Assume that owing to a delay in the mails H. A. Burt failed to place us in funds to cover his unsecured loan maturing on June 30, the amount of the loan being $2,000 and the interest $50. The general ledger entries to cover this situation would be as follows:

The balance of the loan account would be reduced $2,000 by this entry, and the balance of the past due paper account would be increased accordingly. If there were no items in it when this entry was made, the general ledger account on "past due paper" would appear as follows as at the close of the day.

Auxiliary Records

H. A. Burt's liability would remain the same in the loan ledger, excepting that the fact of non-payment would be shown by notation. A similar notation should be made on the loan card and on the maturity tickler. In the tickler the item should be carried forward for the next day. For the purpose of the officers and directors a separate record is kept for past due paper. As all of the information concerning the item is already on similar records in the bank, there is no need for great detail on the past due paper record. The following is sufficient: (1) Maturity Date; (2) Loan Number; (3) Borrower; (4) Indorser; (5) Amount of Loan; (6) Date Paid. Open items in the foregoing record should obviously prove as of the close of each day with the balance of the "past due paper" account on the general ledger of the bank.