34 BULLETIN 381, U. S. DEPARTMENT OF AGRICULTURE. 
The advantages of first journalizing the items to be posted are 
(1) that the entries may be checked and approved by the proper 
authority before posting; (2) it facilitates the preparation of the trial 
balance and statement, and (3) it is a very great assistance to the 
auditor. The trial balances and statements should also be copied in 
the Journal. Form 19 illustrates the use of the Journal. 
During the progress of the business, certain adjustments and cor- 
rections must be made which can not properly be made through the 
Cashbook. Such entries are made in the Journal. For example, if it 
is found advisable to exchange a surplus of coal which previously was 
charged to expense, an entry is made in the Journal with suitable 
explanations and detail. A temporary settlement for a bill of mer- 
chandise by a customer may be made by a note. At the end of the 
year the totals for the different columns in the Cash Receipts Sum- 
mary are journalized, the items in the " unclassified" column being 
segregated and posted to the proper accounts. A similar entry is 
made for the cash payments. 
At the end of the year, in order to find the progress of the business, 
the books are closed. According to the Manager's Report (Form 7), 
the inventory of merchandise is $14,900; accrued interest on bills 
receivable, $31; office supplies, $20; and two liability inventories — 
accounts payable, $1,600, and accrued interest on bills payable, $21. 
The proper entries are made in the Journal and posted as follows : 
Inventory $14, 951. 00 
Merchandise $14, 900. 00 
Interest 31. 00 
Expense 20. 00 
Merchandise 1, 600. 00 
Interest 21. 00 
Inventory 1, 621. 00 
In order to find the profit on Trading, this account is opened and 
charged with the different items of cost and credited with the sales. 
The charges and credits are identical with the items in Form 7, II A. 
In fact, the Trading Account contains the same facts as the state- 
ment, but in ledger form. 
Journal entries are then made to transfer the Net Profit from the 
Trading Account and the different profit and loss accounts to the 
Profit and Loss account. This is identical in content with Form 7, 
II B. 
A Balance Sheet is now taken from the ledger, which is practically 
identical with Part I of the Manager's Report. 
In order to open the books for the next year's business, the net 
profit is transferred to the Surplus account by means of a journal 
entry. The Inventory account is closed by a journal entry, which is 
the reverse of the closing inventory entry above. 
