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into a cash-book; then to journalize this cash-book, repeating all its contents; then to post from the journal to the ledger, which includes a cash account as the fourth version of the same history.

382. Fiduciary accounts (Chapter XXI) lend themselves particularly well to this plan of making the check-book into a complete cash book. Trust funds should always be kept separate from individual cash and the proper way is for the fiduciary to open a bank account for and in the name of each trust which he may assume. His check-book, suitably kept, will serve as the chief, or the only, book of account and posting medium. By the use of side posting (Article 271) he may minimize the labor of posting to a ledger or may dispense with it altogether if his accountability is solely for cash as, for example, the treasurership of a society; classification of receipts and expenditure being the only aim.

383. This plan of making the check-book the medium of all transactions will not, for various reasons, be always practicable. When there are several bank-accounts and several cashiers, it will often be simpler to unite their results in what may be called a complex cash-book. This may be in the columnar form and the columnization may be on either of two principles: the one dividing the receipts and payments according to the branch of the cash to which they relate, the other according to the contra accounts involved in the transactions: the accounts credited when cash is debited, and debited when cash is credited; credited " by Cash " and debited “to Cash."

On the former plan, there will naturally be a pair of columns for each bank and a pair of columns for each cash-keeper and also a pair of columns for “the public.” These last columns record those transactions which increase or decrease the total cash balance, as distinguisht from those which are transfers between branches or receptacles. The public columns exactly correspond to the entries of Mode II. Each transaction must necessarily, in this plan, enter into two columns, possibly into more. If it is an interior transaction, a shifting between departments there must be a receipt in one and a payment in another. If it is an actual receipt or payment, from or to the outside world, it must affect “the public” column and also some department.

384. The arrangement of these columns may be somewhat as follows:

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The “check list " column is a convenience for summing up the items received and to be deposited.

385. The second mode of columnization does not concern itself with the components of the cash, but with the consideration which caused it to change hands, the equivalents which were received and given; the wherefore, not the where. This is done for the purpose of forming totals which may be posted in mass, usually monthly, or, following the old conceptions, to make the cash-book self-journalizing.

386. Both kinds of cash-book may be kept concurrently in an extensiv business, where all cash transactions have their origin in tickets or vouchers. They will usually, then, be a daily cashbook of the first columnar plan and a monthly cash-book of the second, the former being balanced every day and the latter at the end of each month.

387. The monthly, or journalized cash-book, as well as the simple form 2, admit of columnizing some values which are not receipts nor payments, but are concomitants of those transactions; and thus the keeping of a special posting-medium is avoided. As an example of this, we may take the subject of cash discounts.

388. Indebtedness for purchases is usually subject to a stipulation that the purchaser may settle at an earlier time than is required by the contract and in consideration of such prepayment shall be entitled to a discount stated in a percentage of the full, or gross, price. Thus it happens that many, or most, of the cash amounts paid or received in settlement of such indebtedness are less than the amount standing on the account as due; and that it cannot be determined until the payment is actually made whether

the discount-option will be utilized, or at what rate. In case of a debtor the settlement will be

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The discount is a concomitant of the cash-entry and it will evidently be an advantage if the entries can be made concurrently without having to repeat the particulars. For this purpose two additional columns are provided, one for the gross amount of the bill, one for the amount of the discount, and the third for the actual cash received.

CUSTOMERS.

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The third column only is used for balancing the cash. The middle column in total iş posted at the end of the month to the debit of Discount, an economic account, the aggregate of which at the balancing period should be carried to the debit of Sales, or of the Trading account. The first column is equal to the sum of the other two if the subtractions of the discount have been correctly made and this test should always be applied.

389. As to posting to the customer's account the simplest way is post the gross amount without distinguishing between cash and discount. It might be thought best to state these separately, in order to leave a record of whether the customer pays promptly or foregoes discount; but if this is not sufficiently indicated by the date, a memorandum of the rate of discount may be inserted in the posting; as:

Apl. 5 (-2%) $2,934.62 which would be far more expressiv than

Apl. 5 By Cash $2,934.62 390. Another way of entering the discount without a concomitant column is to represent that the entire amount has been received and the discount refunded.

Received from Customer, $2,934.62
Extended for Discount,

$58.69

This follows the fact less closely than the method by concomitant column, and it does not agree with the bank pass-book, which will record only $2,875.93 as deposited.

This latter, more fictitious method by two cash entries is often used for discounting bills receivable, but even there I think the concomitant method will frequently be found preferable.

391. In Article 275 a device was explained by which the cashbook is made to perform the work of the journal by introducing two equal and opposit amounts. This would be objectionable in a check-book used as cash-book, for it would break up the correspondence between the account kept by the bank and that kept by the depositor. Nevertheless the shifting of debits and credits may be effected by drawing a check to your own order, and, instead of issuing it, depositing it to your own credit. For example, A is a customer who, besides buying of you, occasionally sells you some special article. As you prefer to keep your personal debtors and creditors separate, you have two accounts with A, one in each capacity. He owes you $270 on the one account and you owe him $30 on the other. He sends you the net amount $240, instead of sending $270 and waiting for you to return $30. To avoid a journal-entry transferring the $30 from one account to the other, you draw a check for the $30 not to his order but to your own, since he has already paid himself; this check you charge to him, but deposit it along with the $240, making up the $270 necessary to balance his account as a customer.

392. The reduction of the cash book, the cash account and the bank account to the one form of the check book is a great simplification, but it has been found that the check book itself may be simplified. What is known as the check register is beginning to supplant it. Instead of containing only three, or at most six checks to a page, thirty to fifty may be described on a page, provided we utterly abandon the idea of a stub from which the check is torn and enter the descriptiv matter on a single line. The checks are made up in pads and are numbered in advance, as are also the lines of the register. The rule must be inflexible that the entry on the register shall be made first and the check filled out from it; in fact, this ought to be the rule when the stub is used, for a check might be issued without record. The vacant stub is somewhat more of a reminder than the numbered line, yet it is thought better to forego this advantage rather than to lose so much time in adding up every four or five checks.

This plan is mostly used by banks issuing drafts which are practically checks on other banks, and is then called a draftregister. Its introduction is facilitated by the fact that no contra account of deposits needs to be kept on the same page.

Without the invention of blocks or pads of blanks, which keep the papers firmly in their proper order, this form of register would have been impracticable.

393. I propose a new method of handling the cash transactions, or rather a recurrence to the original plan of a ledger account, with the aid of the following comparatively modern devices: pads of blanks; machine-numbering ; cards or loose leaves for accounts; ticket posting, and perhaps carbonduplication.

FIG. 56. MEMORANDUM OF CHECK

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