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EIGHTH EDITION
EIGHTH EDITION
BASIC
BOOKKEEPING
BASIC BOOKKEEPING An Office Simulation

An Off ic e Simula ti on
BROOKE C.W. BARKER
EIGHTH EDITION
BASIC
BARKER
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BOOKKEEPING tion
An Off ic e Simu la
nelson.com
BROOKE C.W. BARKER

ISBN-13: 978-0-17-672122-0
ISBN-10: 0-17-672122-3
9 780176 721220
EIGHTH EDITION
BASIC
BOOKKEEPING on
An Off ic e Si mula ti
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EIGHTH EDITION
BASIC
BOOKKEEPING on
An Off ic e Si mula ti
BROOKE C.W. BARKER
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Basic Bookkeeping: An Office Simulation,
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TABLE OF CONTENTS
PREFACExii
CHAPTER 1 AN INTRODUCTION TO BOOKKEEPING 1

Bookkeeping on a Personal Level 2
Bookkeeping for Business 4
Three Forms of Business Organization 6
The Five Categories of Accounts 7
Assets versus Expenses 8
Generally Accepted Accounting Principles 10
Practice Exercise 1 10
Supplementary Exercise 12
Think About It! 12
CHAPTER 2 RECORDING THE TRANSACTION 13

The Accounting Equation 14
Balance Sheet 15
Debits and Credits 16
Basic Rules For Debit and Credit 17
Double-Entry System of Bookkeeping 19
Analyzing a Transaction 19
Analyzing a Transaction (Cartier Window Coverings) 22
The General Journal 29
Supplementary Exercises 33
Think About It! 34
CHAPTER 3 THE LEDGER 35

The Ledger Account 36
Chart of Accounts 37
NEL v
vi TABLE OF CONTENTS
Posting38
The Trial Balance 40
Locating Errors in a Trial Balance 46
Think About It! 49
Case Study: Introducing KBC Decorating Co. 50
CHAPTER 4 CORRECTING ENTRIES AND SALES TAXES IN CANADA 52

Correcting Writing Errors 53
Recording Correcting Entries 54
Recording Reversing Entries 56
Sales Taxes in Canada 58
GST/HST on Sales 59
GST/HST on Purchases 59
Provincial Sales Tax 61
Recording Sales with PST 63
Recording Other Expenses with PST 64
Remitting PST 65
Calculating the Tax Included 66
Think About It! 68
Case Study: KBC Decorating Co. 68
CHAPTER 5 F REIGHT IN, DELIVERY EXPENSE,

AND DUTY & BROKERAGE 70
Freight In 71
Freight on Non-merchandise Items 72
NEL
TABLE OF CONTENTS vii
Delivery Expense 73
Duty and Brokerage 73
Think About It! 77
CHAPTER 6 USING SPECIAL JOURNALS 78

Introducing Special Journals 79
Sales Journal 80
Posting from the Sales Journal 82
Control Accounts 83
Cash Receipts Journal 87
Posting from the Cash Receipts Journal 90
Cash or Plastic? 91
Purchase Journal 94
Posting from the Purchase Journal 97
Cash Payments Journal 100
Posting from the Cash Payments Journal 102
Think About It! 106
CHAPTER 7 CREDIT NOTES, REFUNDS, AND DISCOUNTS 109

Credit Notes and Refunds on Sales 110
NEL
viii TABLE OF CONTENTS

Sales Discounts 114
Credit Notes and Refunds on Purchases 117
Purchase Discounts 120
Cash on Delivery (COD) 122
Think About It! 125
CHAPTER 8 REMITTING GST AND HST 128

How GST/HST Works 129
Registering for GST/HST 129
Voluntary Registration 129
Filing the GST/HST Return 129
Remitting GST/HST 132
Keeping Records 133
Nil Returns (No Tax Owing) 133
Penalties and Interest 133
Discounts Offered to Customers 134
Deposits on Goods and Services 134
Sales to Aboriginals 134
Imported Items 134
Using the Quick Method 136
Examples of the Quick Method 136
Using the Simplified Method for ITCs 139
How the Simplified Method Works 140
NEL
TABLE OF CONTENTS ix
Think About It! 140

CHAPTER 9 ACCOUNTING FOR CASH 143

Petty Cash 144
Establishing Petty Cash 144
The Petty Cash Sheet 145
Recording Petty Cash Entries 146
Reimbursing Petty Cash 148
Cash Over or Short 149
Bank Reconciliation 154
Bank Statement 155
Bank Errors 157
Cash Book Errors 158
Reconciling the Bank Account 158
Bank Reconciliation Statement 160
Think About It! 169
CHAPTER 10 PAYROLL 173

The Payroll Process 174
Calculating Gross Pay 174
Using Deduction Tables 176
Recording the Payroll 184
Payments and Remittances 185
Payments to Employees 185
Remittance of Payroll Deductions and Company Contributions 186
Workers’ Compensation 187
Vacation Pay and Holiday Pay 187
NEL
x TABLE OF CONTENTS
Think About It! 192

CHAPTER 11 PARTNERSHIPS AND CORPORATIONS 202

The Partnership 203
Partnership Accounting 204
The Drawings Account 206
Corporations209
Keeping the Books in a Corporation 210
Kinds of Shares 210
Authorized versus Issued Capital 211
Retained Earnings 212
Supplementary Exercise 213
Think About It! 213
CHAPTER 12 ACCOUNTS RECEIVABLE AND BAD DEBTS 217

Aging of Accounts Receivable 218
Writing Off Bad Debts 220
Recovering a Bad Debt 221
Bad Debts in a Small Business 223
Think About It! 226
CHAPTER 13 INTERIM PROFIT OR LOSS 231

Interim Profit or Loss 232
The Interim Statement 232
Preparing the Interim Statement 232
Think About It! 238
NEL
TABLE OF CONTENTS xi
CHAPTER 14 AT YEAR-END: PREPARING TO CLOSE THE BOOKS 246

Inventory247
Year-End Adjusting Entries 249
Types of Adjusting Entries 249
The Worksheet 257
Think About It! 264
CHAPTER 15 AT YEAR-END: CLOSING THE BOOKS 265

Closing Journal Entries 266
Post-Closing Trial Balance 268
A Look at GAAP 269
Financial Statements 271
Income Statement 271
Balance Sheet 271
Think About It! 276
APPENDIX A REAL-WORLD FINANCIAL STATEMENTS 277
APPENDIX B ANSWERS TO THINK ABOUT IT! 282
APPENDIX C CHART OF ACCOUNTS: KBC DECORATING CO. 289
GLOSSARY 293
INDEX 303
NEL
PREFACE
Welcome to the eighth edition of Basic Bookkeeping: An Office Simulation. In writing

this textbook, I have endeavoured to provide teachers and students with the tools
necessary to learn and practise the concepts of basic bookkeeping for a small busi-
ness in a simple, meaningful way. As an educator for more than 40 years, I under-
stand the importance of giving our students a real-world context for learning. If
students can relate to what they are studying, they will learn better. In today’s
working world, being book-smart is not enough. Our students must learn to
think critically and they must be able to apply what they have learned to an ever-
changing work environment. I want my students to have a greater understanding
of the realities of bookkeeping as a function and as an occupation. I believe I have
achieved this through the approach I use in Basic Bookkeeping, in part through the
varied practice exercises in each chapter, and, most importantly, through the case
study that presents the ongoing activities of KBC Decorating Company, a small
retail store, for an entire financial year.
As a student, you will gain valuable knowledge and experience in keeping
a set of books for a small business. You will learn not only the mechanics of
recording daily transactions in a variety of journals but also how to analyze finan-
cial activities to ensure the accuracy and integrity of the books. You will learn by
doing, just as you would in on-the-job training.
As a teacher, you know the importance of having up-to-date, relevant mate-
rials at hand to guide your students in the ways of today’s typical bookkeeping
practices. Simply assigning an endless series of unrelated exercises will not lead
students to a working knowledge of concepts and practices. It merely teaches
them to respond by rote learning. Giving your students a real-world situation like
that of KBC Decorating Company goes a long way toward a true understanding
of the concepts and principles you are teaching them.
The method of presentation that I have used in this textbook reflects my per-
sonal teaching style in the classroom. In other words, I wrote the material this way
because I teach this way; and I teach this way because it is a style that works very
well for me. I have trained thousands of bookkeeping students over the years, with
great success. I am confident that you will enjoy working with Basic Bookkeeping as
so many others have over the past 30 years.
What’s New in the Eighth Edition

