Account Sale No. 90.

Account Sale of 1 Case White Mulls, received ex "Branksome Hall," from Messrs. Timothy Jones & Co., and sold by the undersigned, on account .and risk of the concerned.

Terms: 1 per cent. disct., and 60 days' prompt, @ 6% per annum. Sold 3rd December, '98. Rec'd in Godown, 16th May, '98. Prompt 1st Feb., '99.

ACCOUNTS CURRENT.

Another document which is largely, but by no means exclusively, used in connection with goods shipped "on consignment " is an Account Current.

This, as the term implies, is a running account, or a statement of transactions which have taken place between two parties acting as agent and principal respectively. Such an account is frequently rendered by a branch firm to a head firm, or vice versa, and shows in the form of debit and credit entries all payments made and amounts received by the one firm on account of the other. An account of this kind is frequently rendered by a consignee to his consignor, in respect to goods shipped on consignment. Interest pro and con is usually computed on each item separately, the customary rate of interest being 5 per cent., unless some other arrangement has been made. Accounts Current are usually made up at certain stated periods, say, 30th June or 31st December; sometimes on both dates, and frequently at even shorter periods than six months.

There is one point in connection with accounts current which requires some explanation, as it is a frequent cause of perplexity to novices. We refer to the interest to be debited or credited in cases where the due date of one or more items falls subsequent to the date on which the Account Current is made up. For instance, you are making up an Account Current to 30th June, and you credit certain drafts drawn by you on your correspondent which are hot due until, say, 31st August, and you debit certain drafts which you have remitted, but which do not mature until, say, 20th September. In such cases interest would be computed from the 30th June to the due date, and the interest and number of days would be entered in the Account Current in red ink. The items of "red interest" are added together, and the balance pro or con entered (in black ink) as "balance of red interest."

Here is a specimen of a simple account current, in which we have introduced an example of “red interest "—the figures in heavy types representing red ink :

Nov. 12

Very often the consignee is drawn upon for an agreed-upon percentage of the goods. In other cases the goods are sent out without being drawn against, and remittances are made when the goods are sold and amounts realised. In either case the consignee should send by each mail a return of the goods sold since his previous advice, and at the end of each month should forward a summary of the sales for that month. He should also send a statement of his payments for duty, freight, insurance, &c., and of any allowances which he may have made, and should remit any balance due at certain stated intervals, say once a month. Sometimes remittances are made as soon as the goods are realised. An account current is usually rendered when the transaction is closed or at stated periods, as may be arranged.

In the account current given on the preceding page the interest is entered in pounds, shillings, and pence. Each item of interest is not, as a rule, calculated separately, but is taken from a book of "interest tables." There are several such books on the market, but if one is not available the interest may be calculated by the method given in our previous volume on the Home Trade-page 131.

Many firms, especially continental firms, calculate the interest by numbers, that is, the amount of money is multiplied by the number of days, and the product entered in the interest column, the last two figures (units and tens) being omitted. The balance of interest numbers is afterwards multiplied by the rate per cent. and divided by the number of days in the year—generally taken as 360 instead of 365—which gives the amount of interest. On the next page is a specimen of an account current made up on this principle. It will be noted that the interest is calculated on the basis of 360 days to the year.

=

The following example shows how the interest in this case is arrived at. The balance of numbers is 3,645. 3645 × 6 ÷ 360 60.75 or $60.75, the amount of interest shown in the Account Current. (The same result would be attained by simply dividing the total products by 60.)

The figures in heavy type represent red interest.

Mar. 31 To Duty, Freight, Insur

Aug. 3 £400 90 d/s ex. 4.85 Aug. 3101 1962 1943 00

July 1 By Account Sales

Aug. 2102

342 $334 56

226 4741 $2097 57

Sept. 10 63 3021

4794 98

482 25

Nov. 12

Balance of Nos.

3645