Ray's New Higher Arithmetic · Arts. 327–329 · Unit 21: Percentage with Time: Equation of Payments and Settlement of Accounts
94. Settlement of accounts
Goal: Your student reads an account current and finds its cash balance on a given day, with interest on each item.
You'll need
- The book
- A slate, small whiteboard or scrap paper
- A notebook and pencil
What's in the book
Section VII, Settlement of Accounts: account and account current, a bank account (Henry Armor and City Bank), a worked problem finding interest and balance, a rule, and accounts to settle. Answers are printed.
The lesson, step by step
Warm-up
Ask: In a bank book, which side shows money you put in, and which shows money you took out?
The idea
Read:
An Account is a written statement of debit and credit transactions between two parties, giving the date, quantity, and price of each item.
An Account Current is a written statement of the business transactions between two parties, for a definite time.
Generally, in an account current, each item draws interest from its date to the day of settlement.
Debit and credit
Look at the Henry Armor account in the book. The Dr. (debit) side lists what Armor owes the bank, the checks it paid for him. The Cr. (credit) side lists what the bank owes him, his deposits.
Work the book's example
Follow the F. H. Willis account line by line. Each item gets interest from its date to the settlement day. Add each side, items and interest. The interest due is $2.33, so the cash balance due Willis is $244 + $2.33 = $246.33.
The rule
Read:
The difference between the amounts on the two sides of the account is the cash balance.
Practice
Your student settles one of the accounts on the following pages. Read the remark:
When, in forming the several products, the cents are 50 or less, reject them; more than 50, increase the dollars by 1.
Check and wrap-up
Check the printed answers. Ask: What does "Bills Receivable" mean? Read the book's answer:
All written obligations, of whatever form, for which a certain amount is to be received, are called Bills Receivable.