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LIVE-STOCK SHIPPING ASSOCIATIONS. ~ 19 
The insurance fund account will usually show an excess of credits 
over debits, in which case the balance indicates that more has been 
reserved than actually paid because of losses. 
Such a credit balance is a liability from the point of view of the 
association, as it represents deductions from returns due members 
in excess of the needs for insurance purposes. In a sense, this excess 
is held in trust for the members and in case of dissolution would be 
prorated back to them. 
As the financial strength of an association depends to a considerable 
extent upon its ability to meet ordinary losses promptly without bor- 
rowing, it is important that a conservative credit balance be maintained 
in the insurance fund account. After a balance of several hundred 
to a thousand dollars (depending on the volume of business and other 
conditions) has been accumulated, the charge for insurance should 
be reduced to a point which will maintain the desired balance in 
the fund. The practice of some associations of drawing on the in- 
surance fund for overhead and miscellaneous expenses is not to be 
commended, as the protection to members is likely to be impaired 
by an undue drain on this account. Where the membership fees 
are not adequate, special provision should be made for meeting over- 
head expenses. This may be done either by making a separate de- 
duction from the proceeds of shipments for this purpose or, when 
a lump deduction is made for all purposes in general, by dividing 
the total deduction into two parts, one to be specifically reserved for 
insurance purposes and the other for overhead expenses. In order 
to avoid the possibility of using the insurance funds for purchases 
of equipment or otherwise rendering it unavailable for the payment 
of losses, some associations set aside the cash reserved for insurance 
in a separate deposit account in the bank, or even invest part of it 
in securities of a readily salable sort. 
LOCAL CAR EXPENSE. 
Debit : Credit : 
(1) With amounts paid for feed, bedding, | (1) With deductions from proceeds from 
partitions and other materials used sales of live stock to cover any ex- 
in preparing cars for shipment. pense incurred in preparing cars for 
shipment, imecluding local feed, bed- 
ding, partitions, rope, nails, etc. 
The local car expense account will balance provided the deductions 
from returns exactly equal the expenses incurred in preparing cars 
for shipment. It happens sometimes, however, that supples, such 
as feed, bedding, or lumber for partitions, are bought in quantities 
and charged against the shipments for which they are used. In 
such cases, the “ payments” (debits) at a given time will exceed the 
“ deductions” (credits) and the balance will represent the value 
of unused supplies on hand. 
UNDIVIDED BALANCE. 
Debit: Credit: 
(1) With losses on shipments when more } (1) With gains on shipments when less is 
is distributed than the actual bal- distributed than the actual balance 
ance available for distribution. available for distribution, 
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