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The junior assigned to count the cash and verify the bank balance, proceeded by first making a count of the cash on hand. His working papers show (see illustration on page 58) the result of his count. Among the checks, there was one signed by C. P. Cooley, which has been returned from the bank, marked “No funds”. Investigation showed that shortly before the auditor began counting the cash the bank had returned the check, the cashier having settled by writing a new check payable to the bank for the proper amount, $17.76. This check, however, had not been entered in the cash book. After talking it over with the cashier, the proper entry was made, charging the amount back to the customer's account, and the check was not included in the cash balance.

Verification of the cash receipts book and cash payments book footings showed for the first fifteen days of January:

Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,994.89
Payments... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,402.08
Excess receipts. . . . . . . . . . . . . . . . . . . . . . . . . . 5,592.8 I

According to the Trial Balance, the cash balance on Dec. 31, 1918, was $20,162.00. Adding to this the excess receipts for the first fifteen days of January, 1919, it will be seen that the cash balance at this date should be $25,754.81. The count of cash on hand shows a balance of $4,971.70. Therefore, there should be a balance in the bank at this time of $20,783.II after deducting the sum of all outstanding checks.

Bank Certificate. The senior mailed a letter to the bank requesting a certificate showing the balance to the credit of the Blank Manufacturing Co., at the close of business on January I5, 1919. It is customary with banks to furnish this information, but it is first necessary to have your request approved by the client. Banks do not like to give out information without the permission of the depositor.

The bank responded with a certificate showing a balance on January 15, 1919, to be $28,950.50, divided into three funds,

General checking account. . . . . . . . . . . . . . . . . $24,400.50
Fund for Dividend No. 9. . . . . . . . . . . . . . . . . 2,050.OO
Fund for Bond interest. . . . . . . . . . . . . . . . . . . 2,500.OO

The bank also returned to the Blank Manufacturing Co. the canceled checks.

After obtaining the bank certificate and the canceled checks the junior continued his work by reconciling the bank balance. (See illustration on page 59.)

He found that the following checks had been issued but had not as yet passed through the bank:

No. Date. Payee Amount. 4527 I2/8/18 Flint & Walling Mfg. Co. . . . . . . . . . $ 765.8o 4597 I / 5/19 A. S. Morrow & Co. I,499. IO 4599 I / 7/19 Geo. A. Barns 75.00 4670. I/10/19 L. W. Kindow 985.00 4682 I/I4/19 Robert E. Arnes & Son 292.49 $3,617.39 Cash THE BLANK MAMUPACTURING CO. G. B. Shaw, oount: - Junior

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(a) That the footings of the cash book were in ink. (b) That it was the custom of the company to make a de

posit each day at noon.

(c) That the cash on hand represented receipts since the

last deposit was made at noon, Jan. 15, 1919.

(d) That this deposit was shown in the bank certificate. (e) That the checks listed had all been entered in the cash

receipts book.

(f) That the check written in favor of the bank on Jan. 15, 1919, on account of the check returned by the bank with the notation, “no funds”, had been deducted from the balance as

shown on the certificate.


(a) Verification of oash book balance C. R. Bhaw, (b) Reconciliation of Bank balance Junior Completed Jan. 16, 1919 Balance (Jan. 15, 1919) as per bank certificate attached hereto $28.950 || 50 Deduct Fund for Dividend Ho. 9 £0.50 00 Fund for Bond interest QQ | QQ 4550 |00 Balance in general checking account $24409 || 50 Deduct checks in transit: No. 4527 765 || 80 4597 1499 || 10 4599 75 || 00 4670 985 || 00 4,682 298 || 49 36]. Available balance in bank 20733 ll Add oash on hand (see record of count attached) 4971 70 Cash balance Jan. 15, 1919 of 25754 || 31 Wooking BAGK: Add dieburgements (Jan. 1 to 15) #; ; 71t & Deduct receipts (San: 1 to 15) 36994. I-83 Cash balance Dec. 31, 1918 29.152. I-99. Total cash receipts book, Jan. 15, 191 Total cash payments book, Jan. 15, išić Excess receipts Add C. B. balance Deo. 31, 1918 G. B. balance Jan. 15, 1919

(A2-Working Sheet, C. E. Shaw, junior accountant. Pho

tographed and reduced one-half.)



