SYSTEM OF ACCOUNTING FOE COOPEBATIVE ASSOCIATIONS. 3 



deterioration may set in, and an allowance may have to be made 

 before the consignee is willing to accept the shipment. Demurrage, 

 switching, and extra icing charges may accrue in transit, and these 

 must be deducted from the selling price. Fluctuations in market 

 conditions may change the selling price even after the shipment has 

 gone forward. Again, cars may be sent out to commission houses to 

 be handled on consignment, while others may be sent to the auctions 

 in the various cities. In these cases the net proceeds derived from 

 any particular shipment will not be known until the account of sales 

 has been received. To take care of all these contingencies, a system 

 of accounts devised for a cooperative organization which markets 

 deciduous fruits and produce must be very flexible, and the record 

 of sales must be kept in memorandum form until the transaction is 

 consummated. 



Many of the systems now in use are built around a form generally 

 known as the sales book. In this book each sale is journalized, a 

 column being provided for charges to customers' accounts on one 

 side, and on the other side a column for credits to the growers' 

 accounts, for commission and for brokerage due, the journal entry 



being: 



Dr. Purchaser $700. 00 



Or. To Growers $650. 75 



Commission 34. 25 



Broker 15. 00 



The charges to the accounts of the purchasers are posted in detail 

 during the month, but the growers' accounts and the commission 

 account are not credited with the net proceeds until payment is 

 received for the shipments. In order to establish the equality of the 

 two sides of the trial balance at the end of the month, the unpaid 

 items would have to be taken into consideration. Or the posting to 

 the ledger is carried out as follows : 



Dr. Purchaser $700. 00 



Cr. To Fruit $700. 00 



Dr. Fruit $700. 00 



Cr. To Growers 665. 00 



Commission 35. 00 



These entries make a trial balance possible at the end of the first 

 month, but to obtain a balance at the end of the second month all 

 items recorded during the previous month but paid during the second 

 necessarily would have to be taken into account in order to obtain a 

 balance. 



These systems are found, therefore, to be entirely too rigid for use 

 in the handling of highly perishable products where provision must 

 be made for so many contingencies. The changes on the sales book 

 are made necessarily by interlineations, and in some instances these 

 entries are so confusing as to be impossible of translation. Since it 

 is difficult to obtain a trial balance at the end of each month, as a 



