BOOKKEEPING FOR GBMN ELEVATORS. 

 Reserve for Doubtful Accounts (11-4). 



23 



Debit: 



Credit: 



1, With, the amount oi" outstanding 



1. Witli tlie amount reserved at the 



accounts found to bo vmcollect- 



time of opening the books as shown 



ible. (('redit Accounts Receiv- 



by the balance sheet. 



able.) 



2. With an amount estimated to cover 





the probable lo.sses due to uncol- 





lectible accounts during the fiscal 





period. (Debit T.oss from Bad 



\, 



Accounts.) 



Any collections made on accounts which have previously been charged off as worth- 

 less should be credited to this account. 



Reserve for Sinking Fund {TI-5). 



Debit: 



Credit: 



1. When funds are disbursed for the 



1. With the amount reserved at the 



purpose for which the reserve has 



time of opening the books as shown 



been created. (Credit Surplus.) 



by the balance sheet. 





2. With the amount reserved during 





the fiscal period for any specific 





purpose. (Debit Surplus.) 



In some States, notably South. Dakota, where the cooperative law is in operation, 

 statutory regulations requires that an amount equal to a certain percentage of the 

 capital invested be set aside each year in a sinking fund, so that the company will be 

 in a position to retire its capital stock at the end of a given period. Companies opera- 

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

 the requirements of their State law. 



A sinking fund may be established for expansion purposes or to pay off mortgages 

 at their maturity. Amounts so reserved should be deposited in a special accoimt and 

 not used as working capital. 



r. NET WORTH. 



Capital Stoch {I-l). 



Debit: 



Credit: 



1. With the par value of shares of stock 



1. With the par value of shares of stock 



retired. 



outstanding at the time of opening 





the books as shown bv the balance 





sheet. 





2, With the par value of shares of stock 





issued subsequently. 



The balance of this account should represent the value at par of all outstanding 

 shares of stock. In case shares are retired at a cost above or below par, the difference 

 will be debited or credited, as the case may be, to Surplus. . 



