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The following payments are indorsed on this note:
Nov. 26, 1907, $50.00.
Jan. 2, 1908, $25.00.
What amount is due March 2, 1908 ?

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3 2 1908

2 0 Interest on $137.97 for 2 mo. .

• • . . 1.38 The amount due March 2, 1908 . . . . . $ 139.35

2. What was the amount due on the note on Nov. 26, 1907 ?

3. How much interest was due Nov. 26, 1907 ? What payment was made ? How much greater was the payment than the interest ?

4. How much was the new principal due Nov. 26, 1907, after the payment of $50.00 ?

5. How much interest was due Jan. 2, 1908 ? How much greater was the payment than the interest ?

Observe: 1. That the interest was computed on the principal to the time of the first payment; then on the balance, as a new principal, to the time of the second payment; then on the balance, as a new principal, until March 2, 1908.

2. That the interest at each payment was first paid and the balance of the payment was credited on the principal.

3. As the interest must first be paid, in case the payment does not equal the interest, the interest must be computed until such time as the sum of the payments equals or exceeds the interest.

This is the United States 'rule of partial payments, and is the legal one in most states.

Find the amount of the principal to the time of the first payment, and from the amount subtract the first payment. Consider the remainder as a new principal and proceed as before until the time of final settlement. If any payment does not equal or exceed the interest, then find the interest to the time when two or more payments equal or exceed the interest.

The Supreme Court of the United States has decreed:

(1) That the payment on a note must first be applied to cancel the interest then due, before the principal may be diminished.

(2) That interest must not be charged upon interest.

Written Work 1. A note for $1800, bearing 6% interest, was given April 1, 1903, and settled Oct. 22, 1906. On the back of the note were these indorsements: May 10, 1904, $ 225; June 16, 1905, $50; Sept. 28, 1905, $340; March 10, 1906, $475. Find the balance due on the note at date of settlement.

Principal . .

. Interest from April 1, 1903 to May 10, 1904 . Amount due May 10, 1904 . . . . First payment made May 10, 1904. . . Balance = new principal due May 10, 1904 . Interest from May 10, 1904 to June 16, 1905 .

. . . .

. . $1800.00 . . 119.70 . . 1919.70 . . 225.00

1694.70 $111.85

.

The interest exceeds the payment and a new principal is not

formed. Interest from June 16, 1905 to Sept. 28, 1905, . . 28.81 Interest from May 10, 1904 to Sept. 28, 1905 . . . . 140.66 Amount due Sept. 28, 1905 . . . . . .

1835.36 Sum of second payment June 16, 1905, and third payment Sept. 28, 1905, $50.00 + $340.00

390.00 Balance = new principal due Sept. 28, 1905 . .

1445.36 Interest from Sept. 28, 1905 to March 10, 1906

39.024 Amount due March 10, 1906 . . .

1481.384 Fourth payment made March 10, 1906 . .

475.00 Balance = new principal due March 10, 1906 .

1009.384 Interest from March 10, 1906 to Oct. 22, 1906

37.347 Balance due Oct. 22, 1906 . . . . . . . $1046.731

2. A mortgage for $960, bearing 6% interest, was given June 20, 1900, and settled Dec. 26, 1904. On the mortgage were these indorsements: Nov. 2, 1901, $140; Jan. 14, 1903, $200; June 20, 1904, $180. Find the balance due on date of settlement.

3. On a claim of $850, dated May 2, 1901, interest 5%, the following payments were made: Aug. 8, 1901, $200; Dec. 14, 1901, $200; April 26, 1902, $ 200. How much was due at final settlement April 26, 1903 ?

4. A note of $1000, dated Aug. 1, 1903, bearing interest at 6%, had the following payments indorsed upon it: Dec. 20, 1903, $250.50; May 12, 1904, $300; Nov. 20, 1904, $400. Find the amount due June 26, 1905.

HAM. SCH. ARITH. — 15

5. June 1, 1900, a note was given for $1700, with interest at 6%. The following payments were indorsed on this note : Dec. 1, 1900

$300. June 1, 1901

300. Nov. 1, 1901

300. May 1, 1902 . . . 600. Find the amount due July 1, 1902.

6. A note for $ 240 was made June 1, 1903, with interest at 6%. The following indorsements were made on the note: Oct. 13, 1903, $120; Jan. 19, 1901, $ 60; June 1, 1904, $ 60. Find the amount due on the note Dec. 16, 1905.

Merchants' Rule When partial payments are made on mercantile accounts, overdue, or on notes running a year or less, the interest is often computed by the merchants' rule.

Find the amount of the principal from the time it begins to bear interest to the date of settlement.

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

From the amount of the principal, subtract the sum of the amounts of the payments. The result will be the balance due.

Written Work 1. A note for $ 1200, dated July 15, 1905, has the following indorsements: Sept. 25, 1905, $450; Jan. 1, 1906, $200 ; March 9, 1906, $ 150. How much is due July 1, 1906, at 6% interest ?

2. A note for $ 2500, dated Jan. 1, 1907, has the following indorsements: Feb. 1, 1907, $ 50; March 1, 1907, $ 75; May 1, 1907, $ 100. How much is due Oct. 1, 1907 ?

BANKS AND BANKING

A bank is an institution that receives and lends money. A national bank may also issue notes that circulate as money.

Among the various forms of banks in the United States may be mentioned national banks, which are under control of the Federal government; state banks, which are under the control of the state; private banks ; and savings banks.

A trust company is an institution empowered by its charter to accept and execute all kinds of trusts, to act as executor, administrator, assignee, and receiver. In most states it is also empowered to do a general banking business.

Savings accounts have been treated under the head of Compound Interest, as the computations involved are a direct application of it.

The chief business of banks is to receive deposits for safe keeping; to lend money on approved security; and to collect drafts and bills of exchange.

Discounting notes is simply lending money on approved security.

Opening an account with a bank.

When a person opens an account with a bank, he first fills out a deposit slip, as indicated on page 228, and gives it, together with the deposit, to the “ cashier” or “receiving teller.”

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