ACCOUNTING RECORDS FOR COUNTRY CREAMERIES, 17 
a 
count and charged to the corresponding ‘‘Expense’’ account. Butter, 
milk, cream, and cottage cheese, which may be on hand, should not 
‘be carried in accounts in the ledger, as it is the intention to make a 
complete distribution to patrons for goods of this nature which may 
be on hand at the end of the month. However, if manufactured 
goods be on hand at the end of the year when the bocks are closed, 
they should be inventoried. These accounts should then be closed 
and the balance carried forward to the “Operating statement’’ for 
the first month of the succeeding ycar. For example, in the case of 
butter, this may be accomplished by debiting ‘ Butter inventory”’ 
and. crediting ‘ Butter sales,’’ thus setting up an asset of butter on 
hand and showing the amount of income derivable from it. Upon 
opening the books for the following year a reverse entry should be 
made, crediting ‘Butter inventory”? and charging “Butter sales,’’ 
thereby replacing the butter upon the “Operating statement’’ and 
debiting the sales for the following vear, since credit has been taken 
for the value of this butter in the sales of the year just closed. Other 
expense accounts may occur aside from those derived from usage of 
inventoriable material and these will include such as salaries, office 
expense, depreciation, bad debts, insurance, repairs, and miscella- 
neous expense, all of which are derived from entries made in the cash 
journal. 
INCOME ACCOUNTS. 
Since the income of a creamery is secured from the sale of butter, 
cream, milk, cottage cheese, and other dairy products, the ledger 
should carry accounts showing the amount of sales creditable to each 
of these, and these accounts should be debited with any allowances 
made to customers. 
CAPITAL, PROPERTY, AND RESERVE ACCOUNTS. 
An account should be provided showing the capital stock outstand- 
ing, or the portion of the capital which is used or is available for the 
working of the business, as well as accounts showing the value of 
plant, machinery, and real estate. Since there are certain wastages 
taking place in the operation of a busmess which are not directly con- 
trollable by the management, it is necessary to set up such accounts 
as “Reserve for depreciation on buildings,’ ‘‘ Reserve for deprecia- 
tion on machinery and equipment,’’ ‘Reserve for sinking fund,’’ 
“Reserve for bad debts,’ and for such other accounts as may be 
required. 
F ' RESERVE FOR DEPRECIATION, 
It is estimated that the depreciation on a brick building is from 
2 to 3 per cent per year and upon a frame building about 5 per cent. 
Creamery managers, therefore, should be careful to deduct a monthly 
| 92644°—Bull. 559173 | 