The eighth edition of Basic Bookkeeping: An Office Simulation contains updated pay-
roll deductions tables and the latest sales tax rates (at time of printing). This edi-
tion also provides options in many of the practice exercises to calculate sales taxes
using the method of calculation applicable in each student’s home province (GST
only, HST, or GST plus PST). The case study, KBC Decorating Company, located
in Ontario, charges HST on all purchases and sales. Supplementary Exercises are
available online in Microsoft Excel format for additional practice of basic book-
keeping concepts along with basic Excel formulas.
xii NEL
PREFACE xiii
Pedagogical Features
The objective of each chapter of this text is to cover the basic bookkeeping tech-
niques employed by small businesses in Canada. Explanations are purposely
geared to students who have little or no previous bookkeeping knowledge, and
the practice exercises and case study provide practical reinforcement of each con-
cept discussed.
Each chapter contains the following pedagogical features:
CHAPTER OBJECTIVES
Objectives are provided at the beginning of each chapter to identify the major
areas and points covered in the chapter and to guide the learning process.
IMPORTANT TERMS USED IN THE CHAPTER

A list of key terms used in each chapter appears at the beginning of the chapter,
and each term appears in boldface within the chapter. A complete list of
bookkeeping-related terms used throughout the text, including the key terms
highlighted in each chapter, is found in the Glossary at the back of the book.
PRACTICE EXERCISES
Each chapter includes practice exercises that provide students with ample oppor-
tunity to review how well they have learned the material in the chapter. The
variety of exercises attempts to provide exposure to different types of businesses
and thus different account names, different provincial sales tax rates and calcula-
tion methods, as well as different degrees of complexity. Hints are added to some
exercises, wherever deemed beneficial, to simplify the calculation or recording of
certain transactions and to guide the student on the best way to address that par-
ticular issue.
SUPPLEMENTARY EXERCISES
Most chapters have additional exercises in Microsoft Excel format available for
download from nelson.com/student. The students will complete the exercises
according to the instructions that appear at the top of each spreadsheet exercise.
THINK ABOUT IT!

Each chapter contains a series of theory questions that teachers can use to generate
class discussion on issues addressed in the chapter and to check that the students
have a firm grasp of the concepts presented.
CASE STUDY: KBC DECORATING COMPANY

At the end of Chapters 3 to 15 are the case study activities for KBC Decorating
Company. This ongoing exercise incorporates each new concept into the com
pany’s monthly transactions, chapter by chapter, month by month, with the
results being greater student understanding, greater student confidence, and a
more practical real-world experience in keeping financial records.
NEL
xiv PREFACE
Supplements
INSTRUCTOR ANCILLARIES
The Nelson Education Teaching Advantage (NETA) program delivers
research-based instructor resources that promote student engagement and higher-
order thinking to enable the success of Canadian students and educators. Visit
Nelson Education’s Inspired Instruction website at nelson.com/inspired/ to find
out more about NETA.
The following instructor resources have been created for Basic Bookkeeping.
Access these ultimate tools for customizing lectures and presentations at nelson.com
/instructor.
●● Instructor’s Solutions Manual: Prepared by Brooke C.W. Barker, the solu-
tions manual contains the solutions for all of the chapter exercises and the
KBC Decorating Co. case study. Solutions have been independently checked
to ensure their accuracy and reliability.
●● NETA Test Bank: This resource was written by Jake Chazan of Seneca
College. It includes over 100 multiple-choice questions written according to
NETA guidelines for effective construction and development of higher-order
questions. Also included are true/false and short-answer questions.
®
The NETA Test Bank is available in a new, cloud-based platform.
Nelson Testing Powered by Cognero® is a secure online testing system
that allows instructors to author, edit, and manage test bank content from
anywhere Internet access is available. No special installations or downloads
are needed, and the desktop-inspired interface, with its drop-down menus
and familiar, intuitive tools, allows instructors to create and manage tests
with ease. Multiple test versions can be created in an instant, and content
can be imported or exported into other systems. Tests can be delivered from
a learning management system, the classroom, or wherever an instructor
chooses. Nelson Testing Powered by Cognero for Basic Bookkeeping: An Office
Simulation, Eighth Edition, can be accessed through nelson.com/instructor.
●● PowerPoint Presentation: Microsoft® PowerPoint® lecture slides for every
chapter have been prepared by Jake Chazan of Seneca College. There is an
average of 35 slides per chapter, many featuring key figures and tables from
Basic Bookkeeping: An Office Simulation, Eighth Edition. NETA principles of
clear design and engaging content have been incorporated throughout.
●● Image Library: This resource consists of digital copies of figures and short
tables used in the book. Instructors may use these jpegs to create their own
PowerPoint presentations.
STUDENT ANCILLARIES
Working Papers (978-0-17-682784-7)
This supplement contains working materials for the practice exercises and for the
KBC Decorating Co. (introduced in Chapter 3) case study. Special ledger accounts
and trial balances have been included expressly for work on the case study.
NEL
PREFACE xv
Companion Web Site

Nelson Education’s Companion Web Site for Basic Bookkeeping: An Office Simula
tion, Eighth Edition (nelson.com/student), brings course concepts to life with
interactive learning and exam preparation tools that integrate with the printed
textbook, including:
●● Flashcards
●● PowerPoint presentations
●● Supplementary exercises
●● Alternative Case Study
Acknowledgments
I wish to thank all the reviewers of the previous edition of Basic Bookkeeping: An
Office Simulation for their opinions and suggestions on how to change and improve
the material. There were so many great ideas and suggestions; the difficult task
was putting them all together. I would like to acknowledge those who assisted
in reviewing this edition and earlier editions of this textbook: Dennis Adolph of
Saskatoon Business College, Nicole Ayotte of Canadore College, Daniel Basquill
of Eastern College, Dianne Berlenbach of Fleming College, Ruby (Rupinderbant)
K. Brar of SAIT, Julia Bueckert of Saskatoon Business College, Sylvia Culshaw
of Red Deer College, Denise Dodson of Nova Scotia Community College, Dana
Goedbloed of Kwantlen Polytechnic University, Kim Hyatt of Robertson Col-
lege, Diamond Meuse of Eastern College, Kerri Simich of Niagara College, Gorian
Surlan of George Brown College, Vicki Sutherland of College of New Caledonia,
Marcia Whittaker of Saskatoon Business College, and Colin Wilkie of George
Brown College. Special thanks to Sharla Trudell of Fleming College, the technical
checker for this edition. As well, I wish to thank my accounting students for their
participation in “test driving” my new exercises. Last, but certainly not least, I
express a special thanks to all the staff at Nelson for their assistance in producing
this eighth edition.
NEL
CHAPTER
OBJECTIVES
After completing this
chapter, you will be
able to:
●● define the three forms
of business organization
●● define the five
categories of accounts:
assets, liabilities, CHAPTER
1
owner’s equity,
revenues, and expenses
●● classify accounts
according to the five

categories
●● identify the generally
accepted accounting
principles
IMPORTANT TERMS
USED IN THIS
CHAPTER
Assets
Balance Sheet
Bookkeeping
Corporation
Expenses
GAAP (Generally
Accepted Accounting
Principles)
AN INTRODUCTION
Income Statement
Liabilities
Owner’s Equity
TO BOOKKEEPING
Partnership
Proprietorship
Revenue
NEL
2 CHAPTER 1 An Introduction to Bookkeeping
T he word bookkeeping typically refers to the recording and recordkeeping

phase of the overall process called accounting. More simply put, book-
keeping is the process of keeping records of sales and purchases, money
received and money paid out, as well as all costs incurred in running the business.
BOOKKEEPING ON A PERSONAL LEVEL

On a basic level, bookkeeping is what you do when you keep track of your own
financial activities in a personal chequing account. It is your record of the money
you received and the money you spent.
Fun Fact
Your chequebook is your record of all deposits made to the chequing account
and all payments made from the account, whether by cheque, by debit card, or
“Bookkeeping” and “bookkeeper”
are the only English words that even by electronic payments such as PayPal. (See Figure 1.1.) But where did the
have three consecutive double money come from that was deposited to the account? To whom were the cheques
letters. issued? What did those cheques pay for? Where was the debit card used, and
what was purchased? Some people are careful about recording each transaction
Figure 1.1 Chequebook Record
Apr.
1 930 00
Apr. Hill Realty
1 64 Rent 650 00 280 00
Food Basket
4 debit Groceries 50 00 230 00
Provincial Power
6 65 Hydro Bill 95 00 135 00
Food Basket
15 Paycheque 872 50 972 50

