20 BULLETIN 559, U. S. DEPAETMEXT OF AGBICULTTJBE. 



transferred to the operating statement, which is in effect a statement 

 of the income and expense, together with the distribution of the net 

 income. Aside from these entries, the operating statement should 

 record the inventory of butter at the beginning and end of the month. 

 The inventory of butter whT include butter in the refrigerator and the 

 inventoriable balance of butter on consignment, as shown by the 

 footing of the "Balance on consignment" column of Form 2, the 

 ■ "Record of shipments on consignment." When necessary, inventories 

 of cream, milk, and buttermilk may also be shown, but as a rule 

 this is not done. The addition of the several items of income result 

 in a portrayal of the gross amount distributable. It will be noted that 

 prepaid express, which is express on outbound products, is deducted 

 from the income in order that the net value at the creamery may be 

 shown. By deducting the various expense accounts from the gross 

 amount distributable, the balance for distribution is ascertained. 

 The balance for distribution is used as a basis for figuring the price 

 per pound to be paid for butter fat. The figures representing the 

 distribution to patrons are derived from the totals shown by the 

 various columns of the patrons settlement sheet. Should the amount 

 distributed not equal the balance for distribution there will be a sum 

 left over, which is represented by the "Undistributed balance." After 

 the operating statement is completed, a journal entry should be made 

 in conformity with the example shown below. (See also Form 6, 

 pp. 29-31.) 



Dr. Cr. 



Butter fat purchased $916. 15 



Current overdrafts 5. 10 



To patrons accounts payable $639. 40 



Butter, patrons 187. 60 



Cream, patrons 3. 20 



Cottage cheese, patrons 1. 35 



Supplies, etc., patrons 4. 90 



Hauling, patrons 75. 30 



Previous overdrafts 3. 20 



Undistributed balance 6. 30 



(Credit to "Butter fat purchased" account.) 



It will be noted that butter fat purchased has a debit of $916.15 

 which is the amount of the balance for distribution, and a credit of 

 $6. 30. The "Undistributed balance" is journalized and earned to 

 the credit of the "Butter fat purchased" account, in order that the 

 account may show all transactions in butter fat which have taken 

 place during the month. The credit item to this accoimt represents 

 the butter fat value which is undistributed and is therefore subject 

 to distribution in the next month's operation. It has been the 

 custom in some creameries to hold the books open until a date in the 

 succeeding month when sufficient cash was on hand to make payments 

 to patrons. This practice has resulted in considerable confusion 



