Account No. 13-Labels Stock Account

Debit this account with the inventory value of labels on hand at the beginning of the fiscal year and with the cost of all labels purchased during the year, including freight and drayage. Also with all label allowance to buyers of canned goods when the allowance is given for unlabeled goods or for buyers labels used.

Credit the firm from whom the labels were purchased, or the buyer for label allowance.

At the close of the year take an inventory of labels on hand and Credit label stock account, 13, with the balance after deducting the inventory. value. Debit labels used, 119.

When closing the books for the year Credit the account "by inventory" in red ink. Balance and rule the account. Reopen by carrying forward the value of inventory to the debit side in black ink.

Closing Entry: Balance sheet. Current assets. Inventory. Stock accounts. Factory materials and supplies.

Account No. 14-Paste Stock Account

Same explanation as account No. 9.

Account No. 15-Box Stock Account

Divide this account into sub-accounts for each different size boxes. These sub-accounts should correspond to those of account, 121.

Debit the proper sub-account with inventory value of boxes and shook on hand at the beginning of the fiscal year. Also with the cost of all boxes and shook purchased during the year including freight and drayage. Also with all labor engaged in making boxes as itemized in the labor distribution book.

Credit the firm from whom the boxes or shook were purchased.

At the close of the fiscal year take an inventory of all boxes and shook on hand giving value of each size inventoried. Then: Credit box stock account, 15, with the balance after deducting the inventory value.

Debit boxes used, 121.

When closing the books for the year Credit this account "by inventory" in red ink. Balance and rule the accounts. Reopen by carrying forward the inventory value to the debit side of the account, in black ink.

Closing Entry: Balance sheet. Current assets. Inventory. Factory material and supplies.

Account No. 16-Nails, Strapping and Silicate Stock Account

Subdivide this account into 16A, nails; 16B, strapping; 16C, silicate. Same explanation as account 9.

Account No. 17-Employees Supplies

Debit this account with the cost of all purchases of supplies that are to be sold to the employees, such as caps, gowns, uniform, gloves, fruit knives, spoons, pitters, etc., and credit the firm from whom purchased, or cash, 2, if a cash transaction.

At the close of the fiscal year take an inventory of employees supplies giving inventory value of each item. If the inventory does not agree with the balance as shown by the ledger account then transfer, by journal entry, such profit or loss to factory overhead expense, 140.

Closing Entry: Balance sheet. Current asset. Employees supplies. Inventory.

Account No. 18-Notes Receivable

On all deferred accounts receivable take short term notes from the debtor and Debit notes receivable, 18, Credit the debtor.

This will balance the debtors account in the ledger. List all notes receivable in the notes receivable ledger and as payments are made to apply in the notes: Credit notes receivable, 18, by cash book entry. If cash payment is made, or if the payment is made in green produce, reopen the debtors ledger account by journal entry: Debit green produce, 105, and Credit the debtor. Then transfer such credit to his notes receivable by journal entry. Debit the debtor and Credit notes receivable, 18, with the amount transferred.

When the credit is made the note should be endorsed with the amount and date. Also enter record in notes receivable book.

Credit interest received, 138, with all interest received on notes receivable. Endorse the note with payments of interest and the day on which the payment is made and record in notes receivable book.

Closing Entry: Balance sheet. Current assets. Notes receivable. Account No. 24—Land and Improvements to Land, Investments

Debit this account with the cost of all land and with all new improvements to the land. These charges will include the first cost of the land, the cost of surveying, examination of title, recording fees, commissions, cost of all permanent improvements which result in increasing the value of the land such as street work, sewers, sidewalks, planting and care of trees, boring wells for water supply, etc.

There are some firms who charge these minor improvements to general expense in order that such costs can be deducted from income in tax returns. This practice, however, should be condemned.

Credit this account with the cost value of any land sold. Should the proceeds from the sale be greater, or less, than the original cost, the difference should be transferred to surplus adjustment, 99. Land owned, or acquired, which is not in any way used in connection with the operations of the business should be carried as an investment in account No. 68. The balance of the account should represent the cost value of land and land improvements used in the operation of the business.

Closing Entry: Balance sheet. Fixed assets. Land and improvements to land.

Account No. 25—Buildings and Improvements to Buildings

This account should be subdivided so as to carry a separate account with each building comprising a unit of the plant such as factory building, tomato building, administration building, welfare building, warehouse building, cottages, etc. Each subdivision of the account should be lettered as 25A, 25B, 25C, 25D, etc. The cost of the buildings will include fixtures, plumbing and heating apparatus, etc. Debit each subdivision of this account with the cost of all new buildings purchased or erected and with all permanent additions and improvements thereto.

Credit the proper subdivision of this account with the cost of buildings

replaced or dismantled Charging cash, 2, or its equivalent for the amount received if sold, and Charging "provision for depreciation" with the amount which has been accumulated in the provision account for the item in question only, and to surplus adjustment account, 99, Charge, or Credit, the loss or the profit resulting. When an initial purchase of land includes the buildings already located on the land it will be necessary to make an appraisement of the land and buildings separately, the total of the appraisement to balance with the total purchase price as paid.

Closing Entry: Balance sheet. Fixed asset. Buildings and improvements to buildings.

Account No. 26-Furniture and Equipment, Investment

Subdivide this account to show the investment in furniture and equipment in each building unit of the plant such as administrative furniture and equipment; cafeteria furniture and equipment; welfare building furniture and equipment, etc.; letter each subdivision.