Gregg’s Auto Service
16 debit Car Tune-Up 75 00 897 50
L’il Corner Store
Cell-Tel
23 66 Cell Phone Bill 45 00 827 50
Topper’s Tailors
25 debit New Clothes 155 00 672 50
Food Basket
30 Paycheque 872 50 1,485 00

Petro-Gas Bar
30 debit Gas & Oil 150 00 1,335 00
NEL
CHAPTER 1 An Introduction to Bookkeeping 3
that affects their chequing account. Others are not. So, then, just how important
is this information? Perhaps more important than you think. A record of cash
flow (the movement of cash into and out of your account) helps you plan your
spending over the coming days, weeks, and months. If, for example, you have
only a small amount of money in your bank account, you likely would not be
planning any major spending, such as buying a shiny new sports car or booking
a tropical vacation.
Marvin Reese, for instance, has his eye on a new car, but he is not sure if
he can afford to buy it. His bank account shows a balance of only $1,335—not
nearly enough for his dream car! From the chequebook record in Figure 1.1, we
get some idea of Marvin’s spending habits. A simple chart helps us see at a glance
where his money comes from and where it goes each month.
Cash In (deposits) Cash Out (cheques and debit card)

Paycheques $872.50 Rent $650.00
872.50 Hydro & phone 140.00
Food 170.00
Automobile 225.00
Other 155.00
$1,745.00 $1,340.00
On the one side, we see his deposits, which are usually his paycheques. On the
other, we see a list of what he spends his money on every month. Simple arith-
metic shows us that Marvin would be able to save $1,745 − $1,340 = $405 each
month. Keep in mind, however, that we have not yet considered other costs, such
as annual insurance costs on his car and his apartment, or regular or unforeseen
car repairs and maintenance. At this rate, Marvin could be saving for many years
before he has enough money to buy a new car.
As an alternative to saving the money he needs, Marvin might be able to get
a car loan from the bank. First, though, he will need to make a list of everything
he owns, including his existing car, any investments (such as savings bonds and
education funds), and all debts he currently owes, including any existing bank
loans, student loans, and amounts owing on credit cards. The bank will want to
know his present financial situation and will use this and other information to see
if Marvin is eligible for a bank loan.
Things He Owns Debts He Owes

Cash $1,335.00 Credit Cards $1,450.00
Car 7,500.00 Topper’s Tailors 390.00
Furniture 2,000.00 Gregg’s Auto 270.00
Savings Bonds 2,500.00
$13,335.00 $2,110.00
NEL
This kind of detailed personal recordkeeping not only helps us make better
day-to-day decisions about spending but also helps us set long-term goals for
major purchases. By looking back over the financial activities of previous months
and years, we get a picture of spending habits. This is helpful in establishing a
budget so that money is spent wisely.
BOOKKEEPING FOR BUSINESS

Lance Reed, on the other hand, is a college student with his own part-time
business doing yard work for his neighbours—cutting grass in the summer and
clearing snow in the winter. For his business, Lance keeps track of the same kind
of information that Marvin does—that is, where his money comes from and how
it is spent.
Cash In (deposits) Cash Out (cheques and debit card)

Earnings from yard work:
J. Tunnicliffe $187.00 Gasoline/oil $155.00
L. Porth 85.00 Garbage bags 45.00
B. Szuuts 150.00 Miscellaneous 15.00
D. Essig 50.00
$472.00 $215.00
Also, Lance will prepare a list of what his business owns (called assets) and all
the debts he owes (called liabilities).
Things Owned (Assets) Debts Owed (Liabilities)

Lawnmower $550.00 Loan from father $120.00
Other tools 140.00
$690.00 $120.00
Based on these figures, we can calculate Lance’s net personal investment in

his business: $690 – $120 = $570. This value is sometimes called equity or
net worth.
Suppose, then, that upon graduating from college, Lance decides to operate
his business on a full-time basis. To get started properly, he prepares the two
statements that we discussed earlier and takes this information to the bank in
order to apply for a $15,000 loan so he can buy a used truck and some additional
equipment (more tools and another lawnmower).
The bank will ask that the information be prepared in a more formal fashion.
The statement of assets, liabilities, and owner’s equity is commonly called a
NEL
Figure 1.2 Balance Sheet
Lance Reed
Balance Sheet
June 30, 20—
ASSETS
Equipment:
Lawnmower 5 5 0 00
Tools 1 4 0 00
6 9 0 00
LIABILITIES
Loan (Father) 1 2 0 00
EQUITY
Capital, L. Reed 5 7 0 00
6 9 0 00
Balance Sheet. (See Figure 1.2.) The statement that shows his business earnings
and operating costs is an Income Statement. (See Figure 1.3.)
Assuming the loan to Lance has been granted by his bank and he has pur-
chased the additional items he needs, Figure 1.4 shows a new Balance Sheet for
his business today. The loan for $15,000 appears in the Liabilities section, and the
truck and additional equipment appear in the Assets section.
You can see that the information recorded by an individual and the informa-
tion recorded by a small business are very much the same. Company information,
however, is generally kept more formally and is displayed formally for the benefit
of others who must also interpret it. Examples of real-world financial statements
can be found in Appendix A of this textbook.
Figure 1.3 Income Statement
Lance Reed
Income Statement
For three months ending June 30, 20—
REVENUE
Yard Service 4 7 2 00
OPERATING COSTS
Gas/Oil 1 5 5 00
Garbage Bags 4 5 00
Miscellaneous 1 5 00 2 1 5 00
NET INCOME 2 5 7 00
NEL
Figure 1.4 Balance Sheet
Lance Reed
Balance Sheet
July 15, 20—
ASSETS
Cash 1 0 0 0 00
Truck 11 0 0 0 00
Equipment:
Lawnmower 2 5 5 0 00
Tools 1 1 4 0 00 3 6 9 0 00
15 6 9 0 00
LIABILITIES
Loan (Father) 1 2 0 00
Loan (Bank) 15 0 0 0 00 15 1 2 0 00
EQUITY
Capital, L. Reed 5 7 0 00
15 6 9 0 00
THREE FORMS OF BUSINESS ORGANIZATION

Since our focus is on learning how to keep books for business, we will consider
the different forms of business organization. Every business, regardless of size or
type, falls into one of the three basic forms of organization: proprietorship, part-
nership, or corporation.
1. Proprietorship refers to a business owned by one person, such as a gro-

cery store, a dress shop, or a TV repair shop. (Lance Reed’s yard care busi-
ness is a proprietorship because he is the sole owner.) In a proprietorship,
the owner is the manager, the owner makes all the business decisions, and
the owner is personally responsible for all the debts of the business, such
as bank loans, mortgages, and accounts owing to suppliers.
2. Partnership refers to a business owned by two or more persons. These co-

owners, or partners, combine their skills and financial resources (money)
to form what they hope will be a successful business. The partners share
the management and decision making, and are fully responsible for all the
debts of the business. Any two or more people who have combined their
skills and financial resources to operate a hardware store, a restaurant, or
a computer repair shop, for example, have formed a partnership.
3. Corporation refers to a business that is a separate legal entity operating

under a government charter. Entity, in this context, means that the busi-
ness is separate from the owners (called shareholders or stockholders), almost
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as if it too is a person. The ownership of a corporation is divided into shares

or stocks. The most familiar examples of public corporations include large
national and multinational companies, such as Coca-Cola, Microsoft,
and Air Canada. The oldest corporation in Canada is the Hudson’s Bay
Company, which started business in 1670. (The topics of partnerships and
corporations will be discussed in more detail in Chapter 11.)
Whether the business is large or small, or whether it is a proprietorship,
a partnership, or a corporation, the basic principles of bookkeeping are the same: a
clear, accurate record of all financial activities must be maintained and reported
in a form that can be interpreted and verified by others.
THE FIVE CATEGORIES OF ACCOUNTS

