Historic, archived document Do not assume content reflects current scientific knowledge, policies, or practices. UNITED STATES DEPARTMENT OF AGRICULTURE 22-9 DEPARTMENT BULLETIN No. 1150 @ i August 8, 1923 ACCOUNTING RECORDS AND BUSINESS METHODS FOR LIVESTOCK SHIPPING ASSOCIATIONS By : ) FRANK ROBOTKA Assistant, Iowa Agricultural Experiment Station, and Collaborator, Bureau of Agricuitural Economics CONTENTS Bae ties tosh aes eiletiane The need of permanentrecords - - +--+ +++. « Scaletickel 3 cos, disse ol euick ve Peasy, Wake Vs 3 Records as a protection to manager, directors, and ES A Ce Ee On eae 4 : ay ots 57s ane - OAR CAE ee St eee 6 - Recerds as a guidefo management - - - - - + « ’ Monthly and annualreports. - - --+ e+. 24 Menihersistalcment= sic a) | @ fevic, oc) oho 6 y : Shi Jexel Analyzing the business. - - - » 2 2» 2 2 = e 28 clog deci saat alt ee al Ts} _ Who should keep the books? . ..-.--- 29 Shipment summary record - - ++ +--+ -- 9 Marketing metliods «ait eietab sari ene 30 The cash jour mal. . « Beta ates ee 10 Terminal mar'ct methods. . . . . 22. ee 30 Operating the cashjournai - - --- +--+ ll Grading and prorating athome. - . -. +... - 33 Information needed to determine business standin; - 16 Problemsinvolvedin proraling. - . » + +--+ - 34 Description of the accounts - . -. +--+... - 18 Filling out the prorating sheet - - - - +--+ 38 Advances to shippers . ..-...+..2+-+2.- 22 Prorating mixed shipments - - -..+-.-+-.- 41 Sales subject to inspection . ...-.- 22. 22 Short-weight and mixed carloads. . . .. +. 45 Illustrative transactions). <>. /<)'. s) «ss etenlel<) «ita 1 WASHINGTON GOVERNMENT PRINTING OFFICE 1923 Washington, D. C. August 8, 1923 ACCOUNTING RECORDS AND BUSINESS METHODS FOR LIVE-STOCK SHIPPING ASSOCIATIONS.’ By FRANK RopotkKa, Assistant, Iowa Agricultural Experiment Station, and Col- laborator, Bureau of Agricultural Hconomics. CONTENTS. Page. Page. What forms are needed______-__-_- 3 | The need of permanent records—Con- GTI ETM AG) eee See ee eee 3 tinued. Manifest 232i) se tare tS 4 Records as a guide to manage- Prorating: sheets: eto. bey 6 Met tee ot ope a, 23 Member’s statement __________ 6 Monthly and annual reports__- 24 Shipment record envelope_____ 7 Analyzing the business _______ 28 Shipment summary record ____ 9 Who should keep the books?___ 29 ‘The -cash*-journal + =i ssi sh 10 | Marketing methods___-__________. 30 Operating the cash journal____ 11 Terminal market methods____.. 80 Information needed to determine Grading and prorating at home_ 33 the business standing ______ 16 Problems involved in prorating_ 3 Description of the accounts___ 18 Filling out the prorating sheet_ 38 Advances to shippers_________ 22 Prorating mixed shipments____ 41 Sales subject to inspection____ 22 Short weight and mixed car- The need of permanent records ____ 23 NOL SS en ree 45 Records as a protection to man- F: Illustrative transactions __________ 47 agers, directors, and others__ The cooperative marketing of live stock has experienced a more phenomenal growth than perhaps any other form of cooperative endeavor. Using Iowa as an illustration, the oldest association in the State was organized in 1904. Of all the associations in existence in the State in 1920, about 3 per cent were organized before 1910, only 8 per cent before 1915, and less than 25 per cent before 1918. About 75 per cent of the associations in existence in December, 1920, were organized during the years 1919 and 1920. Even though the history of the movement in other States differs in some respects from that in Iowa, by far the greatest development for the country as a whole has taken place within the past five years. This rapid growth has brought to the front a number of problems, most of which may be traced directly or indirectly to small volume of business, inexperienced management and in some localities to competition among the associations. As a result there is a wide difference in the cost of shipping between the most efficient and the least efficient associations. The choice of markets is also important, Manuscript for this publication was prepared in collaboration with the Iowa State College of Agriculture and Mechanie Arts and is also published as Accounting Records aN Live Stock Shipping Associations, by Frank Robotka. Iowa Agr. Exp. Sta. Bul. No. 2 Cooperative Live-Stock Shipping in Iowa in 1920, by E, C. Nourse and C. W. Ham- mans, lowa Agr. Exp. Sta. Bul. No. 200. 