ACCOUNTING RECORDS FOR COUNTRY CREAMERIES. 17 



count and charged to the corresponding "Expense" account. Butter, 

 milk, cream, and cottage cheese, which may be on hand, should not 

 be carried in accounts in the ledger, as it is the intention to make a 

 complete distribution to patrons for goods of this nature which may 

 be on hand at the end of the month. However, if manufactured 

 goods be on hand at the end of the year when the books are closed, 

 they should be inventoried. These accounts should then be closed 

 and the balance carried forward to the "Operating statement" for 

 the first month of the succeeding year. For example, in the case of 

 butter, this may be accomplished by debiting "Butter inventory" 

 and crediting "Butter sales," thus setting up an asset of butter on 

 hand and showing the amount of income derivable from it. Upon 

 opening the books for the following year a reverse entry should be 

 made, crediting "Butter inventory" and charging "Butter sales," 

 thereby replacing the butter upon the "Operating statement" and 

 debiting the sales for the following year, since credit has been taken 

 for the value of this butter in the sales of the year just closed. Other 

 expense accounts may occur aside from those derived from usage of 

 inventoriable material and these will include such as salaries, office 

 expense, depreciation, bad debts, insurance, repairs, and miscella- 

 neous expense, all of which are derived from entries made in the cash 

 journal". 



INCOME ACCOUNTS. 



Since the income of a creamery is secured from the sale of butter, 

 cream, milk, cottage cheese, and other dairy products, the ledger 

 should carry accounts showing the amount of sales creditable to each 

 of these, and these accounts should be debited with any allowances 

 made to customers. 



CAPITAL, PROPERTY, AND RESERVE ACCOUNTS. 



An account should be provided showing the capital stock outstand- 

 ing, or the portion of the capital which is used or is available for the 

 working of the business, as well as accounts showing the value of 

 plant, machinery, and real estate. Since there are certain wastages 

 taking place in the operation of a business which are not directly con- 

 trollable by the management, it is necessary to set up such accounts 

 as "Reserve for depreciation on buildings," "Reserve for deprecia- 

 tion on machinery and equipment," "Reserve for sinking fund," 

 "Reserve for bad debts/' and for such other accounts as may be 

 required. 



RESERVE FOR DEPRECIATION. 



It is estimated that the depreciation on a brick building is from 

 2 to 3 per cent per year and upon a frame building about 5 per cent. 

 Creamery managers, therefore, should be careful to deduct a monthly 

 92644°— Bull. 559—17 3 



