~ 
36 BULLETIN 985, U. S. DEPARTMENT OF AGRICULTURE. 
must be kept constantly in mind, namely: (1) No entries are to be 
made direct to the ledger, but must be posted from original entries 
in the journal; (2) the equality of the debits and credits of each page 
of the various journal forms must be proved before any figures are 
either carried forward or posted to the ledger. It follows, then, that 
if the journal pages are proved to be in balance and the entries are 
correctly posted the ledger also must balance. In order to prove 
whether or not the equality of the debits and credits has thus been 
maintained, a trial balance must be taken of the ledger at the end 
of each month. A trial balance consists of a schedule of the open 
accounts in the general ledger showing in one column the debit 
balances and in another column the credit balances of the accounts. 
The footings of the two columns must be equal. A stock form of 
trial balance book should be obtained for the permanent preserva- 
tion of the monthly trial balances. 
After the trial balance has been completed it is necessary to ‘‘close 
the books” and to prepare a balance sheet and an income and expense 
statement in order to ascertain the results of the period’s operations 
and the financial position of the company. 
CLOSING THE BOOKS. 
By the expression ‘‘closing the books” is meant the process of 
balancing all income and expense accounts by transferring . their 
balances to the loss and gain account. After this has been done, 
the only open accounts to be found in the ledger are the balance- 
sheet accounts which represent the assets and liabilities of the 
company. 
Preparatory to closing the books, it will be necessary to make the 
following schedules:* 
Seed cotton on hand—unginned......--- List showing quantity, kind, grade, and 
price. gece er 
Corton seed on-hatids +2226 50-22 sa ree List showing quantity, kind, condition, 
and price. 
Cotton on hand—ginned.........--..---- List showing quantity, class, grade, and 
DELICE. 5 
arsine Of Nang. eS ee eer ae See List showing quantity and cost. 
TCS ON MAMG ere eo rn eae en eee List showing quantity and price. 
Accrued interest on notes receivable ?... List by name of drawer, date, time to run, 
: interest rate, and amount of note. (See 
discussion, p. 21). 
Insurance premiums unexpired at the List by policy number, date, property 
end of the period. covered, time, and amount of premium 
unexpired. 
Unused stationery and printing.......... ‘List by quantity, kind, and value. (See 
account No. Ol). 
Accrued salaries and wages. ...-...-..--.- List by name, time, and wage rate. 
Meeried rent andy taxes 2) Serer ees List by name, time, and rate. 
Accrued interest on notes payable?._._... List by name of payee, date, time to run, 
interestrate, amount of note. 
1 These schedules are called ‘‘inventories.”’ - 
2 In some cases there may be some notes receivable on hand, or notes payable outstanding. Itis then ~ 
necessary to compute the accrued interest on each class, and open two new accounts, captioned, respec- 
tively, ‘‘ Accrued interest on notes receivable” and ‘‘Interest accrued on notes payable.” The following 
journal entries would then be made: * 
000 Interest accrued on notes receivable. 
Sundry INCOMe sb oe BS LES Ni ee ee Pepe tees ee ae C00 
Toset up asincome and asset the earning ofinterest not yet received in cash. 
060 Miscellaneous expense. 
‘A cerued interest on notes payables! s A 1 F aie Ill Fee ee eee 0co 
To place on the books the expense for interest, not yet paid. 
