16 BULLETIN" 236, U. S. DEPARTMENT OF AGRICULTURE. 
cobs sold are subtracted from cob corn. The net expense is then 
ascertained from these subtractions. 
The total net expense being 100 per cent, the percentage of net 
expense of each kind of grain and merchandise will be determined as 
being the relative percentage of each to the total. The net unit cost 
of operation is determined by dividing the amount of expense by the 
number of bushels handled. The net unit cost in this operation 
would be in terms of cents or decimals of a cent. In the case of sales 
of coal and other merchandise the net unit cost of operation is repre- 
sented by a certain percentage, as, for instance, 5 per cent of the gross 
sales, this percentage being determined by dividing the net expense 
by the value of goods sold. 
BALANCING CASH WITH THE BANK. 
To determine the correctness of the cash transactions for the 
month the following method will be found simple and adequate: 
(1) Determine whether the "bank deposit' 1 column agrees with 
the bank pass book as to individual .deposits. Be sure that it is cor- 
rectly footed. 
(2) Sort the returned vouchers, arranging them consecutively. 
Compare them with the entries in the "bank withdrawals" column 
and ascertain which, if any, are missing. List the numbers and 
amounts of all outstanding checks for the next month's reference. 
Outstanding checks may be listed either on an adding-machine tape 
or by writing them into the cashbook. The difference between the 
"bank deposits" and "bank withdrawals" columns, plus the total of 
outstanding checks, should equal the balance as shown in the bank 
pass book. No error, however small, should be ignored in balancing 
cash with the bank. 
RESERVE ACCOUNTS. 
RESERVE FOR DEPRECIATION ACCOUNT. 
In order to show the true condition of the plant a reserve for 
depreciation account is essential. To this account should be credited 
annually a certain percentage of the money invested in the plant, 
and an equal amount should be written off profit and loss. 1 
RESERVE FOR BAD DEBTS ACCOUNT. 
During the operation of a business where credit is given to a large 
number of customers there is likely to be a loss on account of uncol- 
lectible debts. This amount may be small one year and large another. 
For that reason it is well to set aside a sufficient amount of capital 
from the yearly profits to offset such losses. To effect this, "reserve 
for bad debts" should be credited and "profit and loss" debited with 
i For further explanation of reserve for depreciation see U. S. Department of Agriculture Bulletin No. 
178, "Cooperative Organization Business Methods." 