33703°—23 t 2 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. especially in the Middle West, where in some cases associations are accessible to several markets. The solution of many of these problems depends upon the man- agement having a thorough knowledge of the relative advantages of different methods of handling live stock and operating the asso- ciation, the relative costs of shipping to different markets, the rela- tive merits of different methods of selling and weighing live stock, and the extent to which these factors influence the rate of shrinkage or loss due to dead and crippled animals. The question of what business policy shall be pursued in connec- tion with these and other problems can be answered intelligently only when the details regarding the different shipments are summa- rized and the results analyzed. Reliable figures which can be used for this purpose too frequently have not been preserved by shipping associations. In fact, bookkeeping has been neglected more among shipping associations ‘than in most other types of farmers’ organiza- tions. Perhaps the chief reason for this situation is that it is a relatively simple matter to organize a shipping association. A group of farmers may meet in the morning, elect a board of direc- tors and a set of officers, hire a manager and begin business the same day. The details of management and record keeping are usu- ally left to be worked out as the i necessity arises. Another explanation for the frequent neglect of record keeping is to be found in the fact that each sale—that is, each shipment—is often treated as if it were a completed fiscal period. The entire pro- ceeds are either paid out or reserved at the time of settlement and the shipment is considered a closed incident. Other causes are the small average annual income received by the managers, the lack of standardization of business practices, and the frequent changes of managers and directors. The fact that many associations also handle feed and other farm supphes, often on credit, has done much to complicate the situation. The adoption of a simple but adequate system of records by the associations generally would be a long step in the direction of rais- ing the standards of efficiency of operation, of building up the vol- ume of business and of inspiring loyalty on the part of the members and confidence on the part of the community generally. Further- more, it would lay the foundation for successful cooperation among the associations. The association which fails to meet any one of these essential conditions is not likely to be in a position to render the kind of service which the community has a right to expect of it. The system of records and accounts recommended in this bulletin is based on the methods used by shipping associations in different parts of the country which experience has demonstrated are sound and practical. Its operation in a number of States has already dem- onstrated its adaptability under a wide range of conditions and methods of operation.® 3 Some of the forms as presented are revisions of forms found in actual use, and others, particularly the shipment summary record and the cash journal, are original with the author. Final revisions were made at a series of conferences on shipping associa- tion business practices and accounting held in Chicago during the summer of 1921 under the auspices of the Illinois Agricultural Association, at which conferences the underlying principles involved and the forms themselves, substantially as here presented, were approved. In addition to the author, the following men. took an active part in the dis- cussions of the accounting records: S. W. Doty and F. G. Ketner, of Ohio, Ralph Loomis and T. D. Morse, of Missouri, and F. M. Simpson, of Illinois LIVE-STOCK SHIPPING ASSOCIATIONS. 