This post completes the collection of final exams for accounting taught at Harvard during the first decade of the 20th century. With an enrollment of 212 students, it helped to add a note of business practice to Harvard’s liberal arts curriculum.
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Earlier Accounting Exams at Harvard
1900-01
1901-02
1902-03
1903-04
1904-05
1905-06
1906-07
1907-08
1908-09
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William M. Cole
His Textbook
Accounts. Their Construction and Interpretation for Business Men and Students of Affairs. Boston: Houghton Mifflin Company, 1908.
“The first issue of this book was brought out at a time when no general, non-technical, non-professional treatise on accounting had been published . The author had then been giving for eight years a course of instruction to seniors in Harvard College on the principles of accounting, and believed that many business men and students of affairs would be interested to see briefly but comprehensively how accounts are constructed and interpreted.”
Revised and enlarged edition, 1915.
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Course Enrollment
1909-10
Economics 18. Asst. Professor W. M. Cole, assisted by Messrs. J. J. Kaplan, R. M. Johnson, and H. B. Platt. [For biographical information about the teaching assistants, see the post for the 1908-09 course Economics 18] — Principles of Accounting.
Total 212: 3 Graduates, 99 Seniors, 56 Juniors, 9 Sophomores, 1 Freshman, 44 Others.
Source: Harvard University. Report of the President of Harvard College, 1909-1910, p. 45.
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[“1909-10” noted in pencil]
ECONOMICS 18
The following transactions are to be entered in complete form, with full details and index references; the resulting figures are to be carried through a six-column statement; the books are then to be closed as for the end of the year, and a Balance Sheet for the beginning of the new year is to be shown.
The books to be used are a journal, a special-column cash-book, a sales book, a purchase book, a sales ledger, a purchase ledger, and a general ledger. When insufficient details for a complete entry are given below, reasonable details are to be assumed. Interest and discount should be figured at 6%.
In determining and recording profit, all additional facts necessary to know are to be assumed at fairly reasonable figures. Care should be taken that all necessary additional facts are considered.
Do not attempt in this case to analyze the profit into its three elements, — wages of management, interest on investment, and pure profit, — but consider it an entity and carry it to the account representing the proprietor.
January
- You as sole proprietor begin business under the name of the Fair Deal Co. with the following capital: cash, 15,000; store building, 15,000; promissory notes to the amount of 5000 (as follows: Roderick Hudson, 1000, dated to-day, payable in two months; Silas Marner, 2000, dated Dec. 1, two months; Adam Bede, 500, dated Dec. 16, one month; Henry Esmond, 1500, dated Nov. 1, payable on demand with interest). Buy office and store furniture for cash, 500. Pay for postage, 15. Buy stationery, books, etc., for cash, 125.
- Buy goods of Oliver Twist, payment due in 10 days, 4000. Buy goods of David Copperfield for cash, 3000.
- Pay freight, 65. Pay telephone bill, three months, in advance, 25.
- Buy horses and wagon, cash, 500. Pay for advertising, 30.
- Sell goods to Enoch Arden, 30 days’ time, 700. Buy goods of Dombey & Son, cash, 6000
* * * * * * * * * * * *
- Pay wages: bookkeeper, 25; three clerks, at 15 each; driver, 10.
- Buy goods of Richard Feverel, 10 ds., 7000. Accept Oliver Twist’s draft on you, payable in three days, for the amount of your bill.
- Discount at a bank your own note (signed by the Fair Deal Co.), face 5000, 30 days. Henry Esmond pays his note.
- Buy goods of David Balfour, cash, 6000.
- Discount at a bank Silas Marner’s note. Pay your acceptance of the 9th.
- Sell goods to Felix Holt, 10 ds., 575.
* * * * * * * * * * * *
- Sell goods to Silas Lapham, 10 ds., 200.
- Adam Bede’s note is paid. Sell goods to John Nicholson for his note, 30 ds., 600.
- Sell goods to John Halifax, cash, 300.
- Borrow on your own note for 30 ds., bearing interest, 4000.
- Pay Richard Feverel in full. Pay insurance, 100.
- Pay freight, 75. Sell goods for cash, 150. Sell goods to Joseph Vance, 30 ds., 1200.
