the left hand or what is called the debit side of the ledger, and the amount is considered to be eventually collectible, it is an asset; otherwise a loss. (2) When the balance is on the right hand or what is known as the credit side of the ledger, and the amount shown is considered to be eventually paid by us it is a liability; otherwise a gain.

The points connected with an adjustment will most clearly be brought out by an illustration. Dicksee in his Advanced Accounting, emphasizes that he does not recommend that the books of a partnership concern be kept by the single-entry method of bookkeeping. Yet, as such cases frequently arise, he gives the following interesting problem, showing how the adjustment should be made. It is needless to say that the monetary system as well as some of the details have been changed and modified, in order to adapt the problem to American readers:

On December 31, 1901, A's liabilities amounted to $10,000,00, and his assets to $17,000.00. On January 1, 1902, he admitted B into partnership on the terms that A's capital was to be agreed at $7,500.00; that B should not be called upon to find any capital; that profits should be divided between the partners in the proportions of two-thirds to A, and one-third to B; that B's drawings should be limited to $2,000.00 a year until such time as A had been paid the premium which it was agreed that he should receive in consideration of the partnership. This premium was fixed at $2,875.00, to be paid from year to year out of the excess of B's share of profits over his drawings, interest at the rate of 5 per cent. per annum, being charged by A on the balance outstanding from time to time. The firm kept their books by single-entry, but statements of their assets and liabilities were prepared at the end of each year as follows:

A's drawing during the five years were as follows:

B drew out only his agreed maximum of $2,000.00. Required to show (a) the capital accounts of the partners for the five years, allowing interest at the rate of five per cent. per annum, and (b) a statement showing the account between A and B, in respect of goodwill.