3 The system is specifically designed to meet the needs of associations which make the shipping of live stock their main or only business. This includes associations which, in addition to shipping live stock, occasionally buy feed and other farm supplies which are unloaded directly from the car and paid for on delivery. Farmers’ elevators or produce and supply associations which have a warehouse and carry a stock of supplies and which also ship live stock need only to add to their general ledger the special accounts necessary to handle the live-stock business. Such cash books and journals as may be in use also receive the entries for the live-stock transactions. How- ever, all of the detail records and the shipment summary record herein recommended for shipping associations may be used with equal ad- vantage by these other types of associations. Neither the cash jour- nal nor the classification of accounts proposed in this system is de- signed or recommended for a mercantile or general produce business. The purpose of each form and the method of using it is explained on the following pages. WHAT FORMS ARE NEEDED? A system of records, to be adequate, must provide for the keeping of two principal classes of records: The detail records or working papers, and the permanent records. The detail records are needed to give evidence of the business trans- acted and to furnish the authority and data needed in making entries in the permanent records. As they contain the original calculations and figures they should be preserved carefully and filed conveniently for ready reference and verification in cases of dispute. Unless they are available when an audit is being made it is practically impossible to prove the accuracy of the books. The detail records which are included as part of the system and which experience has shown are necessary are: Form No. 1. Scale ticket. Form No. 2. Manifest. Form No. 38. Prorating sheet. Form No. 4. Member’s statement and check voucher. Form No. 5. Shipment record envelope. The permanent records are provided for the purpose of preserving the information contained in the detail records and classifying it so as to make it useful to the management, first, in determining the busi- ness standing and explaining changes made in it during a fiscal period; and, second, in deciding what changes should be made in the choice of markets, methods of handling the live stock, and in the busi- ness methods generally. The forms provided are: Form No. 6. Shipment summary record. Form No. 7. Cash journal. To illustrate the use of each of these forms an imaginary shipment, No. 111, will be followed through the records. SCALE TICKET. A memorandum should be made on the scale ticket (Form No. 1) showing how the animals were marked and the number and weight of each kind and grade of live stock delivered by each shipper. The 4. BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. shipment number, date, and the name and address of the shipper should also be recorded. The home weight should be obtained sepa- rately for each grade of animals. Notations regarding the condi- tion of the animals should be made on the ticket whenever there is reason to suspect that the animals have been fed excessively, or when there is a question as to whether certain ones may be subject to dock- CO-OPERATIVE WEIGH TICKET No ee PC ae P. OY «aA: KIND No. Head _Home Wt. Marks —— ee a SD err nme wet ee mele ww ee ew ee ele ee ee eee ee ee we ele me em ee eee ee ee ee ee ee wn Parkers LE / 2Go EE Lleol Ae Stags Sr we we ee le we ww Ow a we wn wee mn ee ee elon were as eee secre cee ae Boars ll lela lad ll ed Ee ne a Pigs: wm ww mw mm mm wnt eam tm me me Me we we em mm ww we we ole ee ee ee eee ee ee es oe Crip. Busts Steers wr ew eoe er eww nee eee ee eH Re ee eee em em ew ee ee ee ee ee ee ew ee ee ee ee ec Cows Heifers NO ee | Bulls Calves Lambs ee Ewes @ wwe www ww - = l- w= = = a nw we on we www ww ee wm ew ee ewe eee ee ee i ce Yearlings Wethers y9) Bueks dak Phrac tne hat seve occbcrsades dakavent Me dce tc tcenaes toreot hae Stace eee ae Manager Fic. 1.—WScale ticket (Form No. 1). age or be sold subject to inspection. The original copy of the ticket should be given to the shipper and the carbon copy retained in the office. MANIFEST. A summary of the scale tickets for all the live stock included in the shipment should then be made on the manifest (Form No, 2) as shown in Figure 2. This form is also issued in duplicate, one copy being: sent to the commission firm and the other retained in the office. LIVE-STOCK SHIPPING ASSOCIATIONS. TT BEET WSIOM ouloyy =a ate : - - ssuedxq SuljeiodO ¢ - = = » puny souriInsul ¢ UOISSIWIWIOD Sjoseueyy SASNAddX3 SINOH - "(3 ‘ON WIOT) JsoyTUBW—Z “OI aILLVS ‘Wd Doe at OR Ap POPE aE SD 27a aa meg ct el ea a eee eee: Sn pap y ha agg oo 0} Soles WZIOM awoY, WY eo) etre Ji7 ‘ON aay aaa 9 poddtiys oyeqg Ad GAddIHS NOOLS JATI JO “LSAIINVIN suolonszjsuy Sulpuezy 0} AQuoyy puss quNoooy [IeJAL 