CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. 265 
There aretwo distinct methods of settling with patrons for deliveries of butter fat. 
The first method is to pay according to the market quotations regardless of operating 
expense; the second is to pay the patrons the entire net income, that is, the total 
- receipts from product, less the total expense. The second method is to be followed 
in nearly all cooperative creameries. 
In creameries following the first procedure, the periodical debit to butter-fat pur- 
chases will be the total of deductions for butter delivered to patrons for hauling, for 
supplies sold to patrons, for collections on notes, etc., as well 2s payments in cash or 
by check, as shown by the recapitulation of patrons’ vouchers on the Patrons’ Settle- 
ment Sheet. 
Suppose that the Patrons’ Settlement Sheet at the close of the period shows: 
AUMO MING COnbespatdsbyrcheek...). 5 eee h a 5 eres crac Peale $9, 500 
BULLET SAIES LORD ALRONS 55 sccm 2S i oer. epee etre Lata Sasser ie a 450 
SUpwlaecsOldgOnpatlODs <-> 45 note cre Sees aeine os Se ce eio oa ce 40 
The entry would be: 
DEBIT. CREDIT. 
$9,900. Butter Fat Purchases. 
Patrons’ Accounts Receivable—Butter Sold........ $490 
ANCCOUNtSspayaDlepeatronsi =. saci hey ees 9, 500 
The procedure under the second method is fully described on page 20, U. S. De- 
partment of Agriculture Bulletin 559, ‘‘Accounting Records for Country Cream- 
eries.’’ However, it has been found desirable to substitute for the account Patrons’ 
Overdrafts, the account Patrons’ Accounts Receivable, operation of which is des- 
cribed on page 7 of this bulletin. 
Tn some creameries any balance undistributed is allowed to accumulate and is 
distributed at a later date in the form of a patronage dividend.- When thisis done, the 
_ undistributed balance should be credited to an account captioned Patronage Dividend 
account and should not be carried forward to the next Operating Statement. 
A patronage dividend is in reality a deferred payment and is advised against, 2s it 
necessitates considerable clerical labor, with no apparent advantage. The Patronage 
Dividend account would be closed by debit, and the corrésponding credit to the 
Bank account. 
The Undistributed Palance account is not raised in the Ledger, inasmuch as it is 
immediately closed by a debit, the corresponding credit being carried to Butter Fat 
Purchases. 
However, in preparing a Balance Sheet, such undistributed balance should beshown 
as a part of the abilities asillustrated on page 34. 
Sxim Mitx PurcHasss (L 2). 
DEBIT: CREDIT: 
1. With the amount due patrons for 1. With the debit balance at the close 
skim milk purchased during the of the fiscal year. (Debit Loss 
period. and Gain.) 
UNDERPAYMENTS AND OVERPAYMENTS (L 8). 
DEBIT: CREDIT: 
1. With the amount paid to patrons on 1. With the amount received from pa- 
account of errors in vouchers. trons on account of errors in 
vouchers. ; 
