8 BULLETIN 865, U. S. DEPARTMENT OF AGRICULTURE. 
It is not intended to carry the inventory of manufactured products currently in 
the Ledger, although at the time of opening the books it is necessary to show this 
amount in order to arrive at a true basis of the net worth of the organization. The 
inventory should include products on hand, and any which may have been shipped 
on consignment and not paid for by the consignee. If part payment has been made 
on consigned goods, the amount of this payment should be deducted from the inventory. 
Under cooperative methods of conducting a creamery, distribution is made to r 
to patrons for all butter, or other product, actually manufactured during a period, 
whether or not it has all been sold. This necessitates a slightly different accounting 
for inventories of manufactured products than is used under the ordinary plan of 
business operations, the amount of the inventories being credited to Sales accounts 
at the end of the fiscal period, and charged to these accounts at the beginning of a 
new period, instead of these entries being made in the Purchases accounts. The 
following Journal entries will illustrate: 
COOPERATIVE CREAMERY. 
DEBIT. CREDIT. 
$350 Manufactured Products Inventory. 
Buiter Saless ai ao: - oscas seers Scie ee ee $350 
To place inventory on books at end of fiscal period before closing books: ‘ 
DEBIT. CREDIT. 
$350 Butter Sales. 
Butter: Inwentony 7552) 2a cee. oe en oe eee $350 
To close Butter Inventory account at the beginning of the new fiscal period. 
PRIVATE CREAMERY. 
DEBIT. CREDIT. 
$350 Manufactured Products Inventory. 
‘Butter Hat Burchaseses 10. ee ee ene $350 
To place inventory on the books at the end of the fiscal period before closing the 
books. 
DEBIT. CREDIT. 
$350 Butter Fat Purchases. 
Manufactured Products Inventory..--........-.- $350 
To close inventory account at the beginning of the new fiscal period. as 
OPERATING Suprries INVENTORY (A7). 
DEBIT: CREDIT: 
1..With the cost of all operating sup- 1. At the close of the period with the 
plies on hand as shown by the Bal- cost of all operating supplies used 
ance Sheet at the time of opening during the period. 
the books. 2. With the cost of all supplies sold or 
2. With the cost of all operating sup- disposed of in any other manner. 
plies purchased. 
3. With all freight, express, and dray- 
age charges on operating supplies. 
— 
Operating Supplies include such items as fuel, oilsand greases, packages and liners, 
butter color, salt, glassware, acid, washing powder, etc. 
An Inventory Report (see U. 8. Department of Agriculture Bulletin No. 559, p. 11) 
should be kept at all times. The balance on this report must agree with the balance 
on this account. 
By reference to the descriptions of the Operating Expense accounts (Nos. M2 and 
M3) it is easy to determine what account should be charged with the supplies used. 