Next, we will look at some of the basic terminology commonly used in the book-
keeping and accounting fields. These terms apply whether we are talking about
the financial activities of an individual, such as Marvin Reese; of a small business,
such as Lance Reed’s yard care company; or of a large corporation, such as The
Bay or Canadian Tire.
Assets are things of value that are owned by the business and are expected
to benefit the business into future years. Examples include cash, land, buildings,
furniture, equipment, and inventories of merchandise and supplies. Amounts
owing to the business from its customers (called Accounts Receivable) are also of
value to the business, so they too are considered assets. Lance Reed’s assets include
the lawnmowers, the truck, and the tools he uses in his yard work. If any of his
customers have not yet paid him for work already completed, these amounts are
his accounts receivable and would be included among his assets.
Liabilities are debts owing to others. Examples include debts owing to sup-
pliers (Accounts Payable) and debts owing to a bank or mortgage company (Bank
Loan Payable and Mortgage Payable). If Lance had bought his tools from a local
hardware store and had agreed to pay the amount over the next 60 days, this debt
would be considered an account payable. His loan from the bank would be shown
on his books as Bank Loan Payable.
Equity (sometimes called Owner’s Equity) represents the value of assets
remaining after all liabilities have been deducted. The owner’s equity typically
comes from two sources:
1. Investments made by the owner to start the business, such as the cash, furni-
ture, equipment, etc. (Lance Reed invested a lawnmower and cash when he
started his business.)
2. Profits (or losses) earned through the operation of the business. The goal of
most businesses is to earn a profit. These profits, if kept within the business,
increase the worth (or equity) of the business.
On the Balance Sheet for Lance Reed’s business (Figure 1.4), the equity value
can be seen as Capital, a common term referring to the owner’s investment.
Capital is determined by calculating the difference between the total assets and
the total liabilities ($15,690 – $15,120 = $570).
Revenue refers to the earnings from the sale of goods and/or services to
customers. In Lance Reed’s case, some of his customers will pay immediately for
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Figure 1.5 Sources of Revenue
Type of Business Primary Revenues Secondary Revenues

Retail Store Sales of Merchandise —Sales of Services
—Cafeteria
—Parking Lot
—Interest on Charge
Accounts
Doctor, Lawyer, Dentist Professional Fees
Colleges, and Universities Tuition Fees —Sale of Books
and Supplies
Grants —Cafeteria
—Parking Lot
Real-Estate Broker Commissions Earned —Interest
—Real Estate Rental Fees
the work he does on their yards. Others might arrange to pay him at the end of
the month. Regardless of when he receives the money for his work, Lance will
record the revenue as having been earned because the work was completed. As
Figure 1.5 shows, a business can have more than one source of revenue.
Expenses are the costs of operating a business, which typically include rent,
salaries, utilities, telephone, supplies, and advertising, to name just a few. Lance’s
expenses are gas and oil for the lawnmowers and snow equipment, garbage bags,
and the cost of getting his equipment to and from the work sites. Each of these
expenses is necessary to his ability to provide service to his customers; therefore,
they are considered operating expenses.
Figure 1.6 shows account names that are commonly used by a variety of busi-
nesses. An account name should indicate the purpose and, when necessary, the
classification of the account. For example, office supplies can be both an asset and
an expense. Therefore, when referring to the expense, the account name is Office
Supplies Expense, and when referring to the asset, the account name is Office
Supplies Prepaid. The word “Prepaid” means the supplies have already been paid
for but have not yet been used up. (When naming accounts, however, experienced
accountants will sometimes take shortcuts by dropping the word “Expense,” thus
referring to the account simply as Office Supplies.) Similarly, when interest is
earned by the business, it is called Interest Revenue or Interest Earned, but when
interest is paid by the business, it is called Interest Expense.
ASSETS VERSUS EXPENSES

At first glance, the definitions for assets and expenses may seem quite similar.
The basic difference between these two categories is the length of time for which
the asset or expense is expected to be carried on the books. The general rule of
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Figure 1.6 Sample Account Names
SAMPLE ACCOUNT NAMES
Assets Liabilities Equity Revenues Expenses

