20 BULLETIN 811, V. S. DEPARTMENT OF AGRICULTURE. 



Patronage Dividend {F4). 



Debit: 



1. With the amount of the dividend 

 when it is paid. 



Credit: 

 1. With the dividend declaration when 

 such dividend is based on the 

 amount of business transacted. 

 (Debit Surplus.) 



Storage Liability (F5). 



Debit: 



Credit: 



1. At the beginning of a fiscal period 



1. With the market value of stored 



the storage liability at the close of 



grain as shown by the balance 



the previous fiscal period. (Credit 



sheet at the time of opening the 



Loss and Gain.) 



books. 





2. With the inventory value of stored 





grain at the end of a fiscal period. 





(Debit Loss and Oain.) 



In calculating the liability arising from storage tickets outstanding at the end of 

 the year, the same price must be used as is used in computing the value of the inven- 

 tory of grain on hand and in transit. 



Notes Receivable Discounted {F6). 



Debit: 



Credit: 



1. With the face value of notes receiv- 



1. 



With the face value of any notes re- 



able discounted which have been 





ceivable discounted held by the 



reported by the bank as having 





bank as shown by the balance 



been paid by the signers. (The 





sheet at the time of opening the 



Notes Receivable account is cred- 





books. 



ited at this time.) 



2. 



With the face value of all notes sub- 



2. With any discounted note redeemed 





sequently discounted. (Debit In- 



by the business. (In this case the 





terest account with the amount of 



Notes Receivable account is not 





the discount and Cash account 



affected as the note is still owned 





with the proceeds.) 



by the company.) 







Notes received by the company, especially those received in payment for shares 

 of stock, are frequently discounted at the bank. Such discounted notes represent a 

 contingent liability, for if the makers refuse or are unable to pay, the company dis- 

 countiag them is liable to the bank for their payment. The credit balance of this 

 account indicates the extent of this contingent liability. When all such notes are 

 paid, the contingent liability will disappear from the books. Shares of stock for 

 which notes are taken should be held ag collateral to secure the payment of the notes. 

 In case the note is past due and no notice of payment has been received, it may 

 usually be taken for granted that the note has been paid. 