* * * * * * * * * * * *
- Pay wages, two weeks, at the same rates as on the 8th. Pay for remodelling offices, 400. Three months’ rent is paid in advance by a tenant to whom one of the remodelled offices is let, 100.
- Felix Holt’s bill is paid. Paid for coal, 100.
- Pay subscription for flood sufferers, 100. Sell goods for cash, 1200.
- Draw a draft on Enoch Arden, payable in ten days, to your own order, for the amount of his bill due Feb. 4. Pay a dry-goods bill for your wife out of the cash drawer, 75. Silas Lapham’s bill is paid.
- You receive, accepted, the draft drawn on the 25th.
- You discount at a bank Enoch Arden’s acceptance.
* * * * * * * * * * * *
- Sell goods to Silas Lapham, 30 ds., 1300.
- Pay wages as before.
- Pay for lighting, 15. You draw for your own use, 150.
Source: Harvard University Archives. HUC 8522.2.1. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 1. Folder: 1909-1910.
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ECONOMICS 18
Mid-year Examination, 1909-10
- Distinguish in nature between: —
- Bills Receivable account and Accounts Receivable account;
- Capital Stock account and Surplus account;
- Real Estate account and Rent account;
- Bond Discount account and Merchandise Discount account (supposing the latter to be of the common type);
- Insurance account and Repairs account.
- Show, in the form of a simple journalization, what should be debited and what credited in each of the following cases: —
Payment, by you, of wages in the form of merchandise.
Receipt, by you, of a bond which you have agreed to take in payment of an accepted draft.
Writing off a bad debt owed you by a customer.
Interest allowed you on your bank deposit.
A discovery that included in a bill for goods purchased to be sold as merchandise, and charged as merchandise, is included $100 worth of office supplies, and $100 worth of goods shipped to the proprietor’s residence, and broken goods to the value of $100.
Receipt of a promissory note for an account already written off as bad.
- The following is the trial balance of a manufacturing concern for January 1, 1910. Make any allowances and state any additional facts that you think probably necessary (any fairly reasonable figures will be accepted), and show the income sheet and the balance sheet, on the understanding that no profits are withdrawn by partners.
| Proprietors | $60,000 | |
| Plant and machinery | $35,000 | |
| Merchandise purchases | $38,000 | |
| Merchandises sales | $95,000 | |
| Merchandise Inventory (balance on closing the books a year ago, and unadjusted since then) |
$15,000 | |
| Wages and salaries | $30,000 | |
| Traveling expenses | $2,500 | |
| Interest | $600 | |
| Stationery and printing | $1,200 | |
| Rents and taxes | $3,500 | |
| Discounts | $1,250 | |
| Fuel | $3,000 | |
| Insurance (one year from July 1, 1909) | $1,150 | |
| Freight | $1,500 | |
| General expenses | $600 | |
| Bills Payable | $5,000 | |
| Creditors | $4,000 | |
| Accounts Receivable | $25,000 | |
| Rent of steam power | $1,500 | |
| Cash on hand | $200 | |
| Bills Receivable | $7,000 | |
| $165,500 | $165,500 |
- Comment upon the condition of a corporation which shows the following changes from 1910 compared with 1909:––
| 1909 | 1910 | |
| Accounts Receivable | $55,000 | $66,000 |
| Bills Receivable | $20,000 | $25,000 |
| Accounts Payable | $20,000 | $23,000 |
| Bills Payable | $15,000 | $16,500 |
| Merchandise Inventory | $30,000 | $37,500 |
| Cash | $8,000 | $8,500 |
| Sales | $300,000 | $310,000 |
| Purchases | $225,000 | $238,000 |
| Surplus | $10,000 | $29,500 |
- You find, after charging $1000 to Maintenance of Buildings for repairs made this year, that the interruption of business caused by the repairs has cost $200, and that the repairs actually increased the value of the building to the amount of $200. Should you make any new entry? Why, or why not? If so, what?
- In a manufacturing business what accounts should you open and charge for the following expenditures? Should each of such accounts be treated at the end of the year as a capital account or as a revenue account? Defend your decision in each case.
Taxes on a piece of real estate held for possible extension of plant.
Wages of a chemist carrying on experiments for improvement of processes.
Contributions to an agency for gathering information about foreign markets.
Expense of maintaining an exhibit at an international exposition.
Compensation to the owner of a piece of land when a lease on that land is by mutual agreement canceled.
Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1909-10.
