ACC01T]sj-TS FOE PRIMARY GRAIN ELEVATORS. 17 



or by writing them into the cashbook. The difference between the 

 "bank deposits" and "bank withdrawals" colunons, plus the total of 

 outstanding checks, should equal the balance as shown in the bank 

 pass book. No error, however small, should be ignored in balancing 

 cash with the bank. 



RESERVE ACCOUNTS. 



RESERVE FOR DEPRECIATION ACCOUNT. 



In order to show the true condition of the plant a reserve for 

 depreciation account is essential. To this account should be credited 

 annually a certain percentage of the money invested in the plant, 

 and an equal amount should be written off profit and loss.^ 



RESERVE FOR BAD DEBTS ACCOUNT. 



During the operation of a business where credit is given to a large 

 number of customers there is Hkely to be a loss on account of uncol- 

 lectible debtSo This amount may be small one year and large another. 

 For that reason it is well to set aside a sufficient amount of capital 

 from the yearly profits to offset such losses. To effect this, "reserve 

 for bad debts" should be credited and "profit and loss" debited with 

 an amount which experience would dictate is sufficient to take care 

 of the uncollectible debts of the company. 



While many elevator companies make a practice of furnishing 

 supplies to members and others on credit, all suppHes, if possible, 

 should be handled on a strictly cash basis. Any system of extending 

 unprotected credit requires a large capital and often results in con- 

 siderable loss. 



RESERVE FOR SINKING FUND. 



In some States, notably South Dakota, where the cooperative law 

 is in operation, a statutory regulation requires that a certain per- 

 centage of the capital invested be set aside each year in a reserve for 

 sinking fund, so that the company will be in a position to retire its 

 capital stock at the end of a given period. Companies operating 

 under such conditions should set up a reserve for sinking fund in 

 accordance with the requirements of their State laws. 



Where the custom of hedging grain prevails, an account should be 

 opened designated "profit and loss on hedging." To this should be 

 debited or credited the losses or gains incident to the hedging of grain, 

 the opposite entry being made to the commission account handling 

 the business. 



1 For further explanation of reserve for depreciation see U. S. Department o f Agriculture Bulletin No . 

 178, "Cooperative Organization Business Methods." 



