Closing Entry: Deduct the total of the improvements to land, provision for depreciation and obsolescence account, 35, from land and improvements to land investment account, 24, in the balance sheet at the close of the fiscal year.

Account No. 36-Buildings: Provision for Depreciation

This account should be subdivided into the same accounts as buildings and improvements to buildings investment account, 25.

Debit depreciation expense (buildings), 152B, with the total amount of depreciation to be charged for the year.

Credit the proper subdivision of provision for building depreciation, 36. Closing Entry: Deduct the total of the provision for building depreciation from the total of the buildings and improvements to buildings investment, 25, in the balance sheet at the close of the year.

Account No. 37—Machinery and Equipment: Provision for Depreciation This account should be subdivided into the same accounts as account No. 27.

Debit depreciation expense, machinery and equipment, 152C, with the total of depreciation to be charged for the year. Depletion of deep wells taken care of in account 35.

Credit machinery and equipment: Provision for depreciation, 37, with the amount.

Closing Entry: Deduct the total of the machinery and equipment, provision for depreciation from the total of machinery and equipment investment, 27, in the balance sheet at the close of the fiscal year.

Account No. 38—Furniture and Equipment: Provision for Depreciation

Subdivide this account into accounts to correspond to the subdivisions of furniture and equipment investment, 26.

Debit depreciation expense, furniture and equipment, 152D, with the total amount of the depreciation to be charged for the year.

Credit furniture and equipment, provision for depreciation, 38, with the amount.

Closing Entry: Deduct the total of the furniture and equipment, provision for depreciation, from the total of the furniture and equipment investment, 26, in the balance sheet, at the close of the year.

Account No. 39-Motor Vehicles: Provision for Depreciation

Debit depreciation expense, motor vehicles, 149E, with the total amount of the depreciation to be charged for the year.

Credit motor vehicles, provision for depreciation, 39, with the amount. Closing Entry: At the close of the year deduct the amount of the motor vehicle provision for depreciation from the total of the motor vehicle investment account in the balance sheet.

Account No. 42-Reserve for Accounts Receivable

At the close of the fiscal year accounts receivable outstanding should be carefully reviewed to determine the probability of collection. Liberal allowances should be made for accounts doubtful of collection to provide against anticipated loss. Make journal entry: Debit bad debts, account No. 169, listing each account; Credit reserves for accounts receivable, 42.

Any time after the books are reopened when any of the accounts listed prove to be uncollectable charge the uncollectable portion, or loss, to reserve for accounts receivable, 42, and credit each individual debtor. At the end of the year reserve for accounts receivable may show a debit or a credit balance and this balance will be a credit or a debit to bad debts account when figuring the amount of the reserves at the end of the year. Closing Entry: Deduct the reserve for accounts receivable from accounts receivable assets in the balance sheet.

Note: Except in the cases of very large corporations it will not be necessary to establish a reserve for accounts receivable. It is included here merely to make this system complete. If no reserve account is desired simply close any bad debt account into bad debts account by journal entry.

Debit bad debts, 169; Credit the debtor.

Account No. 43-Reserve to Complete Finished and Unfinished Warehoused Goods

At the close of the fiscal year provision must be made to complete finished goods in both of the following cases.

1. Finished goods which are stacked loose in the warehouse and which have not been sold or billed. In this case the reserve must take care of the cost of casing up, warehouse expense and selling expense.

2. Finished goods which are stacked loose in the warehouse and which have been billed to the buyer, but which have not yet been shipped. In this case the reserve must take care of the casing up and warehouse expense. Selling expenses have already been taken care of.

Memorandum warehouse receipts should be issued for the finished goods included in case two.

All finished goods stacked loose in the warehouse will not be shipped until after the close of the fiscal year.

All finished goods inventoried under class one will be valued as though complete and ready for shipment and the reserve to complete will be created in the following manner.

Credit the reserve to complete finished and unshipped warehouse goods, 43, and Debit each of the following accounts with the amounts specified: Warehouse expense, 180; labor at 7 cents per case, insurance at 2 cents per case; box stock account, 15, at the current price of boxes; nails, strapping and silicate stock account, 16, at current prices; labels and paste stock account, 13 and 14, at current prices; sales allowances and swells, 192, at 2 cents per case; selling expense, 183, at 10 cents per case; brokerage and commission, 181, at 15 cents per case.

These prices are arbitrary and will fluctuate from year to year due to changes in valuations and costs.

All finished goods inventoried under class 2, will not be taken into the regular inventory but will be carried in such inventory in the form of a memorandum as "warehoused goods," and the reserve to complete will be created as follows:

Credit the reserve to complete finished and unshipped warehoused goods and Debit each of the following accounts with the amounts specified: Warehousing expense, 180, labor at 7 cents per case, box stock

account, 15, at current prices of boxes; nails, strapping and silicate stock account, 16, at current prices; sales allowances, 192, swells arising in the stacks at 2 cents per case. The prices here also are arbitrary and will vary from year to year.

Closing Entry: Deduct from the inventory of finished goods, 6, in the balance sheet at the close of the fiscal year. After the books are closed, for the fiscal year the reserve created will be closed out by the following journal entry:

Debit reserve to complete finished and unshipped warehoused goods, 43, and Credit each account listed with the amount charged against it. Account No. 46-Plans and Patterns, Investment

Debit this account with the cost of all new plans and patterns but not those covering repair work.

Credit this account with the original cost of all plans and patterns discarded as obsolete and worthless and Charge surplus adjustment, 99, with the loss.