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ECONOMICS 18
Year-end Examination, 1909-10
- A trial balance for the ledger below shows error. Find the trouble.
PROPRIETOR
| Sundries | $16,000.00 |
BILLS PAYABLE
| Merchandise | $1,684.00 |
BILLS RECEIVABLE
| Proprietor | $2,000.00 | Aaron Burr | $1,527.10 |
MERCHANDISE
| Cash | $10,549.00 | Aaron Burr | $1527.10 | |
| Bills Payable | $1,648.00 |
AARON BURR
| Merchandise | $1527.10 | Bills Receivable | $1,527.10 |
CASH
| Proprietor | $14,000 | Merchandise | $10,549.00 |
- A summary of transactions for the year 1909 shows the following changes:—
| Increases | Decreases | ||
| Notes held | $2,000 | ||
| Notes outstanding | $3,000 | ||
| Cash | $7,000 | ||
| Due from customers | $5,000 | ||
| Due to creditors | $6,000 | ||
| Goods on hand | $11,000 |
The balance sheet, Dec. 31, 1909, was as follows:—
| Merchandise | $16,000 | Capital Stock | $25,000 | |
| Bills Receivable | $7,000 | Bills Payable | $7,000 | |
| Accounts Receivable | $10,000 | Accounts Payable | $8,000 | |
| Fixtures | $2,000 | Surplus | $3,000 | |
| Cash | $8,000 | |||
| $43,000 | $43,000 |
Show the balance sheet for Dec. 31, 1908.
- Comparing two trial balances of the same business six months apart, you find the only changes to be an increase of debits to nominal accounts amounting to $12,000 and a corresponding increase of credits to accounts not nominal. What does this disclose? Illustrate by an imaginary case.
- What entries should you make for the following?
- Collecting an account previously written off to Bad Debts.
- Redeeming an endorsed discounted note on which the maker has defaulted.
- Paying wages to a cabinet maker regularly in your employ in a furniture factory when he has been working at sorting woods recently bought for manufacturing purposes.
- Paying off debt by a sinking fund previously accumulated and carried on both sides of the balance sheet.
- Depreciation on a machine found to be so poorly built that its life will be only half that assumed in previous allowances for its depreciation.
- Purchasing a new machine to replace, at the same purchase price, one superannuated.
- Purchasing out of an accumulated replacement fund a new machine that costs the same as the one which it replaces but will save one-fourth in the costs of operation.
- Purchasing in the natural process of maintenance a new machine that will do the same work as that which it replaces and at the same cost of operation but costs only three-fourths as much at purchase.
- Show what should be entered on the books for the collection of the last, and maturing, interest payment, and the payment of principal, on a bond with a book value on the preceding interest-date of $1,002.45, when the interest payment is $25.
- Schedule I was the balance sheet at the beginning of the year. Schedule Il is the trial balance at the end of the year. The proprietor, intending to close his business, has brought all matters to a settlement at the end of the year, and there are therefore no outstanding or accrued items, and no inventories. Give in the form most intelligible to persons not acquainted with accounts a history of the business for the year past. Then show entries for closing out the business, so that no balances remain on the books.
I
| Real Estate | $10,000 | Proprietor | $45,000 | |
| Merchandise | $25,000 | Bills Payable | $5,000 | |
| Bills Receivable | $8,000 | Accounts Payable | $12,000 | |
| Accounts Receivable | $12,000 | Accrued liabilities | $610 | |
| Cash | $7,610 | |||
| $62,610 | $62,610 |
II
| Proprietor | $43,000 | ||
| Bills Payable | $4,000 | ||
| Accounts Payable | $10,000 | ||
| Real Estate | $41,350 | ||
| Bills Receivable | $6400 | ||
| Accounts Receivable | $8,000 | ||
| Cash | $1,516 | ||
| Repairs | $88 | ||
| Freight | $249 | ||
| Insurance | $250 | ||
| Expense | $2,740 | ||
| Purchases | $64,550 | ||
| Sales | $67,167 | ||
| Interest | $740 | ||
| Commission | $236 | ||
| $125,143 | $125,1143 |
Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 9, Bound vol. Examination Papers 1910-11; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1910), pp. 50-52.
Image Source: U.S. Patent Office. Patent for green eyeshade by W. F. Mahony in 1903. Wikipedia.