Bank (or Cash) Accounts Payable Capital Sales Purchases
Accounts Receivable Suppliers Payable Equity Service Income Freight Costs
Fees Receivable Bank Loan Payable Drawings Service Revenue Delivery Expense
Supplies Prepaid Loans Payable Withdrawals Interest Earned Advertising Expense
Office Supplies Prepaid Mortgage Payable Income Summary Rent Earned Maintenance Expense
Store Supplies Prepaid Interest Payable Current Earnings Fees Earned Business Tax Expense
Shop Supplies Prepaid GST Payable Medical Fees Earned Property Tax Expense
Warehouse Supplies GST-ITC Dental Service Income Licences Expense
Prepaid HST Payable Professional Fees Amortization Expense
Inventory HST-ITC Tuition Revenue Donations Expense
Insurance Prepaid PST Payable Legal Fees Earned Office Supplies Expense
Land Salaries Payable Advertising Revenue Store Supplies Expense
Buildings Wages Payable Passenger Revenue Warehouse Supplies Expense
Office & Warehouse Payroll Payable Green Fees Earned Interest Expense
Trucks CPP Payable Pro Shop Sales Bank Charges Expense
Autos EI Payable Parking Fees Earned Interest & Bank Charges
Vehicles Pensions Payable Postage Expense
Vans & Trucks Income Tax Payable Professional Fees Expense
Delivery Equipment Union Dues Payable Salaries/Wages Expense
Service Equipment Telephone Expense
Rental Equipment Travel Expense
Tools & Equipment Utilities Expense
Office Equipment
Computer Equipment
Office Furniture
Telephone Equipment
thumb is that expenses contribute to the business only during this operating year,
whereas assets contribute not only to this year but also to future operating years
as well. Operating costs are usually recorded as expenses if they are of relatively
insignificant amounts. But costs that are considered significant would instead
be recorded in a prepaid account and then converted to expense as the cost is
used up.
For example, on November 15, $450 was spent on office supplies, such as paper,
pens, pencils, paper clips, ink cartridges, etc. If these supplies are expected to be
consumed (used up) before the end of the current operating year (December 31),
the cost can immediately be recorded as an expense.
In another example, a one-year insurance policy on a building is purchased on
July 1 at a cost of $1,397. If the operating year ends on December 31, one-half
the cost of the policy will contribute to operations in the current operating year
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and one-half will contribute to next year’s operations. Because the cost will affect
two operating years, it is recognized initially as an asset in the Insurance Prepaid
account. Then each month, one-twelfth (1/12) of the cost will be transferred from
the Insurance Prepaid account to the Insurance Expense account to reflect the
amount of the policy that has been used up.
Recognizing costs as assets or expenses is often at the discretion of the accoun-
tant, and the decision is based on when and how often such costs are incurred.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Across North America, and in fact in most nations around the world, all financial
accounting information must be recorded and reported clearly, consistently, and
objectively according to generally accepted standards. This means that anyone
who relies on such information has a right to be assured that it is correct and fair,
and free from bias and inconsistency. As a result, the practices and procedures
illustrated and used in this textbook are in accordance with established standards
or guides called GAAP (Generally Accepted Accounting Principles). They are
the guidelines that tell us what to do and how to do it. GAAP will be discussed
in more detail in Chapter 15.
PRACTICE EXERCISE 1
Using the definitions explained in this chapter, determine the classification
(assets, liabilities, equity, revenues, and expenses) of each of the following account
names. If necessary, refer to Figure 1.6. To get you started, the first account has
been done for you.
Account Name Class
1. Cash Asset
2. Delivery Truck
3. Bank Loan Payable
4. Telephone Expense
5. Salaries & Wages
6. Sales
7. Office Supplies Prepaid
8. Accounts Receivable
9. Service Sales
10. Capital
11. Tools & Equipment
12. Building
13. Mortgage Payable
14. Rental of Equipment
15. Advertising Expense
16. Insurance Prepaid
17. Utilities Expense
18. Interest Earned
19. Bank
20. Office Equipment
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PRACTICE EXERCISE 2
Classify each of the following account names as an asset, liability, equity, revenue,
or expense.
Account Name Class
1. Vans & Trucks
2. Accounts Payable
3. Sales of Service
4. Cash
5. Mortgage Payable
6. Store Supplies Prepaid
7. Capital
9. Bank Loan Payable
10. Computers & Printers
11. Sales of Merchandise
12. Shipping Supplies Prepaid
13. Office Building & Warehouse
14. Interest Expense
15. HST Payable
16. Advertising Fees Earned
17. Office Supplies Expense
18. Parking Fees Earned
19. Salaries/Wages Expense
20. Taxes Expense
PRACTICE EXERCISE 3
Classify each of the following account names as an asset, liability, equity, revenue,
or expense.
Account Name Class
1. Land
2. Income Tax Payable
3. Property Taxes
4. Travel Expenses
5. Commissions Earned
6. Automobiles
8. Service Revenue Earned
9. Accounts Payable
10. Shop Supplies Prepaid
11. Pro Shop Sales
12. Building
13. Postage & Courier Costs
14. Interest on Bank Loan
15. Legal Fees Earned
NEL
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XV
AS IT WAS IN MY DAY
I am like the deaf old lady who, when asked why she took a box at
the opera when she could not hear, replied, “I can see.” So it is on
piazzas at summer hotels, I do not overhear remarks, so perforce
the pleasure of gossip is denied me, but “I can see,” and no doubt do
observe more than those who have the other faculty to play upon;
also I see and moralize. Last summer in the mountains didn’t I see
young girls, young society girls, educated girls who ought to have
known better, with bare heads and bare arms playing tennis in the
hot sun; and, worse still, racing over the golf links? I could see them
from my window, equally exposed, chasing balls and flourishing
clubs. The sun in August is pitiless even on those breezy mountains,
so I was scarcely surprised when one young girl was overcome by
heat and exposure, and was brought to her mother at the hotel in a
passing grocer’s cart or lumber wagon. I tell my grandchildren who
want to “do like other girls” that is not the way “other girls” did in my
day. Grandma may be so old that she forgets, but she moralizes all
the same. These athletic girls come back to city homes so sunburnt
and with such coarse skin they have to repair to a skin specialist,
and have the rough cuticle burnt off with horrid acids, and be
polished up before the society season opens.
There are, of course, extremes, but years ago young ladies took
more care of their complexions and of their hair, too. Years back of
years, I don’t know how they did. In my day we girls loved to visit the
granddaughter of a voluble dame and listen to the old lady’s talk, just
like I am talking now. She thought we were criminally careless with
our “skins,” as she called it. Why, when she was young, her skin was
so thin and clear that “one saw little blue veins meandering her
neck.” We always heard something as reminiscent in that house to
laugh over till we saw the old lady again, and heard something
equally remarkable of her youth. She was living in the past, as I am
now, as I return to my experiences. One young girl visited me, ever
so many years ago, who wore one of those awful, long, scoop
sunbonnets all the time she was not at table or in bed. She looked
like the proverbial lily. I used to wish she would take off that
sunbonnet and say something, for she was dumb as a lily. I have
entirely forgotten her name, though she was my guest for a whole
stupid week; but I recall she was a relative or friend of the Morses. I
don’t know Mr. Morse’s name; he was called Guncotton Morse, for
he invented an explosive of that name, which the United States
Government appropriated during the war.
Years after this young girl’s visit to me I called on the charming
Morse family in Washington. He was then urging his “claim.” Every
Southerner in Washington was after a “claim” at that time. I nearly
broke my neck falling over a green china dog or a blue china cat in
their dark parlor. Enterprising Morse barricaded himself behind his
explosive, but I think he failed in his fight. I find I have wandered
from the girls having their skins burned off to the Morses and their
blue china cat!... In my days there were no specialists except cancer
doctors. I think they always flourished—there were no skin
specialists. A doctor was a doctor, nothing more nor less, and he
was supposed to know all that was necessary of the “human form
divine.” He did, too, for people did not have the new-fangled
diseases of to-day. A woman’s hospital! Oh, heavens! Only last week
I saw a friend, old enough to know better, but we never are so old we
don’t want to rid our faces of pimples and warts and wrinkles. This
friend was a sight. I was really alarmed for her. She had been to a
specialist. Her face was fiery red, all the skin removed by acid.
Yesterday I saw her again, cured of sunburn and all the ills skin is
heir to. Her complexion was that of the lily girl who wore the scoop
sunbonnet. I do not advise you to try the experiment. It is shockingly
painful, and does not always prove a success.
When I was a little girl, more than seventy years ago, mother
made me, for summer romps in the country, gloves of nankeen, that
well covered the wrist, had a hole for the thumb and a deep flap to
fall over the hand. It was lucky they were easily made, and nankeen
was not expensive, for I hated them and had a way of losing them in
the currant bushes. Maybe you never saw nankeen? Gentlemen’s
waistcoats were often made of it, and little boys’ trousers. If I lost my
scoop sunbonnet one day—and it was surprising how easily I lost it!
—it was sewed on the next. There were no such things as hatpins—
and we had pigtails anyway, so they would have been of no use.
Such tortures were inflicted when we were running wild over the blue
grass farm, but no doubt the little Creole girls on the lakeshore were
similarly protected. The hair specialist was not in evidence either.
St. Louis Cemetery, New Orleans.
Ladies had their hair done up with bandoline and pomatums made
of beef’s marrow and castor oil and scented with patchouli; hair was
done into marvelous plaits and puffs. A very much admired style
which Henriette Blondeau, the fashionable hair dresser, achieved,
was a wide plait surrounding a nest of stiff puffs. It was called the
“basket of fruit.” The front locks were tiny, fluffy curls each side the
face and long ringlets to float over the shoulders. We all remember
Henriette Blondeau. She dressed my sister’s hair in the early forties,
and she dressed mine ten years later, and I met her in the hall of the
St. Charles Hotel, plying her trade, twenty years later still, the same
Henriette, with the same ample apron, the tools of her trade sticking
out from her pockets. Now, almost forty years later still, she walks
the streets of New Orleans no more. I hope she rests somewhere in
the old French cemetery, for she knew and gossiped with so many
who are taking their long sleep in that peaceful spot.
Mother made—no doubt your grandmother did, too—the pomade
that was used on our hair. It was used, too, very freely; our locks
plastered down good and smooth and flat. You may wonder how
long hair so treated could last; just as long as hair ruffled the wrong
way and marcelled with warm irons lasts our girls to-day. Mother’s
pomade was made of beef’s marrow and castor oil. After the marrow
was rendered to a fluid state, oil was added, then perfume, the whole
beaten in a deep bowl until perfectly cold and white. Mother would
beat and beat, add a few drops more of essence of bergamot, smell
and smell and beat and smell, until she had to call a fresh nose to
see if it was all right. I remember being told to try my olfactories on
the soft, creamy stuff. A naughty brother gave my head a blow that
sent my little pug-nose to the bottom of the bowl! My face was
covered to the ears, and while mother scraped it with a spoon and
scolded Henry, she was entreating me not to cry and have tears
spoil her pomade. Maybe I might have forgotten how the stuff was
made and how it looked, but for that ridiculous prank of the dearest
brother ever was.
I have a sweet little miniature of that brother Henry, namesake of
my father’s dear friend, Henry Clay, with the queer collared coat and
flourishing necktie of the day, and his long, straight hair well
plastered with mother’s good pomade. The dear man went to Central
America, on a pleasure tour to the ruins of Uxmal in 1844. The
vessel on which he sailed for home from Campeache, in September
of that year, disappeared in the Gulf. We never had any tidings of
how, or when, or where. I remember the firm of J. W. Zacharie was
consignee of that ill-fated Doric, and how tenderly Mr. Zacharie came
to my stricken mother, and how much he did to obtain information,
and how for weeks after all hopes were abandoned my mother’s
heart refused to believe her boy was indeed lost. Every night for
months she placed with her own trembling hands a lamp in the
window of Henry’s room, to light him when he came. She never gave
up some remnant of hope. So far as I know, only one friend of that
dear brother, one contemporary, is living now, in New Orleans. She
is the last of her generation; I am the last of mine.
In those days there were few patent medicines, washes and
lotions. There was a Jayne’s hair tonic, and somebody’s chologogue,
that was a fever cure much in evidence on plantations, for quinine
and blue mass pills—others, too—were made by hand. I have made
many a pill. We had an old negro woman who was daft on the
subject of medicine. There was not an earthly thing the matter with
Hannah—she was just a chronic grumbler, begging for “any kind of
pill.” I doctored her successfully, making for her bread pills, rolling
them in a little rhubarb dust to give them a nasty taste. They did her
a world of good. Mother made our lip salve (didn’t your
grandmother?) of white wax and sweet oil. We did not have cold
cream in those days.
When by accident, or some other way, our faces tanned, a wash
overnight of sour buttermilk was all that was required. It was not very
pleasant, and nobody wanted to occupy the room with you on sour
buttermilk night. Reason obvious. Kentucky belles, who were noted
for their rosy cheeks, often increased the bloom by a brisk rubbing of
the leaves of the wild mullein. Except rice powder (and that is not a
cosmetic) no cosmetics were in use.
We can recall at a later date than my girlhood a lady from
somewhere up the coast married a finicky cotton broker in New
Orleans. They made a wedding trip to Paris, and she returned with
her face enameled. I don’t think it could have been very skillfully
done, for she had to be so careful about using the muscles of the
face that she was absolutely devoid of expression. Once, in a
moment of forgetfulness or carelessness, she “cracked a smile,”
which cracked the enamel. She returned to Paris for repairs. I saw
her on the eve of sailing, and do not know if she ever returned.
XVI
FANCY DRESS BALL AT THE MINT IN 1850
I have never heard of a society ball in a United States mint