Debit the proper subdivision with the cost of all new furniture and equipment such as desks, chairs, tables, typewriters, adding machines, dictaphones, calculating machines, stoves, ranges, hospital cots, operating tables, cutlery, crockery, etc. Articles requiring frequent replacement such as rulers, inkwells, desk trays, waste baskets, etc., should be charged to the expense account.

Credit the proper subdivision of the account with the cost of any furniture or equipment replaced or discarded, Charging cash, 2, if sold for cash, for the amount received and Charging provision for depreciation, 99, with the amount that has been accumulated in the provision account for the particular furniture and equipment sold and to surplus adjustment account, Charge or Credit the loss or gain resulting.

Closing Entry: Balance sheet. Fixed asset, Furniture and equipment. Account No. 27-Machinery and Equipment, Investment

Subdivide this account to show the investment in the following factory machinery and equipment.

Debit the proper subdivision of the account with the cost of all new machinery, steam power equipment, shafting, pulleys, etc.; pipe and fittings, electric power and light system, water tanks, pumps and portable equipment. Replacements of entire machines, or units, come under the caption new and should be charged as such. The provision account will take care of the worn out, or absolete, units replaced. Debit belting with the cost of all new belting for newly installed machines but not for belting used to replace worn out belting. Charge such renewals to ma

chinery and equipment repairs and maintenance, 147. Do not create a provision for depreciation for belting for the current income must take care of replacements.

Credit the proper subdivision of the account with the cost of all machinery and equipment replaced or discarded, Charging cash, 2, or its equivalent for the amount received, if sold, Charging the account provision for depreciation, 37, with the amount which has been accumulated in the provision account for the item in question only; and to surplus adjustment account, 99, Charge, or Credit, as the case may be, the profit or loss resulting.

In no event should small, or perishable, tools be charged to this account. The balance of the account should represent the cost value of machinery and equipment on hand.

Closing Entry: Balance sheet. Fixed asset. Machinery and equipment. Account No. 28-Lug Box Equipment, Investment

Lug box investment account represents the original investment in lug boxes at their cost of purchase or manufacture. If the original numbers of boxes manufactured, or purchased, should be increased, the cost of such increase should be charged to this account. All replacements to keep quantity at the original figure should be charged to lug box repairs and renewals, 148E. Do not alter the original quantity, or the value established except when such original quantity has been actually increased. Do not create a provision for depreciation account for lug boxes for the current income must take care of repairs maintenance and renewals.

This method is preferred to the depreciation method for the reason that lug boxes are very fragile and receive the roughest kind of handling, both in the field and in the factory, and if a depreciated rate is established, it may, in certain years, be less than half of the actual loss sustained. The new lug boxes made to keep the quantity at the original figure will not affect the account as the cost is charged to Repairs and Renewals, 148E.

Credit this account with the original cost of all lug boxes discarded or sold and not replaced. Charge cash, 2, or its equivalent, for the amount received and to surplus adjustment account 99, Charge, or Credit, the resulting profit or loss.

Closing Entry: Balance sheet. Fixed asset. Lug box equipment. Note: This method of depreciating lug boxes has been approved by the Government for Income Tax purposes, and it is a very convenient method of handling this item even though it may not be strictly in accordance with approved accounting methods which requires all investment accounts to be insured with a provision for depreciation. Account No. 29-Motor Vehicles, Investment

Debit this account with the cost of all motor vehicles purchased.

Credit this account with the cost of motor vehicles replaced, or discarded, Charging cash, or its equivalent, for the amount received, if sold, and Charging the account provision for depreciation with the amount which has been accumulated in the provision account for the particular vehicle and to surplus adjustment account, 99, Charge or Credit the profit or loss resulting.

Depreciation on motor vehicles will be taken care of at the close of the year by making an appraisement of the machines and not by applying any fixed percentage against them.

Closing Entry: Balance sheet. Fixed asset. Motor vehicles.

Account No. 34-Depreciation and Obsolescence: Method to Compute

(This is not an account but is given a number for reference purposes.) For the purpose of figuring depreciation and obsolescence on land improvements, buildings, furniture and equipment, machinery and equipment and motor vehicles a record book should be provided to be known as the "unit depreciation book" in which a complete record of the cost of each unit of the investment accounts should be kept, together with the amount charged off each year for depreciation and obsolescence.

Except in the case of motor vehicles as already described a fixed percentage of depreciation and obsolescence should be charged off each year without any allowance being made for scrap value. These percentages are as follows:

Obsolescence: In the case of obsolete or inadequate buildings or machines which are razed or scrapped Debit the proper depreciation expense account with the original cost of the unit, minus the depreciation which has accrued to date.

Credit the proper provision for depreciation account (obsolescence) with the amount.

Closing Entry: Deduct the total of the provision for depreciation. account from the total of the corresponding capital investment account in the balance sheet at the close of the fiscal period.

Account No. 35–Improvements to Land. Provision for Depreciation and Obsolescence

This account is mainly intended to provide for the exhaustion of water in the deep wells which sometimes happens. Deep well pumps are taken care of in machinery and equipment, provision for depreciation account, water supply system, 37.

Debit depreciation and obsolescence expense, 152A, with the amount of depreciation and obsolescence (or depletion) to be charged for the

year.

Credit improvements to land, provision for depreciation and obsolescence, 35, with the amount.