A highly popular vocational course offering for Harvard undergraduates was William M. Cole’s principles of accounting. This post provides us with the course description, enrollment figures, and semester exams for the 1912-13 academic year.
________________________
Principles of Accounting
pre-1912/13
Links to earlier course material for Principles of Accounting from Harvard, 1900-01 through 1911-12.
________________________
William M. Cole
His Textbook
Accounts. Their Construction and Interpretation for Business Men and Students of Affairs. Boston: Houghton Mifflin Company, 1908.
_______________________
Economics 9
Course Description
1912-13
[Economics] 9 (formerly 18). Principles of Accounting. Mon., Wed., Fri., at 11. Asst. Professor Cole, assisted by Messrs. —— and ——.
This course is designed to show the processes by which the earnings and values of business properties are computed. It is not intended primarily to afford practice in book-keeping; but since intelligent construction and interpretation of accounts is impossible without a knowledge of certain main types of book-keeping, practice sufficient to give the student familiarity with elementary technique will form an important part of the work of the course. The chief work, however, will be a study of the principles that underlie the determination of profit, cost, and valuation. These will be considered as they appear in several types of business enterprise. Published accounts of corporations will be examined, and practice in interpretation will be afforded. The instruction will be chiefly by assigned readings, discussions, and written work.
Course 9 is not open to students before their last year of undergraduate work. For men completing their work at the end of the first half-year, it will be counted as a half-course. It is regularly open only to Seniors and to Graduates who have passed in Economics 1. Students intending to enter the Graduate School of Business Administration are expected to take this course in preparation for the advanced courses in accounting.
Source: Harvard University. Division of History, Government, and Economics, Courses of Instruction, 1912-13, p. 63.
_______________________
Economics 9
Course Enrollment
1912-13
Economics 9. Principles of Accounting. Asst. Professor Cole, assisted by Mr. Eliot Jones.
Total 276: 7 Graduates, 8 Graduates of Applied Sciences, 62 Graduates of Business School, 147 Seniors, 50 Juniors, 2 Sophomores.
Source: Harvard University. Reports of the President and the Treasurer of Harvard College, 1912-13, p. 57.
_______________________
ECONOMICS 9
Mid-year Examination
1912-13
- Indicate, in the form of journal entries, what should be debited and what credited, on your books, for the following:—
- You sell goods ($500 net selling price), and receive in exact payment a note bearing interest, at 6%, dated two months ago.
- You buy stationery (price $100), and give in return a draft which has been sent to you and has been already accepted by those upon whom it was drawn.
- You sell goods to Dombey & Son for $1,000, terms 6% — 10 ds., 5% — 30 ds., net — 60 ds., and to Stalky & Co. for $2,000, on the same terms.
- You discount at a bank a note receivable, face $1,500, for $1,492.50.
- Dombey & Son pay their bill, taking the discount at 5%.
- Stalky & Co., fail to pay their bill when due, but agree to pay 6% interest for the delayed time, and you send them a new bill with interest for 60 days.
- Stalky & Co. go into bankruptcy and pay 50 cents on the dollar. You collect your share.
- You receive subscriptions, payable in two instalments of $25,000 each, for capital stock to be issued at par.
- You issue $25,000 of capital stock for $30,000 in cash.
Show the trial balance for these transactions.
- Explain the purpose of each of the following, and tell how that purpose is accomplished:—
- a special column in a book of original entry.
- a controlling account.
- a six-column statement.
- accomplished.
- an amortisation table.
- The profit and loss account for a year is as follows:—
PROFIT AND LOSS
| Rent |
$7,000 |
Interest |
$50 |
|
| Wages |
40,000 |
Commission |
1,500 |
|
| Taxes |
500 |
Merchandise |
78,000 |
|
| Stationery |
300 |
|||
| Advertising |
700 |
|||
| Expense |
500 |
|||
| Allowance for Bad Debts |
1,500 |
|||
| Reserve for Bad Debts |
5,000 |
|||
| Dividends |
5,000 |
|||
| Permanent Surplus |
19,050 |
How many of these items affect the balance sheet, and how?
- The annual wear and tear on a certain piece of property is estimated at $2,000. In 1910, $1,500 was spent for maintenance, in 1911, $2,000, in 1912, $2,500. What are the consequences of these facts on the income sheet and on the balance sheet for each of the three years. (Show actual figures in tabular form.)
- Would the following appear on the income sheet or on the balance sheet? Under what name in either case?
- Cost of a patent bought.
- Rent for storage of new machinery ordered from different firms and delivered at different times, but to be installed together, as soon as all arrives, in a new shop.
- Author’s royalty on a copyrighted story printed and distributed in an extended advertising campaign.
- Cost of heating during permanent interior decoration of a new store.
- How far are the following statements true?
- A balance sheet is a statement of resources and liabilities.
- An income sheet is a statement of earnings and expenses.
- A trial balance is a summary statement of the business.
If any of these statements need amendment, illustrate your amendment by concrete items.
- Two clerks in an office, A and B, were asked to find the value of a $10,000 bond, payable in 3 years, bearing interest at 5%, on a market basis of 4.67%. A obtained a figure of $10,090.42; B, of $10,089.86. They both used interest tables showing the following present worths and the following amounts.
