The Waste Book opens with an account of the merchants effects in trades and of the debts he owes to others. The first set of articles compose his stock, and each article is journalised, that is, entered in the Journal, as Dr. to Stock for its value; and, on the other hand, Stock is entered as Dr. to each article, where money is due from the merchant.

The first transaction of the 4th January, where Cloth is sold for ready money, appears thus in the Journal, Cash Dr. to Cloth; that is, Cash received is accountable for Cloth parted with; but in the second transaction of the 6th, where Linen is bought for ready money, Linen is journalised as Dr. to Cash for the money given for it.

On the 8th, Richard Wilson furnishes Rum on credit; the Rum is therefore accountable to him for its value, and in the Journal Rum is entered Dr. to Richard Wilson,

On the 13th, Linen is sold to Thomas Ellis, partly for ready money, and partly on credit; the transaction must therefore have a double entry in the Journal, viz. Cash Dr. to Linen for the money received, and Thomas Ellis Dr. for the balance due at 2 months.

On the 26th, where the merchant acquires a sum of money for his trouble in receiving and transmitting money to Richard Wilson, as no real value is given for this money, a fictitious account is formed, titled Commission, under which must be entered all sums of this nature, either received or paid by the merchant.

On the 28th, a Legacy is received, the amount of which being considered as pure gain, for which no equivalent is given, another fictitious account is formed called Profit and Loss, and Cash is charged Dr. to this account for the amount of the Legacy.

On the 1st February, sundry charges are paid for rent, &c. which are necessary in the course of business, but for which no real value is received in return; the same account of

Profit and Loss, or some similar fictitious account, is therefore charged as Dr. to Cash for the amount.

In this manner, by applying the several rules formerly given, the method of transferring accounts from the WasteBook to the Journal may readily be understood; and the next step, or transferring them from the Journal to the Ledger, will be very obvious.

The first folio of the Ledger contains an account for Stock, on the Cr. side of which are entered the several articles of the merchant's effects, or their amount in one article; and on the Dr. side the amount of his debts.

The next account opened is for Cash, as being the first article in the inventory of his effects in trade, stated in the Waste-Book and Journal, Cash being made Dr. to Stock for the ready money in the merchant's hands.

Then follows an account for Bills receivable, which become, in the same manner, Dr. to Stock for the Bill on David Jones.

Then appears the account of Cloth Dr. to Stock for the number of pieces and yards at a given price.

The next account opened is for Sugar, which appears Dr. to Stock for the whole quantity on hand at the opening of the books; and on the other side Cr. by the several quantities disposed of at different times.

Lastly, comes the account of Richard Wilson, who appears Dr. to Stock for the amount of his debt.

Having thus entered or posted in the Ledger all the articles composing the merchant's stock in trade, those of his debts come next to be posted; but with this difference, that as the former were all. Drs. to Stock for their amount; the latter are Crs. by Stock for their amount; the account therefore of James Andrews is charged Crs. by Stock for the sum due to him, as is that of Bills payable for the amount of George Gray's Bill.

The transaction of the 4th January is posted in the

Ledger

Ledger from the Journal, Cash Dr. to Cloth for the amount received; and the account of Cloth is Cr. by Cash for the quantity and value; thus exhibiting an example of double entry; and in the same way, by comparing the several articles as they appear in the Waste-Book, Journal and Ledger, the Scholar may discover how to transfer any other transactions from one book to another.

The crooked line or dash in the column on the left hand of the Waste-Book opposite to certain articles, shews that these articles have been journalised and the numbers marked in the left hand column of the Journal indicate the folios of the Ledger where the several articles of an account are posted. When two numbers are written with a line between them, like a fractional number, they show that in the opposite line of the Journal there are two articles entered in the Ledger; thus in the transaction of the 4th January, both Cash and Cloth having accounts in the Ledger, Cash being in folio 1st, and Cloth in-folio 2d, the reference is marked. In the Ledger is a column immediately preceding the money columns, in which is marked the folio of the account specified in the entry.

To ascertain the accuracy of the books, it is necessary at certain periods to make what is termed a Trial Balance of the Ledger, founded on this observation, that when every account of the Journal is twice posted in the Ledger in one account on the Dr. and in another in the Cr. side, the sum of all the Drs. should be precisely equal to the sum of all the Crs. If therefore all the articles on the Dr. side of the Ledger be added together, as also all those on the Cr. side, and the amounts be the same, then the books are supposed to be free from error. To form the General Balance, however, more is requisite, because each account must be balanced; observing that the accounts of Stock and Profit and Loss cannot be balanced until all the other accounts are closed.

Το

To begin with the Cash account, the Dr. and Cr. sides being summed up, and the less subtracted from the greater, the difference is placed on the less side to balance it, or make it even with or equal to the greater: the same is done with the next account for Bills receivable; but in that for Cloth, the whole quantity originally on hand being disposed of at an advanced price, the amount of the Creditor side is consequently greater than the Debtor side; the difference, therefore, is considered as the profit or gain on the article Cloth, which appears Dr. to Profit and Loss for the sum.

Had the amount of the Cr. side been less than that of Dr. side, a loss having been sustained by some accident or defect in the Cloth, the difference would have appeared on the Cr. side, Cloth then becoming Cr. by Profit and Loss for deficiency, as is the case in the transaction of the 23d of February, where William Brown being insolvent, a loss is sustained by a composition being agreed to, and only twelve shillings being received for every twenty shillings he owed.

When all accounts on which there has been, either gain or loss are summed up, and the proper sums are posted in the Dr. and Cr. sides of the account of Profit and Loss, the difference between these two sides is entered in the Stock account of the Ledger, in this way; if the Cr. side be the greatest, then the merchant has gained, and Stock is charged Cr. by Profit and Loss for the amount; but had the Dr. side been greater than the Cr. side, then the merchant would have been on the whole a loser by his business, and Stock would have become Dr. for the amount; or, in other words, the merchant's stock would have been diminished by that amount. But supposing, as in the specimens of books here given, that the trader is on the whole of his concerns a gainer, Profit and Loss will be Dr. to Stock for his gains; and the same being entered