Closing Entry: Balance sheet. Intangible asset. Plans and patterns. Account No. 47-Patents and Copyrights

Debit this account with all costs incurred in securing patents and copyrights from the United States Government or with the amount paid for the patent or copyright if purchased privately.

Credit this account with the original cost of all patents or copyrights discarded or sold and Debit cash, or its equivalent, for the amount received, if sold for cash, and to surplus adjustment account Charge or Credit the resulting profit or loss.

Patents and copyrights eventually expire as determined by law and therefore their value decreases each year. Then Credit the investment account each year with the years proportionate share of the total cost of the patent or copyright and Charge this amount to surplus adjustment account. Some prefer to make the charge direct to profit and loss as separate items but this is not necessary.

The balance of this account should show the cost value of all patents and copyrights on hand.

Closing Entry: Balance sheet. Intangible asset. Patents and copyrights.

Account No. 48-Organization Expense

Debit this account with all expense incidental to the organization of the company, including expenses of incorporation, search, attorneys and state fees, stock certificates book, seals, etc., and with the cost of selling stock during the organization period to provide working capital.

Credit this account at the close of each month with one twelfth of such an annual amount as will write this account off over a period of two years Charging account No. 49, extinguishment of organization expense.

The balance of this account will represent the portion of organization expenses to be charged to future years.

Balance sheet. Intangible asset. Organization expense.

Account No. 49—Extinguishment of Organization Expense

Debit this account at the close of each month with one-twelfth of such

an amount, that applied over a period of two years, will extinguish organization expense, Crediting organization expense, 48.

Credit this account at the close of the year, by journal entry, with its balance, Charging such amount to surplus earned, 97. This account will then be closed.

Account No. 52-Construction Work in Progress

Debit this account, under its proper subdivisions, with the cost of materials, including transportation charges, labor and expenses used in the construction of buildings, machinery, equipment, etc., the building of special machines, and the installation of new machinery, and equipment. Credit the proper subdivision of the account with all completed work and Charge proper machinery and equipment or building account.

The balance of this account should represent the cost value of new building construction and installation work in progress.

Closing Entry: Balance sheet. Deferred charge to operation. Constructing work in progress.

Account No. 53-Crop Mortgages

Debit this account with the face value of all crop mortgages received and with all crop mortgages renewed.

Credit this account with all payments received on crop mortgages; with all crop mortgages sold and with all crop mortgages renewed.

The balance of the account will represent the face value of crop mortgages receivable on hand.

Closing Entry: Balance sheet. Deferred charge to operation. Crop mortgages.

Account No. 54-Advanced Expenses

All expenses that are prepaid except those of unearned insurance and prepaid taxes are within the scope of this account.

Debit this account with expenditures for all such charges. At the end of each month Credit this account with that amount of advanced expenses determined to have been absorbed during the month.

Closing Entry: Balance sheet. Deferred charge to operations. Advanced

expense.

Account No. 55-Freight Undistributed

Debit this account with all freight and drayage paid on green produce, fruit and vegetables, empty lug boxes, materials and supplies for factory, canned goods shipments, and all freight and drayage paid, Credit cash, 2. Credit this account with all items distributed, charging the proper account, or expense account, as the case may be.

The balance of this account will represent the amount of paid freight, drayage and express bills the distribution of which is undetermined. All charges in this account must be properly distributed, the account balanced off and closed before closing the books at the end of the fiscal year.

Account No. 56-Deposits

Debit this account with all deposits made for any purpose which are returnable under certain conditions. Deposits for gas meters, telephone

installation, and certified checks sent with bids are illustrative, Credit cash, 2.

Credit this account with the amount of such deposit when returned, Debit cash, 2.

The balance in the account will represent the deposits outstanding. Closing Entry: Balance sheet. Deferred charge to operation. Deposits. Account No. 57-Transporation Claims

It is sometimes the custom to open an account with transportation claims Charging the account with the amount of all claims filed and Crediting the account affected; then Crediting the account with the amount received in payment. The difference, if any, in the amount claimed and that paid is then charged to expense.

Claims filed by canners for loss and damage are sometimes uncertain of collection and it is better to have all such claims recorded in a book when filed and then cancelling the record with the payment or disposition of the claim by the carrier. In this way the claim is not posted to the general accounts until paid and then simply by a Debit to Cash, 2, and a Credit to whatever account is affected.

Account No. 58-Suspense

Debit this account with all charges the disposition of which is to be delayed for any reason, credit the account affected.

Credit this account with all credits the disposition of which is to be delayed for any reason.

The balance of the account will show the total of the debits, or credits, which are being held in abeyance, for any reason, until their proper disposition is determined.

This account should be closed out before the final closing of the books. Account No. 59-Advanced Traveling Expense

Debit this account with all advances made to salesmen, Crediting, cash, 2.

Credit this account with all amounts returned by the salesmen, Charging cash, 2.

The balance in this account is a deferred charge to operations and represents the amount advanced and outstanding to salesmen traveling expense.

Salesmen's Expense Accounts. On long trips the salesman, or other person, will be furnished with a letter of credit. Drafts will be drawn against the credit thus established and these drafts will be Charged to advanced traveling expense account, 59, expense accounts will then be sent in by the person traveling and the amount of these expense accounts will be Charged to salesmen expense account, 183B, and Credited to advanced traveling expense account 59, by a journal entry. Any difference in the amount of these two accounts must be adjusted at the close of the trip when the advanced traveling expense account must be

balanced.

In the case of salesmen and others who have advances, the advance. should be Charged to advanced traveling expense account, 59, and weekly expense accounts turned in and these should be Charged to