0} peusisuog 6 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Full instructions should be given regarding the disposition of the returns, prorating, and the method of handling the live stock. If the commission firm is to prorate the home expenses also, the rates or amounts of the different items should be recorded in the blanks provided for this purpose in the upper right-hand corner of the form. Much confusion in prorating can be avoided by filling out the manifest carefully and completely. This completes the record work involved in receiving the live stock and loading it into the car. The results of the sale are necessary be- fore the next step can be taken, which consists of prorating the returns. j PRORATING SHEET. It 1s assumed that for shipment No. 111 the manager is to do the prorating. The manifest and the account sales received from the commission firm furnish all the information needed in connection with the distribution of the returns. It is assumed that the account sales shown on this page was received as a result of the sale of the live stock included in shipment No. 111. Figure 3 represents the prorating sheet (Form No. 3) as it appears after the returns have been prorated. The steps followed in arriving at the figures given on the prorating sheet are presented on pages 38, 39, 40. [Account Sales for shipment No. 111.] COOPERATIVE COMMISSION Co., UNION STocK YARDS, CHIcAGO, Nov. 2, 1921. Sold for the Account of the Brookridge Cooperative Shipping Association, Brookridge, Iowa. | Dockage. Buyer. Head. | Kind. | Weight.| Mark. |-—————~—————| Price. | Amount. | Sows. | Stags. — ee ee beeen IATINOGUT-22-2 226 sscsee 30 | Hogs.... 6-315) ERS: -42 soo 10. 00 $631. 50 Swalhe ee ek. ee 25 ji csdozssk: 4; 420-4 1 Back siiese 2-8 e sone 9. 80 756. 56 IATMOUD I. 2.ccceewee 6 | Packers. 1, 870 HoT Back. ee ee ee 9. 00 168. 30 15, 905 | | 1,556.36 I. C. 14980, 17,00 pounds @ 40¢.-..-......-.-- $68: 00.) Freight rrscst = ho 2a aoe $73. 04 Switch e 2 a. ease ee en coda tte ee oe 3.00 | Yardase Gig 1265-2... -t--- = 7.32 War tax-22.2 te ticccnccceuscescs eds cocde ces 2: 04. TaSGRANCC. 2 bee e+ oe cea eee 07 Tebalet >: See. eee hs 2 eee 73.04. |. Weed=5 bu: cord. 3. 2.328 == 4. 5. 00 Snspection; 2.1.5. et Commission. $2222 44o5... 4.--% 18. 00 103. 63 Net proceedSic.<~2: at. < 23=---< 1, 452. 73 NotTE.—It will be noted that the weights shown here vary from those used in making up the prorate sheet (fig.3). For explanation see note on page 39. MEMBER’S STATEMENT. When the calculations on the prorating sheet have been verified, statements and checks may be issued to the shippers. Form No. 4 is designed to be used for this purpose. The member’s statement shows the details of the settlement with each shipper as calculated on the prorating sheet. The vouchers are issued in duplicate and are num- bered consecutively. The statement bears the same number as the attached check, which number is inserted in the “check number” LIVE-STOCK SHIPPING ASSOCIATIONS. 7 column on the prorating sheet as the checks are issued. The original copy is given to the shipper and the carbon copy is retained in the office. (See Fig. 4.) In those cases where the association uses an ordinary check form separate from the member’s statement, the member’s statement with- out the attached check may be used. This statement (Fig. 5) is made in duplicate and bears the same number as the check issued in pay- mA Aes fines Nile pets )" 4° > St esos “o.oo 5b AS: 1, 000. 00 $1, 576. 02 liabilities. 0S ED cha I a tir dO ree $300. 00 UPGeratipris Gtieni) 152. OFFS IS tt th) OST Uap vit ee 4 55. 00 : susurance: Gim@oee 2 3: ogo Fi sbreesl Gis ey: 799. 51 LES TREE E 8 be OSD FT CO SE yn a eee eee pee ERO RG A ne Ica Be Sau 1, 158. 02 Net worth. ayrigstte Ss beige tees age 6 eee ds RE = EN Dat 400. 00 SHERI. Une aged = DRONES jt 5 Ea 18. 