building, before nor since, but the Kennedys, who gave this one,
were a power in the social world at that time—and ambitious beyond
their means. Rose and Josephine, the two oldest of quite a flock of
daughters, were débutantes that winter. Both were handsome and
accomplished. Rose was also a famous pianist, even in those days
when every woman strove to excel in music, and it was customary to
entertain even a casual caller with a sonata. Gottschalk declared
Rose Kennedy rendered his famous “Bamboula” better than he did
himself, and to hear her was to rise and dance.
Who was at that fancy ball? Everybody who was anybody in the
fifties. The Eustises—George and Mathilde, George as “a learned
judge” (he was son of Chief Justice Eustis), and Mathilde in pure
white and flowing veil was a bewitching nun. George, years after,
married the only child of the banker-millionaire, W. C. Corcoran, in
Washington. Mathilde married Alan Johnson, an Englishman; both
are long since dead. There was Mrs. John Slidell, of “Mason and
Slidell” fame, a “marquise,” in thread lace and velvet, her sisters, the
Misses Deslonde, “peasant girls of France.” Mathilde Deslonde
became the wife of Gen. Beauregard, and her sister, Caroline,
married Mr. R. W. Adams. All three sisters are with the departed. Col.
and Mrs. John Winthrop, “gentleman and lady of the nineteenth
century,” the jolly colonel announced. Who fails to recall, with a
smile, the Winthrops, who lived in Royal Street, near Conti; near
neighbors of the—long departed—Bonfords? The genial colonel
became a tottering old man, asking his devoted wife “who and where
are we?” before he peacefully faded away. Young De Wolf of Rhode
Island, nephew of Col. Winthrop’s, “an Arab sheik,” wore probably
the only genuine costume in the room—a flowing robe that was
catching in every girl’s coiffure, and every man’s sword and spurs, in
the dance.
All the gilded youth who wanted boisterous fun, and no jury duty,
were firemen, in those days of voluntary service. Philippe De la
Chaise wore his uniform. He later married Victoria Gasquet, and was
relegated to a “back number” shortly after.
I make no special mention of the chaperons, but, Creole like, they
were present in force. Cuthbert Slocomb was a mousquetaire, and
Augusta, in red and black, “Diablotan,” a vision of beauty and grace.
She married the Urquhart mentioned in “Musical History of
Louisiana,” as the father of Cora Urquhart Potter. Mr. Urquhart died
years ago, but his widow survives. She lives with her daughter at
Staines on the Thames, in a stone house that was a lodge of
Windsor Castle in the time of Henry VIII. Cuthbert Slocomb married
a Miss Day; his widow and daughter, Countess di Brazza, survive
him. Ida Slocomb was the noted philanthropist of New Orleans, the
widow of Dr. T. G. Richardson.
There was the stately Mrs. Martin Gordon chaperoning her
exceedingly pretty sister, Myrtle Bringier, who became the wife of
Gen. Dick Taylor, and whose descendants are among the few of
those mentioned above still living and reigning in New Orleans
society.
The mint building was made ample for the gay festivities by
utilizing committee rooms, offices and every apartment that could be
diverted for the crowd’s comfort—so, we wandered about corridors
and spacious rooms, but never beyond the touch of a gendarme—
officers, soldiers, policemen at every step. These precautions gave a
rather regal air to the whole affair.
Augusta Slocomb Urquhart
Painted in Paris, in 1857
The belles retired to their boudoirs for a season, but the beaux had
to go to business, and what a sight some of them were for a whole
week after the fancy dress ball! They had hired costumes from
members of the French opera troupe, and their faces were “made
up” with rouge that could not be washed off; had to wear off in a
purplish stain. My brother represented Louis XIV on that occasion,
and I remember he scrubbed his cheeks until he made them almost
raw. Of no avail. In time the pinkish, purplish tint gradually
disappeared.
Shortly after that grandest and most unique entertainment Mr. Joe
Kennedy’s term expired and he retired into private life. Beautiful
Rose fell into a decline and died early. What fortunes befell that
family I know not. They seem to have faded away. The Kennedys
were a large family in those days, closely allied to the Pierce and
Cenas families, all of which were socially prominent. And now their
names are “writ in water.” I should like to know how many of this old
Creole society are living to-day! I was eighteen, one of the youngest
of the group, in the fifties.
XVII
DR. CLAPP’S CHURCH
It is quite sixty years since Dr. Clapp’s church went up in smoke. It

was as well known to the denizens and visitors of New Orleans, in its
day, as Talmage’s Tabernacle in Brooklyn some decades later was
known far and wide. Dr. Clapp called it “The First Congregational
Church of New Orleans.” Others designated it as “Clapp’s Church.” It
was, in reality, neither one nor the other, for it was not an organized
congregation, and its building was the property of an eccentric Jew.
In a burst of admiration and generosity Judah Touro gave the church
rent free to Dr. Clapp. The structure had quite the appearance of a
“Friends’ Meeting House.” It was of unpainted brick, entirely devoid
of any ornamentation. The little steeple was only high enough and
big enough to hold the inevitable bell. One entered a narrow
vestibule, with two doors leading into the body of the church, and two
flights of stairs to respective galleries. It was further furnished with
two conspicuous tin signs—“Stranger’s Gallery on the Right,”
“Gallery for Colored Persons on the Left.” (Dr. Clapp came from
Boston.)
On entering the sanctuary one faced the organ loft, the pulpit
being at the street end between the two doors. It was a little rounded
affair, with, to all appearances, “standing room for one only.” Back of
it, to convey possibly an idea of space, and also to relieve the
intense white of the wall, was a wonderful drapery, very high and
very narrow, of red serge, pleated, looped and convoluted in an
amazing way.
Dr. Clapp, a large, handsome, middle-aged man, in a clerical black
silk robe, entered the pulpit from between the folds of that draped
monstrosity. He was dignified and reverential, preached without
notes, sometimes, but not always, using a Bible text. The music of
that church was rated as very fine, the organ was the best in the city.
(I wonder if old Judah Touro furnished that, too?) And Thomas
Cripps, the organist, managed it, con amore. There must have been
a choir to furnish the chorus, but I only call to mind Mrs. Renshaw
and her sister, Miss White, who sang solos and duets. Their finely
trained voices produced melody itself. Mr. James I. Day, tall, and
thin, and gaunt, with a hatchet face, who looked as if a squeak was
his vocal limit, had a most powerful bass voice that filled the building
and floated out onto the street. The last time I saw him he was in an
open carriage with a red velvet cushion on his lap, on which reposed
the key (as big as the famous Bastile key) of the city of New Orleans.
He was receiving Rex in an initial Mardi Gras parade. That was
years ago.
To return to church, I don’t recall any prayer books or hymnals, nor
hearing any congregational singing. The choir, of course, was
volunteer. We had yet to know a church singer could be salaried.
There was no church organization, as we know it to-day, or even at
that day. There were no officers, no deacons, no elders, far as I can
think, for my father was a devoted communicant and constant
attendant and naturally would have fitted into some church office, if
there had been any.
When Dr. Clapp announced the taking of a collection he cast his
eye over the congregation and signaled from it those persons who
were to “pass the plates.”
“Mr. Smith will take the center aisle, Mr. Jones the right aisle, Mr.
Robinson the left aisle, Mr. Dick right gallery, Mr. Harry left gallery,”
whereupon Messrs. Smith, Jones and Robinson and Messrs. Dick
and Harry would come forward, take their plates from a table under
the high pulpit and proceed to their allotted tasks. Remembering this
confirms me in the belief there were no officers of the church whose
duty it would have been to discharge such services.
There was only one service a week, a morning service and
sermon on Sundays, no night meetings, as there was really no
means of lighting the building. No Bible class, no Sunday school, no
prayer meeting, no missionary band, no church committee, no
Donors’ Society, no sewing circle, no donation party, no fairs, no
organ recital, absolutely “no nothing,” but Dr. Clapp and his weekly
sermon. The church was always filled to its utmost capacity. I recall a
host of pew holders whose names have passed into oblivion with
their bodies.
The old church stood on St. Charles Street, adjacent to the St.
Charles Hotel, so when one building went up in flames the other did,
too. The Veranda Hotel, next in importance to its neighbor, was
across the way, and from these sources always came strangers,
more than enough to fill the gallery, when they were wafted up the
stairs by the conspicuous tin sign.
Almost simultaneously with the destruction of the building,
disappeared both Dr. Clapp and Mr. Touro from public notice. By the
way, Mr. Judah Touro never had been inside the church, nor had he
ever heard Dr. Clapp preach. Of course, they are both as dead now
as the unique old church, so it matters not how, when or where they
departed. The congregation dissolved as completely. Probably not
one member, old enough at the time to know what Dr. Clapp
preached about or to be able to criticise his utterances, is living to-
day. Dr. Clapp was a loyal citizen, a charitable, kindly man, one of
the few who voluntarily remained in the city and ministered to the
stricken and buried the dead in the fearful epidemics that ravaged
the land every two or three years. His counsel reached the flotsam of
a great city, and his teachings bore fruit. He is gone now where
church organizations are not considered, but the good works he
wrought by his simple methods are placed to his credit.
XVIII
OLD DAGUERREOTYPES
I think I can safely say I possess the first daguerreotype ever

