CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. 18 
Accounts PAYABLE (F 2). 
DEBIT: CREDIT: 
1. With payment on account. 1. With amounts due creditors on open 
2. With purchased goods returned for accounts at time of opening the 
~ credit. books as shown by the Balance 
: 3. With allowances on purchases. - Sheet. 
4, With cash discount on purchases. 2. With the invoice value of merchan- 
dise purchased on credit. (Debit 
the various Inventory or Expense 
accounts. ) 
Separate accounts should be opened for firms with which a large credit business is 
conducted currently. Miscellaneous accounts payable may be handled in one account 
under the caption Miscellaneous Accounts Payable. 
It is not the intention to carry individual Ledger accounts with all the various 
creditors, owing to the fact that in many cases only a single purchase will be made 
is from one concern and that practically all invoices will be paid during the period. 
Care must be exercised when entering checks to ascertain whether they should be 
charged to accounts payable when goods are purchased on credit, or to an inventory 
oz expense account when goods are purchased for cash. 
When the invoice has been credited to Accounts Payable, the check given in pay- 
ment must be charged to Accounts Payable. As the canceled check is a sufficient 
receipt, it is suggested that invoices be stamped ‘‘ Paid —--_—_—_, 19—,,’’ and filed 
alphabetically for future reference. 
A method preferable to that just described, especially for larger organizations, is 
the use of a voucher payable register, description of which may be found in most books 
on accounting. 
AccCOUNTS PAYABLE Patrons (F 3). 
1. With the amount paid patrons by 1. With the net amount due patrons as 
<a cash or check. shown by the Balance Sheet at 
| the time of opening the books. 
| 2. At the close of the period with the 
| net amount due patrons for deliv- 
Desir: CREDIT: 
; eries during the period. 
The liability to patrons will be closed at the time payment is made by a debit to 
| Accounts Payable Patrons, the corresponding credit being made to Cash or Bank 
Account. 
At the time of opening the books, it may occasionally be impracticable to determine 
the actual amount due the patrons, but this should be estimated as closely as possible, 
set up asa liability, and then any difference between the estimated and actual amounts 
should be charged or credited to Surplus Adjustment account. Example: If the 
estimated amount were $1,350 and the actual amount proved to be $1,410, the Journal 
entry at the time of payment would be: 
DEBIT. CREDIT. 
$1, 035 Account Payable Patrons. 
60 Surplus Adjustment account. 
Bank Account..... Siavetarsietele singin cieiseet $1, 410 
