. It is conducted precisely the same as the machinery account. A Pattern and Patent Account is necessary in some lines of business. No special instructions are necessary, as the account is conducted

precisely the same as the Machinery account.

A Material Account is kept by many manufacturers, as articles are often manufactured in excess of the demand; storage is then secured, and goods are then shipped to various markets and kept on sale. In such cases the regular Merchandise Account should not receive credit for such shipments; only as sales are made from such storage branches is the Merchandise Account to receive credit. A special book should be provided for the purpose, and the details of such shipments should be systematically kept, and as rapidly as sales of such goods are made and entered upon the Sales Ledger, this book should be made to correspond, so that when an Inventory is taken, every article is easily accounted for. When the books are kept in this way, they will show actual Assets and Liabilities.

The Construction and Equipment Account of Railroads is usually divided into the following accounts: Depots, Road Buildings, Lands, Surveying, Grading, Bridging, Tunneling, Locomotives, Cars, Coaches, Telegraph, Fencing, Incidentals, etc. These accounts are conducted the same as other property accounts, and should have a certain percentage written off each year for depreciation. See Lesson 25.

The Operating Expenses of railroads are subdivided as follows: Stations, Shops, Trains, Engines, Cars, Coaches, Track, Buildings, Oil and Waste, Fuel, Incidentals, etc. These accounts are conducted the same as other expense accounts, and should be closed into Loss and Gain.

Loss and Gain Account is the receptacle of all Losses and Gains, and like all other secondary accounts, it is a branch of the Stock account, the others being tributary to this. Hence, in closing the Ledger, it is necessary first to close all the other secondary accounts into this, after which this must be closed into the Stock or Partner's accounts; if a corporation, it closes into Surplus if there is a gain. As the account is debited for all losses and credited for all gains, it follows that if the balance is on the debit side it shows the net loss in business, but if the balance is on the credit side it shows the net gain.

Arrangement of Accounts in the Ledger. When but one Ledger is used, the bookkeeper will find it a great convenience to have the customers' accounts in the fore part; next to these should be the creditors' accounts, reserving the back part of the Ledger for the miscellaneous accounts. This arrangement of accounts will be more fully appreciated if read in conjunction with the classification of accounts in condensed Trial Balances.

A Merchandise Discount Account should be kept by all who take

and give cash discounts on the goods they buy or sell, that the Merchandise account may show the true gain on the goods handled. This account should be debited for all discounts allowed by the firm or company, and credited for all discounts taken by them. The account should then be closed into the Merchandise account, (same as Merchandise Returned and Rebate account as shown in Lesson 23, p. 189,) the total debit being deducted from the aggregate of the Merchandise Credit, and the total credit deducted from the aggregate of the Merchandise Debit; the reason for this is plain, yet it has never been presented in any other work on the subject of accounts. For an illustration we will say, a merchant sells a bill of goods amounting to $500 on 60 days time, or will allow a cash discount of 5 per cent 10 days, 3 per cent 30 days or net 60 days; this is practically three different prices-$500 if paid in 60 days, $485 if paid in 30 days, and $475 if paid in 10 days. Of course the Merchandise account will be credited with $500, and if either of the discounts should be taken, the Merchandise account receives credit for $15 or $25 more than will be received for it, therefore this account should be kept separately, that the total discounts taken by the customers can be ascertained, which should be deducted from the total sales, while the total discounts taken by the firm is deducted from the total purchases, to show the actual purchases and sales.

To Inventory Discounted Goods. The price fixed should be the price before the discount was taken off.

To Find the Inventory Without Invoicing. First find the average per cent of gross gain for a period of four or five years, which we will assume to be 25 per cent; then assume the total purchases to be $10,000, and the total sales $8,000, as per the Merchandise account. To find the cost of the goods which sold for $8000, allowing 25 per cent gross gain, divide the amount of sales ($8000) by 100 per cent, plus the rate per cent of gain, and the quotient will be the cost of the goods sold, or $6,400 ($8000÷-125 per cent $6400). The cost of the sales deducted from the cost gives the amount of merchandise on hand ($10,000-$6,400-$3,600, Inventory). In some lines of business it is a very tedious task to take an inventory, therefore many large concerns close their books by this method every alternate year. In case of loss by fire it is necessary, sometimes, to determine the amount of merchandise from the books by this method, which is the most accurate that can be adopted.

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There are two methods of deter

To Find the Loss and Gain. mining the Loss or Gain in business.

First, by classifying the Assets

and Liabilities, and taking the differences of their aggregate; in partnership the partners' net investments are classed as liabilities Second, by classifying the Losses and Gains, and taking the difference of their aggregate. The first method can be used under all circumstances when the assets and liabilities can be obtained, but no item of Loss or Gain can be included. The second method can be used only when the books

have been properly kept by Double Entry. Refer to Lesson 4, pages 27 to 31. The various items of Loss and Gain are in reality represented in the Assets and Liabilities, for a gain is the result of a Resource received, without giving property therefore, hence it is on hand to increase the list, and thereby affecting the gains; while a loss is the result of a Resource disposed of, without receiving property value therefore, hence it is absent from the list, and thus the amount of resources is decreased and the loss increased correspondingly.

Cash Sales. In a manufacturing business there are usually but few cash sales; sometimes cash is received with the order, which is entered in the Cash Book to the credit of the purchaser, and when the goods are shipped they are then charged. Some business houses merely enter the cash and credit merchandise. It is a good plan to credit the purchaser for the payment for future reference; of course this would add to the work of the bookkeeper, but if there are many of such customers, then a special book should be kept in alphabetical order, giving the prices, discounts, etc. In a retail business each salesman makes a cash ticket showing the amount of cash received, the amount of the sale, with the number of the cash boy and his own number. This ticket, with the goods, is sent to the Wrapper or Parcel Clerk, who stamps the date and his own number thereon, and compares the amount of the sales with the price of, the goods; the ticket and cash is then sent to the cashier, who assorts them to make up his cash for the day, each salesman's tickets being listed separately to ascertain the amount of each one's sales. If each salesman has a special department, their sales tickets will show the amount of the department sales.

Credit or Charge Sales. Jobbers and manufacturers usually have a Credit Man, whose duty is to ascertain the financial standing of those who ask credit; this is done by personal investigation, and by special reports through the Mercantile Agencies. If he is satisfied to trust the customer, he will O. K. the order and send it to the warehouse. In case of a retail establishment where credit is asked, the salesman writes the name and address of the customer, with full particulars of the sale. In case the customer be a new one, the salesman will ask for refer