PARTIAL PAYMENTS

543. It frequently happens that the maker of a note cannot pay the whole amount at one time, but instead he makes partial payments.

A record of the partial payments is written, or indorsed, on the back of the note with the dates when they were made.

United States Rule

WRITTEN EXERCISES

544. 1. A note for $1000, dated Jan. 1, 1904, interest 6%, was indorsed as follows: Mar. 22, 1904, $125; June 1, 1905, $50; Aug. 4, 1905, $75; Nov. 1, 1905, $150. Find the amount due Jan. 1, 1906.

Int. from June 1 to Aug. 4-2 mo. 3 da. on $888.50

United States Rule. Find the amount of the principal to a time when a payment, or the sum of two or more payments, equals or exceeds the interest due, and from the amount subtract such payment or payments.

With the remainder as a new principal proceed as before.

In other words, partial payments are applied first to pay the interest due, and then, if anything is left, to reduce the principal.

Most of the states have adopted the United States Rule for computing the indebtedness when partial payments have been made. In states where other methods are prescribed the rules of those states should be followed.

2. A note for $1000, bearing 5% interest, and dated Jan. 2, 1906, had these payments indorsed on it: Apr. 2, 1906, $ 200 ; July 2, 1906, $300. How much was due Oct. 12, 1906?

3. A note for $ 400, dated Apr. 1, 1905, had indorsed on it the following payments: July 1, 1905, $25; Sept. 1, 1905, $30; Dec. 11, 1905, $100. How much was due Apr. 5, 1906, with interest at 4%?

4. A note for $ 1600, bearing 6% interest, dated Nov. 1, 1904, had indorsed on it the following partial payments: Feb. 1, 1905, $60; Oct. 20, 1905, $20; Nov. 1, 1905, $400. How much was due Apr. 10, 1906?

5. A note for $ 4000, bearing 5% interest, dated Aug. 15, 1904, had the following partial payments indorsed on it: Jan. 2, 1905, $40; May 11, 1905, $500. How much was due June 1, 1906?

6. A note for $1250, given Feb. 28, 1903, had indorsed on it the following payments: July 1, 1903, $100; Dec. 16, 1904, $200; Oct. 11, 1905, $ 600. Find the amount due Apr. 4, 1906, with interest at 6%.

7. A note for $80, dated Oct. 22, 1904, had written across the back of it, "Received on the within note, Feb. 1, 1905, $47." How much was due July 1, 1905, with interest at 4%?

Mercantile Rule

545. Business men often settle notes and accounts on which partial payments have been made, and which do not run longer than one year, by the following rule:

Mercantile Rule. - Find the amount of the principal at the time of settlement.

Find the amount of each payment from the time it was made until the time of settlement.

From the amount of the principal subtract the sum of the amounts of the payments.

The following exercises are to be solved by this rule.

WRITTEN EXERCISES

546. 1. A note for $1200 given May 18, 1904, had the following partial payments indorsed on it: Oct. 15, 1904, $300; Mar. 10, 1905, $50. How much was due May 18, 1905, with interest at 5% ?

2. A note for $500, dated May 15, 1906, had these payments indorsed on it: July 10, 1906, $145; Oct. 16, 1906, $175. How much was due Jan. 1, 1907, interest at 6%?

3. A note for $850, dated June 1, 1905, had the following payments indorsed on it: Oct. 1, 1905, $100; Feb. 1, 1906, $150; May 1, 1906, $75. How much was due May 16,

1906, with interest at 6% ?

How much

4. A note for $175, dated June 20, 1906, had these indorsements: July 20, 1906, $75; Aug. 15, 1906, $25. was due Dec. 20, 1906, at 4% interest?

5. A note for $1600, dated Jan. 1, 1905, had the following payments indorsed on it: Mar. 2, 1905, $300; July 1, 1905, $25; Oct. 17, 1905, $80. With interest at 6%, how much was due Jan. 2, 1906?

Find also the amount due by the United States Rule.

BANKING

547. People do not usually carry much money about in their pockets or leave it in their houses or in their stores; they deposit it in banks for safe keeping.

If they intend to use the money soon, they place it in a bank of deposit, but if they do not expect to withdraw it for some time, it will be wiser to leave it in a savings bank, because the savings bank will pay interest upon small sums of money that are left for the interest term, which is commonly six months.

Banks of deposit do not usually pay interest on deposits unless the sums left with them are large.

548. The chief business of banks of deposit and discount, variously styled commercial banks, national banks, state banks, private banks, etc., is the receiving of deposits for safe keeping and the lending of money in various ways, as by buying notes at a discount. They also perform various financial services for business men and corporations.

549. National banks do business under the authority of national law. Besides the ordinary banking business, they issue demand notes, payable to bearer, called bank notes, or bank bills, which circulate as money.

550. A trust company is authorized under state law and is usually similar to a bank so far as loans and deposits are concerned, but it does other business peculiar to itself.

Trust companies, being restricted less than banks in regard to the kind of investments they may make, are usually able to pay interest on deposits. They do not issue bank notes.

551. Money that is deposited in a bank or trust company is usually payable to the depositor or his order on demand. The demand is made by a written order called a check.

The terms maker, payee, face, negotiable, and the different kinds of indorsement, etc., apply to checks the same as to promissory notes.

To get this check cashed at the bank John Green, the payee, must indorse it, and then it will not be cashed unless he is known at the bank, or is identified by some one who is known there.

552. The stub that remains in the check book after the check has been torn out gives a complete record of the check.

After the check has been cashed at the bank, it will be canceled and later returned to Mr. Slawson. It then serves as a receipt from John Green since it has his name on the back of it.

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553. When a depositor wishes to draw money for himself from his bank, he may write a check payable to the order of Self," in which case he must indorse it before he can get it cashed; or, he may make it payable to the order of "Cash," in which case no indorsement is necessary.

554. A check payable to the payee "or bearer" is usually paid to any one presenting it at the bank on which it is drawn, if the bank is sure that the maker's signature is genuine.