CHAPTER IV.

BOOK-KEEPING.

(For Question 1 see page 45.)

Question 2.-A wholesale fruit concern transacts both a commission and a general business. They sell their own and consigned goods in the same invoice, and do not guarantee consignors against bad debts. Give forms of any special books required and Journal entries to illustrate what may arise in course of dealing with consignments.

(a) As consignments come to hand they are entered in Register and numbered consecutively, giving full particulars and instructions.

(b) Ordinary Ledger with accounts opened with number of Consignment and Consignor's name.

JOURNAL ENTRY.

Brown & Scott, Dr..
To Consignment Sales

$258 60

"Sales..

$153 60
105 00

MEMO. The two items $60 and $93.60 will be credited to Accounts Nos. 13 and 17 in the Consignment Ledger. The balances in this Ledger will agree with the balance to Consignment Sales Account in General Ledger. Charge Freight, etc., to this account and post in Consignment Ledger in same way.

When a consignment is all sold, first ascertain, by reference to Sales Book, to whom goods were sold, and if paid for, then

Question 3.-A Mining Company is disposing of its Treasury. Stock at 15 cents per $1 share. A Development Company which is disposing of its Treasury Stock at 10 cents per $1 share purchases 50,000 shares of the Mining Company's Stock, giving 75,000 shares of its own in payment. When the Mining Company's financial year closes, its stock is selling at 10 cents, and the stock of the Development Company is worth 20 cents. Give Journal entries and open accounts in the books of each Company showing transactions and adjustments at end of financial period.

When Treasury Stock is sold some adjusting entry must be passed so that the balance of Treasury Stock Account shall agree with the amount of unsold shares.

Development Company Stock, Dr. $7,500 00

To Profit and Loss Account..

$7,500 00

This entry is asked for by the question, but strictly speaking this amount is not an earned profit until the Stock is sold, and the wiser course might be to treat this as a Reserve to meet losses on other Stocks. Similarly it might be agreed that depreciation on Stock should not be treated as a loss until the Stock is sold.