premiums are on the installment plan), a column for Fees, and one for Fines.

The account of each stockholder runs across these columns through the year, and one may tell at a glance just how his account stands, while the footings of the various columns summed up at the end of the month furnish a valuable check on the footings of the corresponding columns in the Cash Book.

The Loan Register.-This book is especially provided for by the Act of 1893 governing Building and Loan Associations, in the following:

SECTION 7. To facilitate the examinations of the Commissioners, as specified in the foregoing section, every association shall keep a book of records, written in ink, showing the values of real estate security held in connection with each loan, and signed in each case by the appraiser, or officer or committee of the association making such estimate value.

All Secretaries who are not keeping such a book should hasten to open one, as the Commission must insist on a strict enforcement of the law. The object of this provision is to furnish a basis of value which the Commissioners can take for granted in drawing conclusions as to the solvency of an association. It would be a physical impossibility for the Commissioners to visit and appraise every piece of property under mortgage to the Building and Loan Associations of the State, and the law has accordingly provided this means of establishing the value of such property, with the attesting signatures of the associations' appraisers.

This book may be a very simple affair, written up in any blank record book, but a more elaborate form has been provided by the stationers, and may be purchased on application. This provides not only for a complete record of each loan, and the appraisement, but is arranged to keep account of the book and page where the mortgage is recorded, the premium, the insurance, value of stock hypothecated, etc. It is designed. to dispense with some of the smaller auxiliary books generally kept by Secretaries, and thus to simplify the system.

The Ledger.-This, of course, is of the conventional form, and is kept. in a manner that every accountant understands. It should be borne in mind that this is a general ledger, devoted to general accounts of the association, and is not to be cumbered unduly with individual accounts. In another place we will discuss methods of treating ledger accounts, ascertaining profits, closing the ledger, etc.

Auxiliary Books.-There are several auxiliary books which a society. must necessarily have, such as pass books for the members, a bank book, or treasurer's book, etc. Aside from those that are absolutely indispensable, Secretaries will find it a saving of time and labor to have as few auxiliary books as they can get along with. Let the record in the main books be so full and complete that it requires no outside memoranda to explain it. All this will conduce to simplicity, clearness, and accuracy.

TREATMENT OF VARIOUS ACCOUNTS.

The principal revenue accounts of Building and Loan Associations are Dues, Interest, Premiums, Fees, and Fines. As there is much variance in the methods of treating these accounts, it may be expedient to discuss them somewhat, and set forth the plan which we deem most satisfactory.

Dues Account.-With some bookkeepers this is used to designate a general account which represents everything due the association, from installments on stock to installments of interest and premium; but we think it better to let Dues Account stand simply for installments on stock. Some call it Installment Account, some have still different names for it; but Dues Account, with the understanding of its limitation above specified, is as correct a name as any, and it has the merit of brevity.

Dues Account is to be credited with the total amount paid in as installments on stock, and at the end of the year with the delinquency on such installments. It is not a good plan to carry accrued earnings into Dues Account, or to charge to it stock withdrawn, both of which items should go to separate accounts. Dues are not profits, and profits are not dues; they should never be confounded in the same account. At the end of the year Dues Account will stand credited with all installments paid, including those paid in advance, which are to be applied to the next year's business. In order to segregate these advance dues from the current year's account, it is proper to make a debit entry (in red ink) "To Advance Dues," setting down the amount thereof as calculated. After the account shall have been closed, as hereinafter specified, this item is brought down to the credit of Dues Account for the succeeding year, like any balance entry. Thus, the advance dues are withheld from the past year's business (where they did not belong), and are carried into the forthcoming year's business (where they do belong). Many bookkeepers do not carry their delinquent dues, interest, premiums, and fines into their Ledger at all, but keep them in memorandum form in an auxiliary book. But we strongly favor carrying them into the Ledger, because they are a legitimate charge against stockholders, and, moreover, they are good accounts for which the association holds security in the installments already paid, and it can collect them by forfeiture of stock if need be. Another reason is that these delinquencies must be taken into account in determining and apportioning profits, and it is best that a permanent record of them be made in the Ledger, where it can always be found. In order to bring these delinquencies in, the most convenient method is by an entry on the credit side (in red ink), "By Delinquents," setting down the amount of delinquencies on dues. After the account has been closed up, this is brought down as a balance to the debit side of the new year's account, the exact converse of the entry made for advance dues.

With this item of delinquents carried to the credit of Dues Account, that account represents, not simply the amount of dues paid, but the total amount that should have been paid by all stockholders, the advance payments having been eliminated by the debit entry above referred to. The account is then balanced by red ink entry, "To Capital Stock," and this balance is carried to the credit of Capital Stock Account.

