ACCOUNTS FOE PRIMARY GRAIN ELEVATORS. 17 
or by writing them into the cashbook. The difference between the 
"bank deposits " and "bank withdrawals" columns, plus the total of 
outstanding checks, should equal the balance as shown in the bank 
pass book. No error, however small, should be ignored in balancing 
cash with the bank. 
RESERVE ACCOUNTS. 
RESERVE FOR DEPRECIATION ACCOUNT. 
In order to show the true condition of the plant a reserve for 
depreciation account is essential. To this account should be credited 
annually a certain percentage of the money invested in the plant, 
and an equal amount should be written off profit and loss. 1 
RESERVE FOR BAD DEBTS ACCOUNT. 
During the operation of a business where credit is given to a large 
number of customers there is likely to be a loss on account of uncol- 
lectible debts. This amount may be small one year and large another. 
For that reason it is well to set aside a sufficient amount of capital 
from the yearly profits to offset such losses. To effect this, "reserve 
for bad debts " should be credited and "profit and loss" debited with 
an amount which experience would dictate is sufficient to take care 
of the uncollectible debts of the company. 
While many elevator companies make a practice of furnishing 
supplies to members and others on credit, all supplies, if possible, 
should be handled on a strictly cash basis. Any system of extending 
unprotected credit requires a large capital and often results in con- 
siderable loss. 
RESERVE FOR SINKING FUND. 
In some States, notably South Dakota, where the cooperative law 
is in operation, a statutory regulation requires that a certain per- 
centage of the capital invested be set aside each year in a reserve for 
sinking fund, so that the company will be in a position to retire its 
capital stock at the end of a given period. Companies operating 
under such conditions should set up a reserve for sinking fund in 
accordance with the requirements of their State laws. 
Where the custom of hedging grain prevails, an account should be 
opened designated " profit and loss on hedging." To this should be 
debited or credited the losses or gains incident to the hedging of grain, 
the opposite entry being made to the commission account handling 
the business. 
1 For further explanation of reserve for depreciation see U. S. Department o f Agriculture Bulletin No. 
178, "Cooperative Organization Business Methods." 
