20 BULLETIN 559, U. S. DEPARTMENT OF AGRICULTURE. 
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 mventory of butter will mclude butter in the refrigerator and the 
inventoriable balance cf 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. 
Biller tat purenased 260) Sa oe) pina Uae oe ee $916.15 
LAREN OVCTORAMB s: e es 2. SESE Jo a ee te ee eee 5.10 
fo patroas mceounis payables —— ou. 2S 32 Set Soe Se Se eee eee $639. 40 
Butter; patrons). . 52st 24% - aati js ld Sle See SS ee 187. 60 
Greamiypatrons: 2, deiss $422.32) . Seo 2 ee ee 3. 20. 
Cottarerchesse “patnonss fet. nn 2 2 spe ee ne ss e eeee =e 1.35 
Slippies Jebe:, patrons =. oS oor. apes. ee ee ae 4.90 
eiagivs: qetirone es. 2 he ee et ee ee pe ee ee 79. 30 
PXCVIGHEOVCTOTAME ene eee han spies Mes se beas os ee eee 3. 20 
Undistubuted balance: 24050 1.002 lt ON Re sit ee eee 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 carried 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 account 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 creamerics 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 