taken in New Orleans. An artist came there about 1840 and opened
a studio (artist and studio sound rather grand when one views the
work to-day). That studio was at the corner of Canal Street and
Exchange Alley. The artist needed some pictures of well-known men
for his showcase, so he applied to my father, who was of the “helping
hand” variety. And dear Pa was rewarded with the gift of a picture of
himself all done up in a velvet-lined case, which he brought home to
the amazement and wonder of every member of the family, white
and black. I look at it now with a grim smile. Dear Pa’s cravat ends
were pulled out and his coattail laid nicely over one leg, and his hand
spread so that one could see he had five big fingers. His head had
been steadied straight up in a most unnatural position, with a kind of
callipers or steel braces, and he must have been told to “look up and
smile” for a full minute.
We prize that daguerreotype for its antiquity, but I hope seventy
years hence when another and another generation opens my “war
album” they will not laugh at the quaint cartes de visite it contains,
though I confess some of them begin to look rather queer already.
They were all gifts of near and dear friends, most of them with
autograph attachments, some of which were so flourishing that I had
to subscribe the names and dates on the backs.
There are Mr. and Mrs. Jeff Davis, dated 1860, before he was
President, you perceive. Though I have letters from both, I never
saw either after that date. There’s Gen. J. Bankhead Magruder, in
full uniform, far and away the most picturesque of my collection. The
first time we ever met Gen. Magruder was very soon after the
capture of the Harriet Lane in Galveston waters. The Texans were
wild and jubilant at the dashing feat, and when we reached Houston,
all travel-stained and worn out, the city was in a ferment of
excitement.
The General dearly loved to tell a good story, and the impediment
in his speech, a drawling lisp, made him vastly amusing. In his office
one day one of his aides was tinkling a banjo. A travel-stained
individual called:
“Is the General in?”
“No,” tinkle, tinkle.
“When will he be in?”
“Don’t know,” tinkle, tinkle.
“Will you tell him I called?”
“What name?” tinkle, tinkle.
“Smith.”
“I think I have heard that name before,” tinkle, tinkle. “What
Smith?”
“Gen. E. Kirby Smith, young man!”
No tinkle followed that reply. The young aide almost swooned
away. Gen. Magruder surrounded himself with Virginia gentlemen
aides, who gave him infinite trouble, he said.
In the early fifties “we met by chance, the usual way,” Major F.
Ducayet. A party driving down the old Bayou road one Sunday heard
that at Ducayet’s there would be found a rare collection of wonderful
fowls and poultry, and the owner was very gracious about showing
his assortment to visitors. After a bit of hesitation we ventured to
introduce ourselves. Mr. Ducayet received us most hospitably,
showed us through his lovely grounds and gave us the history of his
rarest feathered pets, presented the two ladies with choice bouquets
and insisted upon our partaking of refreshments. During the
conversation that ensued Mr. Ducayet said he would not be able to
increase his fancy flock, all of which had been brought him from
foreign parts by captains and sailors, as a change in the
administration would remove him from the position in the Custom
House he had held for years. One of the party at once asked him to
call on him at the St. Charles Hotel the following day, that he, being a
Democrat and a politician of influence, might exert himself in his
behalf. Mr. Ducayet retained his position. From that chance
acquaintance sprung a strong friendship. We saw much of Major
Ducayet in war times, hence the little carte de visite which
ornaments my war album.
By the side of Major Ducayet’s is the face of ex-Governor Moore of
Louisiana. He was an inmate of our modest little home in Texas
during the expiring days of the Confederacy.
I have also similar small photos of Major Tom Lee, General
Preston, General Breckinridge, Commodore John N. Maffit, General
and Mrs. Robert Toombs, General Early, Dr. Howard Smith and a
host of lesser lights, all of which were taken in Havana after the war.
Dr. Howard Smith of New Orleans was surgeon on somebody’s
(perhaps Gen. Kirby Smith’s) staff, and was our frequent guest in
Texas, a very valuable guest, too, for his skill carried some members
of my family out of the “valley of the shadow” into the sunshine. One
trip we made together from the Rio Grande into the interior of Texas,
quite a caravan of us in the party.
The first day out from Laredo there was a terrible sandstorm, cold
almost to freezing point, and never was a more disgusted party of
travelers. In a fit of despair Dr. Smith exclaimed: “I would give a
thousand dollars for a drink of brandy.” Now brandy was a luxury a
thousand dollars could not always supply, but I promptly replied: “I
will give you a whole bottle of brandy, the cork of which has not been
drawn, if you will divide it with the rest of the crowd.” Of course, the
proposition was accepted. From my carpetbag I produced a tiny toy
bottle, holding perhaps a half wine glass of the coveted liquor. It was
not easy to divide the contents liberally, but the genial doctor
appreciated the joke and did his utmost to carry out its provisions.
Years after, walking uptown in New Orleans, my escort said: “Look
at the man on that gallery. See if you know him.” I met the man’s
eyes full in my face, and passed on. It was Dr. Howard Smith, neither
of us recognizing the other. He was in ill-health, old and haggard,
and I guess I showed some of time’s footprints, too.
XIX
STEAMBOAT AND STAGE SEVENTY YEARS AGO
In the twilight of my days, seated in my favorite chair, I rock away

