BULLETIN 865, U. S. DEPARTMENT OF AGRICULTURE. 



It is not intended to carry the inventory of manufactured products currently in 

 the Ledger, although at the time of opening the books it is necessary to show this 

 amount in order to arrive at a true basis of the net worth of the organization. The 

 inventory should include products on hand, and any which may have been shipped 

 on consignment and not paid for by the consignee. If part payment has been made 

 on consigned goods, the amount of this payment should be deducted from the inventory. 



Under cooperative methods of conducting a creamery, distribution is made to 

 tn patrons for all butter, or other product, actually manufactured during a period, 

 whether or not it has all been sold. This necessitates a slightly different accounting 

 for inventories of manufactured products than is used under the ordinary plan of 

 business operations, the amount of the inventories being credited to Sales accounts 

 at the end of the fiscal period, and charged to these accounts at the beginning of a 

 new period, instead of these entries being made in the Purchases accounts. The 

 following Journal entries will illustrate: 



COOPERATIVE CREAMERY. 



Debit. 



$359 Manufactured Products Inventory. 

 Butter Sales 



Credit. 

 ... $350 



To place inventory on books at end of fiscal period before closing books: 

 Debit. Credit. 



$350 Butter Sales. 



Butter Inventory $350 



To close Butter Inventory account at the beginning of the new fiscal period. 



private creamery. 

 Debit. Credit. 



$350 Manufactured Products Inventory. 



Butter Fat Purchases $350 



To place inventory on the books at the end of the fiscal period before closing the 

 books. 



Debit. Credit. 



$350 Butter Fat Purchases. 



Manufactured Products Inventory $350 



To close inventory account at the beginning of the new fiscal period. 



Operating Supplies Inventory (A 7). 



Debit: 



Credit.: 



1. With the cost of all operating sup- 



1. At the close of the period with the 



plies on hand as shown by the Bal- 



cost of all operating supplies used 



ance Sheet at the time of opening 



during the period. 



the books. 



2. With the cost of all supplies sold or 



2. With the cost of all operating sup- 



disposed of in any other manner. 



plies purchased. 





3. With all freight, express, and dray- 





age charges on operating supplies. 





Operal ing Supplies include .sttch items as fuel, oils and greases, packages and liners, 

 butter color, salt, glassware, acid, washing powder, etc. 



An Inventory Reporl (see U. S. Department of Agriculture Bulletin No. 559, p. 11) 

 should be kept at all times. The balance on this report must agree with the balance 

 on this account . 



By reference to the descriptions of the Operating Expense accounts (Nos. M 2 and 

 M3) it is easy to determine what account should be charged with the supplies used. 