Present worth of $1.00
|
Payable in |
4.67% |
5% |
|
1 year |
.955384 |
.952381 |
|
2 years |
.912758 |
.907029 |
|
3 years |
.872026 |
.863838 |
Amount of $1.00
|
In |
4.67% |
5% |
|
1 year |
1.046700 |
1.050000 |
|
2 years |
1.095580 |
1.102500 |
|
3 years |
1.140828 |
1.157625 |
-
- Was either right? If so, which? Show your figuring.
- Show the amortisation table.
Source: Harvard University. Mid-year examinations, 1852-1943. Box 9, bound volume Examination Papers, Mid-Years 1912-13.
_______________________
ECONOMICS 9
Year-end Examination
1912-13
Save one hour for the last question. It will count as one-third of the paper.
- Show by journal entries what should be debited and what credited for the following transactions:
- Granting a discount to a customer, for early payment of a bill, so that, though the amount of the bill was $100, he pays but $95.
- Paying a lawyer $50 for trying to collect a bill that proves uncollectible, and writing off the debt ($250) as bad.
- Collecting $75 as full payment, including interest to the amount of $17, for a debt previously written off as bad.
- Giving a friend whose credit at banks is not very good, because he is a new-comer in town, and for whom, therefore, you do not wish to endorse notes, your own note for $1000, with the understanding that he will discount it at a bank, and taking in exchange your friend’s note (for the same amount and time) which you intend to keep until maturity.
- Discounting at a bank your friend’s note mentioned in (d), because you find his credit has improved in the public mind and you need the money. [Discount $7.]
- Returning to the manufacturers, as unsatisfactory, goods billed at $500 and bought to be sold at $650.
- Delivering goods from the store as part payment of clerks’ wages, and allowing 5% discount to clerks. [Retail price $50, clerks’ price $47.50.]
- Issuing a stock dividend of $50,000.
- Selling a new $2,000,000 issue of stock for $2,100,000. [Corporation’s books.]
- A bond table gives the value of $10,000 of bonds for January 1 as $10,366.27, and for July 1 as $10,323.60. On the latter day you collect $250 interest. What entry shall you make for the interest?
Assuming that the valuation of the bonds was determined on a 4% basis, how could you prove the correctness of the July 1 valuation if you knew that the valuation for January 1 was correct? - Define and discuss the purpose of the following: —
- a machine rate,
- a life-insurance reserve,
- a national-bank redemption fund,
- a stores ledger,
- a machine ledger,
- a controlling account.
- Would expense burden enter into a plan of cost accounting for (a) a department store, (b) a hospital, (c) a college, (d) a gas company? Explain briefly how, or why not, in each case.
Remember in solving problems that time and confusion are often saved by the use of journal entries as guides in determining which accounts are affected.
- The balance sheet a year ago was as follows: —
| Plant | $125,000 | Capital Stock | $140,000 |
| Accounts Receivable | 33,000 | Bills Payable | 10,000 |
| Merchandise | 19,000 | Accounts Payable | 24,000 |
| Cash | 5,000 | Surplus | 8,000 |
| $182,000 | $182,000 |
An abbreviated tentative income sheet for the year just closing gave the following figures: —
| Wages | $85,000 | Other Expenses | $71,000 |
| Materials | 54,000 | Gross Income | 240,000 |
No items relating to the care of property were included in the “other expenses,” and they are now to be provided for. Such items are found on the debit side of the trial balance as follows:—
| Depreciation | $5,000 | Replacement | $4,000 |
| Repairs | 8,000 | Additions | 12,000 |
Supposing the only changes in the balance sheet are those caused by the items shown above (profit or loss and care of property) and that cash absorbs the net effect of changes not otherwise indicated, show the income sheet and the balance sheet for the new year.
- Prepare such a tabular statement or statements as an accountant should give to his employers or clients for a business yielding the following figures on three trial balances (of ledger balances) taken at the times indicated.
| Trial balance at the opening of business, Jan. 1, 1912 | Trial balance, Dec. 31, 1912, before the books are closed | Trial balance at the opening of business, Jan. 1, 1913 | ||||
| Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | |
| Capital Stock | $200,000 | $200,000 | $200,000 | |||
| Bills Payable | 30,000 | 40,000 | 40,000 | |||
| Accounts Payable | 35,000 | 37,500 | 37,500 | |||
| Surplus | 7,000 | 7,000 | 9,000 | |||
| Dividends declared | 10,000 | 10,000 | ||||
| Real Estate and Plant | $135,000 | $137,500 | $137,000 | |||
| Accounts Receivable | 88,200 | 80,200 | 80,200 | |||
| Goods in process | 17,000 | 17,000 | 20,000 | |||
| Finished Goods | 25,000 | 25,000 | 23,000 | |||
| Raw Materials Inventory | 15,000 | 15,000 | 35,000 | |||
| Raw Materials | 57,000 | |||||
| Wages | 7,000 | 52,000 | 2,000 | |||
| Taxes | 200 | 2,300 | 200 | |||
| Insurance | 1,000 | 2,200 | 1,000 | |||
| General Expenses | 7,500 | |||||
| Sales | 113,200 | |||||
| Cash | 8,000 | 2,000 | 2,000 | |||
| $289,200 | $289,200 | $397,700 | $397,700 | $298,700 | $298,700 | |
If you give more than one statement, prepare one at a time, and leave the reconciliation between statements until all are complete.