many a trip from my New Orleans home to the blue grass region of
my ancestors. Dream trips they are, but dreams of real trips in the
old days when steamboats and stages were the approved, in fact,
the only, transportation for travelers.
About the Fourth of July every year our family migrated to the old
Kentucky homestead. The Fourth was not chosen with any patriotic
motive, but law courts were closed and legal business suspended,
and my father’s vacation at hand at that date. Though the
steamboats were called palatial, viewed from my rocking-chair trip
to-day I wonder how people managed to stand the inconveniences
and discomforts they provided.
There was the famed Grey Eagle, “a No. 1 floating palace” it was
called. There was the Belle of the West and the Fashion and the
Henry Clay. One time and another we churned up the muddy
Mississippi water in every one of them. Naturally the boats catered in
every way to the predilections of the plantation owners, who were
their main source of profit. The picture of Arlington which illustrates
this book was originally made to decorate a stateroom door on a fine
new river boat built in the ’50’s and adorned in that way with views of
homes along the river.
Steamboat on the Mississippi.
(From “Forty Etchings, from Sketches Made with the Camera Lucida in North
America in 1827 and 1828,” by Captain Basil Hall, R. N.)
Grey Eagle was the finest and best, and therefore most popular
boat. I recall with amusement an eight or ten days’ trip on that
palace. The cabins were divided by curtains, drawn at night for
privacy. The ladies’ cabin, at the stern, was equipped with ten or
twelve small staterooms. The gentlemen’s cabin stretched on down
to the officers’ quarters, bar, barber shop, pantries, etc., ending in
what was called Social Hall, where the men sat about, smoking and
chewing (the latter as common a habit as cigarette smoking is now)
and talking—in other words, making themselves sociable.
On that same Grey Eagle I was for the first time promoted to the
upper berth, in a stateroom shared by an older sister. The berth was
so narrow that in attempting to turn over I fell out and landed in the
wash basin, on the opposite side of the room! My sister had to sit on
the lower berth to braid my pigtails, then sent me forth so she could
have room to braid her own. Trunks and other baggage more
unwieldy than carpetbags were piled up in the vicinity of Social Hall.
A carpetbag, small enough to be easily handled, was all there was
room for in the stateroom. There were no valises, suitcases or
steamer trunks in those days of little travel, and unless you are
three-quarters of a century old you can’t imagine a more unwieldy
article than a carpetbag of seventy years ago. Only toilet articles and
things that could not muss and tumble could be safely stored in one.
In the stateroom, where we had to sleep and dress, and, if we
could snatch a chance, take an afternoon nap, there was a corner
shelf for a basin and pitcher and one chair; two doors, one leading
out and the other leading in, transoms over each for light and
ventilation—and there you are for over a week. The cabin was
lighted with swinging whale-oil lamps, and one could light his
stateroom if one had thought to provide a candle.
Every family traveled with a man servant, whose business it was
to be constantly at beck and call. Of course, there was always a
colored chambermaid, and, equally of course, she frisked around
and seemed to have very little responsibility—no bells, no means of
summoning her from her little nodding naps if she happened to be
beyond the sound of one’s voice. The man servant’s duties,
therefore, were almost incessant. If an article was needed from the
trunks he was sent to the baggage pile for it, and often he brought
trunk trays to the staterooms. When the boat stopped “to wood”
every man servant rushed to the woodman’s cabin to get eggs,
chickens, milk, what not.
And those men had the privilege of the kitchen to prepare private
dishes for their white folks. I wonder how long a boat or hotel would
stand that kind of management to-day; but in the days where my
rocking-chair is transporting me, steamboat fare was not up to the
standard of any self-respecting pater familias. There was no ice
chest, no cold storage; in a word, no way of preserving fresh foods
for any length of time, so passengers resorted to such means as
presented themselves for their own bodily comfort. Those who had
not the necessary appendage—a man servant—foraged for
themselves, but the experienced and trusted servant, to use a
vulgarism, “was never left.”
The table for meals extended the length of the gentlemen’s cabin,
stretched out and out to its utmost length, if need be, so that every
passenger had a seat. There was no second table, no second-class
passengers—anybody was the equal of anybody else. If you could
not possibly be that, you could find accommodation on the lower
deck and eat from a tin plate.
It was quite customary, as I have mentioned, for passengers to
have private dishes, prepared by their own servants. I recall with a
smile, on one occasion, a very respectable-looking stranger boarded
our boat at Helena or some such place. At dinner he reached for a
bottle of wine. Cuthbert Bullitt touched the bottle with a fork, saying,
“Private wine.” The man, with a bow, withdrew his hand. Presently he
reached for a dish of eggs. My father said, “Excuse me, private.”
There was something else he reached for, I forget what, and another
fellow-passenger touched the dish and said “Private.” Presently
dessert was served, and a fine, large pie happened to be placed in
front of the Helena man. He promptly stuck his fork into it. “By
gracious! this is a private pie.” There was a roar of laughter.
After dinner the others, finding him delightfully congenial and
entertaining, fraternized with him to the extent of a few games at
cards. He was wonderfully lucky. He left the boat at an obscure river
town during the night, and the next day our captain said he was a
notorious gambler. From his capers at table the captain saw he was
planning a way of winning attention to himself, therefore under cover
of darkness he had been put ashore. My father, who did not play,
was vastly amused when he found the smart gambler had carried off
all the spare cash of those who had enjoyed the innocent sport.
Flatboats floating all manner of freight down stream were a
common sight on the river. Arrived at their destination, the boats,
which were only huge rafts with no propelling power, were broken up
and sold for lumber, and the boatmen traveled back up stream in
packets to repeat the process. Cousin Eliza Patrick used to relate
the trip her family made in about 1820 on a flatboat from Kentucky to
Louisiana. The widowed mother wished to rejoin a son practicing
medicine in the latter state, so she sold her land, and loaded her
family and every movable object she possessed—slaves, cattle,
farm implements, household effects—upon a huge “flat” and they
floated by day and tied up to the bank by night, carrying on, during

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BASIC BOOKKEEPING An Office Simulation

BROOKE C.W. BARKER

BROOKE C.W. BARKER

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Executive Marketing Manager: Copy Editor: Interior Design modifications:

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CHAPTER 1 AN INTRODUCTION TO BOOKKEEPING 1

CHAPTER 2 RECORDING THE TRANSACTION 13

CHAPTER 3 THE LEDGER 35

CHAPTER 4 CORRECTING ENTRIES AND SALES TAXES IN CANADA 52

CHAPTER 5 F REIGHT IN, DELIVERY EXPENSE,

CHAPTER 6 USING SPECIAL JOURNALS 78

CHAPTER 7 CREDIT NOTES, REFUNDS, AND DISCOUNTS 109

Practice Exercise 2 113

CHAPTER 8 REMITTING GST AND HST 128

Think About It! 140

CHAPTER 9 ACCOUNTING FOR CASH 143

CHAPTER 10 PAYROLL 173

Think About It! 192

CHAPTER 11 PARTNERSHIPS AND CORPORATIONS 202

CHAPTER 12 ACCOUNTS RECEIVABLE AND BAD DEBTS 217

CHAPTER 13 INTERIM PROFIT OR LOSS 231

CHAPTER 14 AT YEAR-END: PREPARING TO CLOSE THE BOOKS 246

CHAPTER 15 AT YEAR-END: CLOSING THE BOOKS 265

APPENDIX A REAL-WORLD FINANCIAL STATEMENTS  277

APPENDIX B ANSWERS TO THINK ABOUT IT!  282

APPENDIX C CHART OF ACCOUNTS: KBC DECORATING CO.  289

Welcome to the eighth edition of Basic Bookkeeping: An Office Simulation. In writing

What’s New in the Eighth Edition

IMPORTANT TERMS USED IN THE CHAPTER

THINK ABOUT IT!

CASE STUDY: KBC DECORATING COMPANY

Companion Web Site

according to the five

T he word bookkeeping typically refers to the recording and recordkeeping

BOOKKEEPING ON A PERSONAL LEVEL

Figure 1.1 Chequebook Record

15 Paycheque 872 50 972 50

30 Paycheque 872 50 1,485 00

Cash In (deposits) Cash Out (cheques and debit card)

Things He Owns Debts He Owes

BOOKKEEPING FOR BUSINESS

Cash In (deposits) Cash Out (cheques and debit card)

Things Owned (Assets) Debts Owed (Liabilities)

Based on these figures, we can calculate Lance’s net personal investment in

Figure 1.2 Balance Sheet

CHAPTER 1 AN INTRODUCTION TO BOOKKEEPING 1

CHAPTER 2 RECORDING THE TRANSACTION 13

CHAPTER 3 THE LEDGER 35

CHAPTER 4 CORRECTING ENTRIES AND SALES TAXES IN CANADA 52

CHAPTER 5 F REIGHT IN, DELIVERY EXPENSE,

Practice Exercise 2 113

Think About It! 140

Think About It! 192

CHAPTER 14 AT YEAR-END: PREPARING TO CLOSE THE BOOKS 246

CHAPTER 15 AT YEAR-END: CLOSING THE BOOKS 265

APPENDIX A REAL-WORLD FINANCIAL STATEMENTS 277

APPENDIX B ANSWERS TO THINK ABOUT IT! 282

APPENDIX C CHART OF ACCOUNTS: KBC DECORATING CO. 289