In this way Dues Account is closed every year, and the balance carried up to Capital Stock Account represents the augmentation of liability to stockholders for that year. The account thus closed will stand as follows:

Interest Account.-This is treated in a manner quite similar to that above described. At the close of the year Interest Account stands credited with all interest received, and debited with all interest paid. out. An entry is made, in red ink, on the debit side "To Advance Interest," and this is carried down as a balance to the credit of the next year's account. Delinquent interest is credited just as delinquent dues were credited in Dues Account, and brought down to the new account as a debit balance. Interest Account is then closed into Profit and Loss, and stands as follows:

Premium Account.-There is such a great disparity in systems of collecting premiums that some latitude is required in the keeping of this account, to accommodate it to the method employed; but in the main it may be handled in the closing entries just as Interest Account is treated above. Where gross premiums are treated as earned profits, Premium Account stands credited at the end of the year with the gross premiums entered on the books. Under this system there would be neither advance nor delinquent premiums to enter, and the account is simply closed out to Profit and Loss. When gross premiums are not treated as earned profits, all the unearned portions of premiums are to be segregated, and carried up to the credit of Unearned Premium Account, while the balance of Premium Account is closed into Profit and Loss. Where the installment premium plan is in vogue, there may be both advance and delinquent premiums, and they should be treated like advance and delinquent interest.

Fees and Fines. -Some bookkeepers who carry delinquent dues, interest, and premiums into their ledger as above described, do not thus treat fines. The reason is that they do not consider fines in the nature of fixed charges; they are items which may be remitted, in whole or in part, by the Board of Directors; hence these items are kept account of

in auxiliary books, and only credited to Fees or Fines when collected. But there is no reason why the closing entries should not be made in these accounts the same as Interest, Premiums, etc. In the main, the by-laws of an association ought to be enforced in the matter of fines, and if Secretaries would treat these items more like bona fide charges, more fines would be collected, and there would be less delinquencies.

Unearned Premium Account.-This is an account that is serviceable only when the system of gross premiums is in use. In such cases, we deem it of vital interest to the association that gross premiums deducted from loans be not treated as an accrued or earned profit. It requires the life of the loan (full maturity of stock) to make this profit good. Many associations have a by-law that provides for rebating the unexpired portion of premium in the event that the loan is paid before maturity. The commonly accepted plan is to charge one eighth of the premium for each year, or fraction of a year, that the loan stands. Thus, if a loan is paid at the end of the third year, and three eighths of the premium is considered earned, five eighths is deducted from the face of the note and mortgage, and rebated to the borrower. It may be readily seen that, so long as this possibility of rebating a portion of the premium exists, it is extremely hazardous to credit up the entire premium as an earned profit. Many associations have worked great injustice to themselves by so doing. By appropriating profits not accrued, they swell their earnings unduly, make the book values of their stock too great, and thus are in danger of overpaying withdrawing stockholders. It is to guard against this overpayment that many associations scale down the withdrawal value of stock considerably below the book value. But this scaling down process may or may not protect the association properly. It is an arbitrary matter at best, and may work an injustice either way. At any rate, it is likely to cause dissatisfaction on the part of withdrawing shareholders, who may feel that they are not securing the full share of profits that should go to them.

The best premium plan is undoubtedly that in which the premium is collected in monthly installments throughout the life of the loan, or for a fixed term of years. This point is now conceded by the most experienced Secretaries. Borrowers are better pleased with it, because, on making the loan, they obtain the full amount for which they give their obligation, and they can better afford to pay the premium in small monthly installments than to have it taken out in a lump sum in advance. When the gross premium plan is in use, however, it is very essential that such premiums be treated as unearned profits until made good by lapse of time. To this end Secretaries should carry the whole amount of unearned premiums that remain on the books up to Unearned Premium Account, as previously specified, and close only the balance of earned premiums into Profit and Loss Account.

At the end of each year after the first, there will be an accrued balance to come from Unearned Premium Account and go into Profit and Loss. Withdrawals Account.-When stock is withdrawn, Secretaries should carefully discriminate between the dues refunded and the profits paid on the stock. The dues refunded should not be charged to Dues Account, but to Withdrawals Account. In some instances we have found both dues refunded and withdrawal benefits thus charged, and it invariably leads to complications and embarrassments. Withdrawals Account should represent on its debit side the exact amount of dues refunded

to withdrawing members. At the close of the year this account is to be closed into Capital Stock.

Withdrawal Benefits Account.-This represents the amount of profits on surrendered shares paid out during the year. At the close of the year this account is to be closed into Earnings Account.

Profit and Loss Account.-This is the account in which is to be entered any item of transitory loss or gain through the year, and, on summing up the business, all accounts showing profit or loss are closed into it. The balance of Profit and Loss Account then shows the actual net gain or net loss on the year's business. Any portion of the year's profits not apportioned by reason of fractions or other cause is carried forward in Profit and Loss Account as a balance.

Instances have come to our notice where no Profit and Loss Account is kept, but the several accounts usually balanced into it, as Premium, Interest, Expense, etc., are carried on from year to year. This is far from satisfactory, as it leaves the business in an undigested condition, and a good part of the object of double-entry bookkeeping is lost.

The Profit and Loss Account is of the utmost value in any business, in analyzing the losses and gains, and showing at a glance the result of all transactions. We think it is not the most desirable plan, however, to carry accrued profits from year to year in Profit and Loss Account. This should be a transitory account, to be closed out each year. It should be closed into Earnings Account in the general summing up at the end of the year, except as to any balance of unapportioned profits that may be carried forward to the next year's Profit and Loss Account. Earnings Account.-This represents the accrued earnings of all past years. It is to be credited at the close of each year's business with the