38 BULLETIN 985, U. S. DEPARTMENT OF AGRICULTURE. 



(7) 

 000 Loss and gain. 



Salaries and labor expense 000 



Power expense 000 



Repairs 000 



Depreciation 000 



Operating supplies expense 000 



Insurance 000 



Office supplies 000 



Telegraph, telephone, and postage 000 



Rent paid 000 



Taxes 000 



Loss from bad accounts 000 



Miscellaneous expense 000 



Seed-cotton purchases -. 000 



Cottonseed purchases 000 



Cotton purchases 000 



Bagging and ties purchases 000 



To close the expense accounts and transfer the expenses to the Los3 and 

 gain account. 



(8) 



000 Ginning purchased seed cotton. 



Loss and gain 000 



To charge the former account with the cost of ginning. 



PREPARING THE REPORTS. 



The above journal entries when posted to the ledger will balance 

 all Income and expense accounts and leave only the Asset and lia- 

 bility accounts open. At this point all the balanced accounts 

 should be ruled with a double red line beneath the footings. 



A credit balance on the Loss and gain account represents the net 

 profit for the year, a debit balance represents a loss. 



A trial balance ("after closing") should now be taken to prove 

 that the equality of the debits and credits of the ledger accounts has 

 been maintained, after which the preparation of the balance sheet 

 and Income and expense statement may proceed. 



In compiling the balance sheet it is necessary only to refer to the 

 ledger accounts and draw off the balances shown in the Asset and 

 liability accounts, entering them as indicated on the form of balance 

 sheet provided herein. The preparation of the Income and expense 

 statement is described on page 5. 



It will be noted that while the reserves for depreciation and bad 

 accounts are shown on the ledger as a liability they appear on the 

 balance sheet as a deduction from the assets. 