00 —— 418.00 1,576.02 Tt will be noted that the resources consist of cash and equipment amounting to $1,576.02; the habilities amount to $1,158.02, consist- ing of outstanding notes, dues owed to a State association, the re- serve for insurance and the undivided balance. The resources exceed the liabilities by $418, which amount represents the net worth of the association. As only $400 was put into the business originally, the difference of $18 represents surplus profits left in the business. It will also be noted from this statement that the investment in the business came from stockholders, rather than from an individual owner, as in the case of the farm business. An association which is not incorporated is regarded as a partnership, in which case all of the members would be joint owners. Each of the subdivisions in the statement shown above represents a separate account in the cash journal; in fact, it is from the accounts in this book that the information for such statements is obtained. The accounts which a particular association needs depend upon the character of the business, if any, which it combines with live- stock shipping. Ordinarily all shipping associations need the follow- ing accounts: 1. Bank. 2. Live stock. 3. Manager’s commission. 4. Insurance find. Other accounts which are frequently needed are: 9. Federation dues (State or district | 11. Indebtedness (or notes payable). federation). 12. Merchandise, 10. Yard and office equipment. 33703 °—23—_3 Local car expense. . Undivided balance. Loss and gain. . Net worth. CO 1 D> ON 18 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Each of these accounts is described and illustrated fully on the following pages. DESCRIPTION OF THE ACCOUNTS. THE BANK ACCOUNT. It is good practice to handle all funds through the bank. All receipts of cash from whatever source will accordingly be entered in the “ deposits” (debit) column and as checks are issued the amounts will be entered in the “checks” (credit) column. A debit balance indicates the amount of available funds in the bank and is an asset. A credit balance indicates an overdraft and is a liability. Debit : Credit : (1) With the available balance of cash in | (1) With an overdraft, if any, at time of the bank as shown by the balance opening the books. sheet at the time of opening the (2) With the amounts of all checks drawn. books. The checks issued to shippers will (2) With all checks, drafts, and currency be entered in total for each ship- received from live stock and other ment. sources, as well as proceeds of notes given for loans, as these items are deposited. ~ All cash should be recorded in one bank account in the cash jour- nal, even though the cash is divided into different funds at the bank or is carried in more than one bank. Where it is desired to divide the business between two banks it is preferable to change banks once or twice a year rather than to carry funds in both banks at the same time. LIVE STOCK. Debit: Credit: (1) With net proceeds prorated at the | (1) With the net proceeds received from time of the settlement for each ship- commission firms for live stock ment. ship 3 (2) With the purchase price of live stock | (2) With the amounts received for live purchased outright. stock sold locally. A credit balance in this acount usually represent proceeds which have not yet been prorated to shippers and is a lability. However, if live stock is bought outright the account will show a gain if the credits exceed the debits, and a loss if the debits exceed the credits. At the end of the fiscal year any such gain or loss will be closed to the loss and gain account. ! MANAGER’S COMMISSION. Debit: Credit : (1) With amounts of salary or commis- (1) With commission earned at the time sion aS payments are made. settlement is made for shipment of (2) With amounts paid manager in reim- live stock. bursement of amounts advanced by (2) With amounts advanced by manager him. for association expenses. for association expenses at the time the advances were made. Where the manager is paid on the commission basis, the account will balance if he has been paid in full. A credit balance represents the amount of unpaid commission due the manager. If the man- ager is paid on a salary basis, the debit balance will represent the amount of expense due to manager’s salary, which will be closed to the loss and gain account at the end of the year. INSURANCE FUND. Debit: Credit: (1) With payments to shippers for losses. (1) With amount deducted from the pro- (2) With payments of attorney’s fees for ceeds of each shipment as the in- collecting claims when such fees are 1 surance charge. paid by ah association check. (2) With amounts received in settlement of railroad claims. eres — ee ees x - ‘ So eth TIA LIVE-STOCK SHIPPING ASSOCIATIONS. ~ 19 The insurance fund account will usually show an excess of credits over debits, in which case the balance indicates that more has been reserved than