18 BULLETIN S65, U. S. DEPARTMENT OF AGRICULTURE. 



Reserve for Depreciation" ox Motor Vehicles (E2 1 . 



Debit: 



1. With the book value of 

 discarded or replaced 

 equipment. 



any 



by 



item 

 new 



Credit: 



1 . With the amount of reserve as shown 



by the Balance Sheet at the time 

 of opening the books. 



2. At the close of the period with the 



proportion of annual loss resulting 

 from wear, tear, or obsolescence. 



3. With the amount received from the 



sale of scrapped or discarded 

 equipment. 



It is suggested that a rate of not less than 25 per cent be charged off annually. 

 Reserve for Depreciation on Plant (H 3). 



Debit: 



Credit: 



1. With the book value of any item 



1. With the amount of reserve as shown 



discarded or replaced by new 



by the Balance Sheet at the time 



equipment. 



of opening the books. 





2. At the close of the period with the 





proportion of annual loss due to 





wear, tear, and obsolescence. 





3. With the amount received from the 





sale of any disacrded or scrapped 





material. 



Owing to the conditions existing in some types of plants and to the peculiar nature 

 of the work involved, the wear and tear on equipment is excessive. Special consid- 

 eration should be given to these plant conditions in order that adequate reserves for 

 depreciation may be provided. 



In an organization where a more detailed segregation of accounting data is desired, 

 this account should be replaced by a separate account showing reserves for deprecia- 

 tion on buildings, machinery, equipment, etc. 



Reserve for Dividends Payable (H 4). 



Debit: 



Credit: 



1. At the time of payment with the 



1. At the close of the period with the 



total of checks paid to the stock- 



proportion of the annual dividend 



holders as dividends. 



to the stockholders. 





(Debit Dividend Appropriation.) 



It can he readily understood that those stockholders who have loaned their money 

 to the organization, taking certificates of stock as security thereon, are entitled to be 

 reimbursed for the use of their money, and in many instances this reimbursement is 

 authorized by the by-laws. However, only those stockholders whose subscriptions 

 have been fully paid should receive any share of the dividend payment. A periodical 

 entry should be made as follows: 



Debit. Credit. 



$50. Dividend Appropriation. 



Dividends Payable $50. 



(To set aside an amount to be used 

 in paying dividends at the close 

 of the fiscal year.) 



