Where notes are received from other sources, as from officers, partners, or from outside parties to whom loans have been made, it is evident that these must not be included in the credit to Accounts Receivable, and it may be advisable also to eliminate them from Notes Receivable unless they are short-term, current items, as only such should be carried under Notes Receivable. These special notes may be carried in a “Notes Receivable Special” account.
If, as sometimes happens, interest is included in the face of a note, this must be adjusted by the summary entry, as follows:
- Notes Receivable
- Accounts Receivable
- Interest Income
The considerations stated above as applicable to the notes receivable journal, are of equal importance in handling the notes payable journal. A very careful analysis of the note journals should be made at a summary time, which analysis should be shown by the summary entry.
Summary Entries for Columnar Books.—Illustration will now be given of some standard forms for summarizing the columnar journals. Sometimes the summary entries for the various subsidiary journals are made in the general journal. This seems to accomplish no good purpose and is not usually recommended. Theoretically it is desirable to show a formal debit and credit summary for each journal footing posted to the ledger. If, however, the number of columns is small and it is readily seen that the debits and credits are equal, the formal summary is often dispensed with. So also, if there are many distributive columns of the same effect, i.e., debit or credit, as in the large departmental sales journal or the voucher register referred to on [page 144], formal summary is not shown, the posting being made from the column totals as [illustrated for Petty Cash on page 369].
The Sales Journal Summary.—An illustration of the sales journal summary is given in [Form 35]. The Sundry items should be posted in detail from their column and their total checked in the summary entry. Where a Sundry column is not used and the Sundry items are included in the Sales Ledger column, they must be separated before the summary entry can be made.
Form 34. General Journal
Form 35. Sales Journal Summary