--12-- Sold for cash 3 bbl. pork 11.35 34.05 --13-- Sold to R. C. Ellison, 10 Jefferson Av. On account 2 bbl. pork 11.40 22.80 5 bu. beans 2.10 10.50 33.30 --14-- Received from Geo. Wiggins Cash to balance 9.60 --15-- Sent to Grand Rapids Gro. Co. Draft to balance 290.15 --16-- Sold for cash 1 box soap 3.75 --17-- Received from Smith & Nixon Cash on account 25.00 [Illustration] [Illustration] [Illustration] [Illustration] PROMISSORY NOTES =26.= A promissory note is a form of commercial paper much used in business. Goods are sold on specific terms--that is, to be paid for in a certain time after date. Profits are based on the supposition that the bills will be paid when due. When not so paid, the debtor is virtually borrowing money from the creditor, and should pay interest for the use of that money just as he would if he had borrowed it from a bank. To settle the account when it is not convenient to pay cash, it is customary to give a promissory note for the amount, plus interest, payable on a certain date. The promissory note is more convenient for the creditor; for when it bears his endorsement, his bankers will discount it, thus giving him the money for use in his business. Even though he may not discount it, the promissory note is better for the creditor, as it gives him a definite promise to pay, which he does not have when the debt is represented by an open account. =27. Bills Receivable and Bills Payable.= The commercial term for promissory notes accepted by us is _Bills Receivable_. The commercial term for promissory notes given by us is _Bills Payable_. The term "bill" is used in this connection for the reason that a promissory note is a negotiable instrument, and when indorsed it becomes practically a bill of exchange. The accounts in the ledger which represent notes receivable and notes payable are called _Bills Receivable Account_ and _Bills Payable Account_. The bills receivable account is debited when a note is received, and credited when a note is paid. The balance of bills receivable account shows the amount of unpaid notes payable to us. The bills payable account is credited when we give a note and debited when we pay a note. The balance of bills payable account shows the amount of the notes that we owe.