16 BULLETIN 236, U. S. DEPARTMENT OF AGRICULTURE. 



cobs sold are subtracted from cob corn. The net expense is then 

 ascertained from these subtractions. 



The total net expense being 100 per cent, the percentage of net 

 expense of each kind of grain and merchandise will be determined as 

 being the relative percentage of each to the total. The net unit cost 

 of operation is determined by dividing the amount of expense by the 

 number of bushels handled. The net unit cost in this operation 

 would be in terms of cents or decimals of a cent. In the case of sales 

 of coal and other merchandise the net unit cost of operation is repre- 

 sented by a certain percentage, as, for instance, 5 per cent of the gross 

 sales, this percentage being determined by dividing the net expense 

 by the value of goods sold. 



BALANCING CASH WITH THE BANK. 



To determine the correctness of the cash transactions for the 

 month the following method will be found simple and adequate: 



(1) Determine whether the "bank deposit" column agrees with 

 the bank pass book as to individual deposits. Be sure that it is cor- 

 rectly footed. 



(2) Sort the returned vouchers, arranging them consecutively. 

 Compare them with the entries in the "bank withdrawals" column 

 and ascertain which, if any, are missing. List the n ambers and 

 amounts of all outstanding checks for the next month's reference. 

 Outstanding checks may be listed either on an adding-machine tape 

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

 "bank deposits" and "bank withdrawals" columns, 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. 1 



RESERVE FOR BAD DEBTS ACCOUNT. 



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

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

 lectible debts. 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 



i For further explanation of reserve for depreciation see U. S. Department of Agriculture Bulletin No. 

 178, "Cooperative Organization Business Methods." 



