writes his name and ad1907 dress in a book kept by Dollars Cents 50 60 20 the bank, so that the bank may have his signature for identification. He then receives a bank book, which should always be presented to the teller when a deposit is made, in order that the dates and amounts of all the deposits He also may be entered. receives a check book, each page of which has one or more blank checks and stubs. When he wishes to pay a bill by check, he fills out a form from the check book, similar to the following: STUB No. 1401 Date June 26,'07 Payable to John R. Thompson For Rent to date Am't. $427,25 CHECK American National Bank Pittsburg, Pa., June 26, 1907. No. 1401 Pay to the order of John R. Thompson..... $427.25 25 and 100 Four hundred twenty-seven Dollars. T. A. Smith. A check is a written order by a depositor in a bank, direct ing the payment of money. The stubs remaining in a check book, after the checks are torn out, give a complete record of the checks issued. 1. Who is the maker of the check on p. 228? 2. To whose order is this check written? Observe: 1. The maker of a check is the one who signs the check. 2. The payee is the one to whose order the check is made payable. 3. This check is made payable to the order of John R. Thompson, which means that in order to receive the money from a bank, or transfer the check to another person, he must write across the back of the check the name "John R. Thompson." This is called a blank indorsement, because it does not state to whom the check is made payable. If John R. Thompson should write across the back of the check the following : Pay to the order of Marshall Field & Co., John R. Thompson, this would be known as a full indorsement, for no one but Marshall Field & Co. could collect or indorse the check. Checks, like promissory notes, may be written in different ways, as follows: 1. Pay to bearer, 2. Pay to cash, 3. Pay to James Ogden, or bearer, collectable by bearer. 4. Pay to self (collectable by maker only). 5. Pay to the order of self (collectable by indorsement of the maker). 6. Pay to the order of James Ogden (collectable by indorsement of James Odgen only). NOTE. The last form of check is the one in general use. 3. How may the check on p. 228 be indorsed in blank? 4. How may it be indorsed in full? 5. Suppose Mr. Thompson wishes to send this check to Sage, Allen & Co., Hartford, Conn., in payment of an account: first, write the check as indorsed by Mr. Thompson in blank; second, write the check as indorsed by Mr. Thompson in full. 6. Give reasons why it will be better for Mr. Thompson to indorse the check in full. 7. When a check is indorsed and sent by mail, what form of indorsement should always be used? Why? 8. Give the essentials of a check. Balancing Accounts; Depositing; Checking on Accounts: 1. Your deposits in a bank for the month of September are as follows: Sept. 1, currency, $50; silver, $10; check, $15. Sept. 6, currency, $20; silver, $10; check, $100; gold, $20. Sept. 10, currency, $45; silver, $4.75. Sept. 16, currency, $20; silver, $3.40; check, $80. Sept. 25, gold, $40; check, $40; silver, $10. Sept. 29, check, $80; currency, $80; silver, $35. Make out deposit slips and find amount of deposits for September. 2. Your check book shows the following: Balance in bank Sept. 1, $183.95. No. 1, Sept. 4, Keller Bros., for coal, $15.50. No. 2, Sept. 4, Geo. K. Stevenson & Co., for groceries for August, $49.50. No. 3, Sept. 4, Dr. S. N. Pool, for services to date, $90. No. 4, Sept. 5, cash, $55. No. 5, Sept. 7, Jos. Horne Co., for merchandise, $65.30. No. 6, Sept. 11, Midland Lumber Co., for lumber, $93.75. No. 7, Sept. 15, Johnson & Co., for repairs on automobile, $29.35. No. 8, Sept. 19, cash, $25. No. 9, Sept. 24, J. H. McFarland, for interest due on note, $24. Write the checks for the bills paid for September, and find balance in bank. 3. Arriving at Chicago, I find in my mail a check from the Keystone Lumber Co., Pittsburg, Pa., for $415.40, in payment of my salary and expenses for September. I wish to deposit the same to my account in the Colonial Trust Co., Pittsburg, Pa. How should I indorse the check before sending it through the mail? BORROWING FROM BANKS AND COMPUTING BANK DISCOUNT Banks usually lend money on promissory notes drawn in one of three forms: 1. The note is made payable to the indorser, who signs his name across the back of it. 2. A joint and several note is made payable to the order of the bank and signed by both parties as makers. 3. The note is made payable to the order of the bank. The security in the form of stocks, bonds, mortgages, etc., is deposited as collateral. This note matures three months after Sept. 8, or Dec. 8. If the time in the note were "ninety days" instead of "three months," the note would mature ninety days after Sept. 8, or Dec. 7. If Mr. Chandler wishes to borrow money at the bank, he may make out a note as on p. 231 and get Mr. Watson to indorse it. If both men are responsible from a financial point of view, the bank will buy the note and give Mr. Chandler the difference between the value of the note at its maturity and the interest on that value at the legal rate for the exact number of days the bank is without the use of its money. The value of Mr. Chandler's note is the amount the Lincoln National Bank will receive from Mr. Chandler at its maturity. If Mr. Chandler fails to pay, Mr. Watson will be held responsible. The buying of notes by a bank is called discounting notes, and the interest deducted is called bank discount. The proceeds of a note discounted by a banker or a broker is the value of the note at its maturity less the discount. The term of discount is the exact number of days that the borrower has the use of the money. There are two methods, however, of reckoning this term; the first method counts the day of maturity, but not the day of discount; the second counts both: thus, by the first method Mr. Chandler had the use of the money 22 days in Sept., 31 days in Oct., 30 days in Nov., and 8 days in Dec., or 91 days in all; by the second method he had the use of the money 23 days in Sept., 31 days in Oct., 30 days in Nov., and 8 days in Dec., or 92 days in all. NOTE. - Pupils should solve the problems according to the practice in their vicinity. Answers are given for both methods. When days of grace are allowed they are included in the term of discount, but in this book days of grace are not reckoned. Computing bank discount on note on p. 231: Date of maturity, December 8. Term of discount, 91 days (not including day of discount). Bank discount on $200 for 91 days at 6% = $3.03. 1. How much does the bank pay to Mr. Chandler? How much does Mr. Chandler pay to the bank at maturity? |