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There was cash at Canton, that we were notified that Canton
possessed this cash and they did in fact possess it.
Shekki had sent the cash to Canton. Shekkd did not notify us that it had gone through. There is no question of cash having gone astray or duplicated entries of cash. The result is that there are two branch entries in the accounts which would have cancelled out. Instead of showing the cash at Canton existing, it is against the Suspense Account because itis cash held in suspense. We were not aware that Shekki had sent it there.
It has been pointed out to me, and I quite agree, it could have been avoided by proper book-keeping, but it is quite an
ordinary error and not one that a reasonable man would notice from a fair inspection of the accounts.
It has been suggested that the profit has been wrongly dealt with. I take this rather seriously to heart.
The first point made was that interest on capital should be dealt with in the Profit and Loss and not in the Appropriation of Profit and Loss. That is a point of book-keeping in which I do not know whether the authorities disagree, but I do know some agree with me - but it is made important by the statement that in so dealing with the interest on capital, it could affect the right to declare a dividend.
If an item of expense is subtracted once and once only, I cannot see how i could affect the resulting balance,, whatever account it be deducted from.
There were two criticisms made in respect of the profit, as to whether the profit had been placed unduly high. One was the point that the value of the premises had been written up to $250,000.00 consequent upon a cash offer having been made and refused, to that amount.
That this is paper procedure is a point on which I should be at all times glad to submit authorities Palmer Company's Precedames part 1, is unambiguous on the point that this is an entirely proper method of procedure.
Then again was a profit of $10,000.00 the sum required to be paid by the Instone Trading Co. in respect of work done in its organization. It was I who did that work. Had an outside solicitor and outside brokers been employed for that purpose it would have been necessary to pay them money. I have done the work my employers the Instone Banking Corporation were equally entitled to receive the money. For the work done the amount was not excessive because it included not merely the Incorporationof the Company, but also a considerable number of interviews with intending shareholders in the Instone Trading. There was a great deal of talk and as one might say brokerage.
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That this money was not, in fact, received in hand at the time of the production of this balance sheet is not a matter of importance because a good debt is rightly qualified in the same manner as a profit already in being. If you have sold goods to somebody and the cash has not come in, you do not say the profit has not been made.
The point is, was this a good debt as to whether it would be a profit, and at the date concerned - April 30th, 1928, the directors of the Instone Banking Corporation had every reason to believe that the Instone Trading Co. was and would be a most
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