CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. 

 P. APPROPRIATION ACCOUNTS. 



Dividend Appropriation (PI). 



31 



Debit: 



Credit: 



1. At the close of the period with the 



1. With the debit balance at the close 



proportion of annual dividend 



of the fiscal year. (Debit Loss 



chargeable to the period. (Credit 



and Gain.) 2 



Reserve for Dividends Payable.) 





For further discussion, see Reserve for Dividends Payable, page 18. 

 Sinking Fund Appropriation (P2). 



Debit: 



Credit: 



1. With the amounts deducted from 



L With the debit balance at the close 



gross income as authorized by the 



of the fiscal year. (Debit Loss 



by-laws or "Dy order of the Board of 



and Gain.) 2 



Directors. (Credit Sinking Fund 





Reserve.) 





For further discussion, see Sinking Fund Reserve, page 19. 



TRIAL BALANCE. 



While the Trial Balance is not a financial statement, it serves to prove the postings 

 of the entries to the Ledger from the books of original entry. It is a summary of the 

 various balances as they appear in the Ledger and should be drawn off before closing 

 the Expense and Income accounts into the Loss and Gain account. If no mistake 

 lias been made in posting to the Ledger, the total of the debits will equal a total of the 

 credits. A trial balance should always be taken at the end of every period and all 

 errors should be located and corrected at once. 



CLOSING THE BOOKS. 



Preparatory to closing the books, an inventory should be taken of all supplies on 

 hand and should be written up in permanent form. With it should be included a 

 schedule of expense items, such as postage, stationery, and supplies on hand, and of 

 the unconsumed balances of such accounts as Prepaid Insurance and Prepaid Taxes. 



The balances of all Expense, Income, and Purchase accounts should be transferred 

 to the Loss and Gain account in order to ascertain the net income or loss for the 

 season's operation. The accounts should then be ruled, and the balance brought 

 down. This balance is the net income for the year. Against this net income should 

 then be charged the balances of the Dividend Appropriation and Sinking Fund 

 Appropriation accounts. The balance of the Loss and Gain account should then be 

 transferred to the Surplus account. 



After the books are closed and a post-closing Trial Balance has been taken to prove 

 the mechanical accuracy of the work, the various financial statements are made up for 

 presentation to the Board of Directors. 



2 Care should be exercised that this balance be transferred to Loss and Gain only after the net income 

 has been determined, as shown by the form illustrated on page 35 and 36. 



