CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. 15 



Collections on Notes Discounted (F 5). 



Debit: 



Credit: 



1. With the amount paid to the bank 



1. At the end of the period with the 



to liquidate Notes Receivable 



total amount deducted from pa- 



Discounted. 



trons' vouchers applying on Notes 





Receivable which have been 





discounted. 



In organizing a new association, notes are frequently accepted in payment for 

 subscription to capital stock, and then discounted at the bank, the proceeds being 

 used for the purchase of necessary equipment. In payment of these notes a certain 

 amount is deducted from the patrons' vouchers each period, and these collections 

 should be paid to the bank to apply on patrons' notes receivable which have been 

 discounted. In such cases the following Journal entry should be made: 



Debit. . Credit. 



$100 Collections on Notes Discounted. 



Bank Account $100' 



(For payment to Blank Bank of collections received to 

 date on patrons' notes discounted.) 



It will be evident that when the total of the payments to the bank for patrons' notes 

 previously discounted equals the total of the face value of such notes, this liability 

 will have been liquidated and the canceled notes should be returned to the organiza- 

 tion or to the various makers. At this time an entry should be made debiting Notes 

 Receivable Discounted and crediting Notes Receivable. 



Such creameries deduct a certain fixed amount per pound on products delivered by 

 the patrons during the period, the amount so deducted being applied on the payment 

 of the notes. It is preferable to make this deduction in even dollars — $1, $3, etc. 



Accounts Payable Haulers (F 6). 



Debit: 



Credit: 



1. With the amount paid haulers. 



1. With the amount due haulers as 





shown by the Balance Sheet at 





the time of opening the books. 





2. With the amount due haulers for 





services during the period. 





(This amount is deducted from the 





patrons' vouchers.) 



In some creameries the patrons employ haulers to deliver their product, the cream- 

 ery paying the hauler, and later this payment is deducted on the patrons' vouchers. 

 Such disbursements do not constitute an operating expense to the organization. When 

 the creamery makes no charge to the patrons the hauling becomes an operating expense 

 and should be handled as any other expense account. (See p. 26.) 