Assignment of Contracts. Contracts which do not depend on personal service, skill, ability, or trustworthiness of one or all of the parties involved may be assigned by either of the parties. Of course, if one of the conditions in a contract forbid its assignment, it could not be assigned. Assignments should be in writing, whether the contract is an oral or a written one. If it is a written one the assignment can be made on the back of the contract, and if it is an oral one the assignment can be made in writing anyway. A contract governed by the Statute of Frauds must be assigned in writing. However, there is nothing to preven; the assignment of contracts not governed by the Statute of Frauds by “word of mouth” or by “delivery”.

The assignee becomes liable to perform all the duties of the party who assigns the contract and receives only such rights as the original party enjoyed. His title is no better than that possessed by the original party. If the other parties possessed any defenses against the assignor, they possess the same defenses against the assignee. By defenses is meant fraud, duress, undue influence, offset, etc.

Novation. A novation is the substitution of other parties, or another party, not originally bound by the contract, for one of the original parties to the contract. This can be accomplished only by agreement of all the parties concerned.

Discharge. There are five principal means of discharging COntracts:

By performance.

By agreement.
By operation of law.
By intervention of impossibility.
By breach of contract.


Performance. This is the simplest method of discharging contracts and it is the usual way. When all parties to a contract have fulfilled their agreement in full, the contract is discharged.

Agreement. By mutual agreement, all the parties to a contract may set it aside, thereby discharging it. However, this agreement is simply another contract and must conform to all the conditions of a legal contract. Usually there is simply an oral agreement that the contract be discharged, that is, a mutual understanding of all the parties concerned. It should be definitely understood, and in some cases, it would be best to put it in writing.


Operation of Law. A contract may be discharged by the making of a new contract. Usually this is one of a higher order. A written agreement discharges an oral agreement and an agreement under seal discharges a simple contract in writing. Practically all contracts are discharged by bankruptcy. Taxes, judgments, alimony allowances, and debts created by fraud, embezzlement, misappropriation, or defalcation while in charge of a trust are exceptions to the rule of discharge by bankruptcy. Death discharges executory contracts for personal service in which skill and taste are involved.

Intervention of Impossibility. A contract to do something that was impossible from the beginning is void. It is best, however, to make provision in the contract for strikes, war, acts of God, etc. By “acts of God” is meant floods, tornadoes, hurricanes, public calamities, etc.

Breach of Contract. Violation of the terms of a contract is called a breach of contract. The innocent party to a contract may be discharged from further liability if the other party fails to do something which he agreed to do or does something which he agreed not to do. If the breach is such that the innocent party is not discharged from his obligations, he will be entitled to either money damages or to the right of “specific performance”. A court may compel a party to a contract to do as he agreed to do or to perform all the terms of the contract. This is known as a “specific performance.”

A Tender is an offer to pay. A tender of payment or an offer to perform the conditions of a contract does not discharge the contract. One may avoid penalty for non-payment, court costs, and interest on the debt from the time of the offer by making a tender; but he must hold himself ready to pay or perform the conditions. In case the offer to pay is made in money, it must be made in legal tender.

Legal Tender is that currency or money which the law authorizes a debtor to tender and requires a creditor to receive in payment of money obligations. All gold coins of the United States are a legal tender in all payments at their nominal value when not below the standard weight and limit of tolerance provided by law for the single piece, and when reduced in weight below such standard of tolerance, they are a legal tender at valuation in proportion to their actual weight. Treasury notes and standard silver dollars for all payments. Silver coins of a smaller denomination than one dollar for all sums not exceeding $10.00. Nickels and pennies for sums not exceeding 25c.

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