actually paid because of losses. Such a credit balance is a liability from the point of view of the association, as it represents deductions from returns due members in excess of the needs for insurance purposes. In a sense, this excess is held in trust for the members and in case of dissolution would be prorated back to them. As the financial strength of an association depends to a considerable extent upon its ability to meet ordinary losses promptly without bor- rowing, it is important that a conservative credit balance be maintained in the insurance fund account. After a balance of several hundred to a thousand dollars (depending on the volume of business and other conditions) has been accumulated, the charge for insurance should be reduced to a point which will maintain the desired balance in the fund. The practice of some associations of drawing on the in- surance fund for overhead and miscellaneous expenses is not to be commended, as the protection to members is likely to be impaired by an undue drain on this account. Where the membership fees are not adequate, special provision should be made for meeting over- head expenses. This may be done either by making a separate de- duction from the proceeds of shipments for this purpose or, when a lump deduction is made for all purposes in general, by dividing the total deduction into two parts, one to be specifically reserved for insurance purposes and the other for overhead expenses. In order to avoid the possibility of using the insurance funds for purchases of equipment or otherwise rendering it unavailable for the payment of losses, some associations set aside the cash reserved for insurance in a separate deposit account in the bank, or even invest part of it in securities of a readily salable sort. LOCAL CAR EXPENSE. Debit : Credit : (1) With amounts paid for feed, bedding, | (1) With deductions from proceeds from partitions and other materials used sales of live stock to cover any ex- in preparing cars for shipment. pense incurred in preparing cars for shipment, imecluding local feed, bed- ding, partitions, rope, nails, etc. The local car expense account will balance provided the deductions from returns exactly equal the expenses incurred in preparing cars for shipment. It happens sometimes, however, that supples, such as feed, bedding, or lumber for partitions, are bought in quantities and charged against the shipments for which they are used. In such cases, the “ payments” (debits) at a given time will exceed the “ deductions” (credits) and the balance will represent the value of unused supplies on hand. UNDIVIDED BALANCE. Debit: Credit: (1) With losses on shipments when more } (1) With gains on shipments when less is is distributed than the actual bal- distributed than the actual balance ance available for distribution. available for distribution, e 20 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Much time is often wasted in attempting to distribute’ returns to the cent. In calculating the shrinkage and expenses it is much more practicable to use rates figured to the nearest whole number or convenient fraction. Furthermore, when carloads of mixed grades are sold for a flat sum, it is necessary to “price the car up and down” according to grades when making returns to members. In all of the above cases the amount prorated may differ slightly from the actual returns. The difference is to be carried in the un- divided balance account. Some of the older associations have adopted a flat rate of expense based on past experience which is applied on all shipments of a given species of livestock over a con- siderable period. In such cases gains or losses occurring on indi- vidual shipments will also be entered in this account. At the end of the year the net balance should be closed to loss and gain or otherwise disposed of as decided by the board of directors. LOSS AND GAIN. Debit : Credit: (1) With general expense, such as postage, | (1) With deductions from proceeds from stationery, telephone, premium on shipments of live stock to cover manager’s bond, interest paid, taxes overhead expenses. and similar items, (2) With membership fees.® (2) With losses suffered in handling sup- | (3) With extra charges made for handling plies’ or buying live stock. stock for nonmembers. (3) With the balance in the undivided bal- | (4) With profits resulting from handling ance account at the end of the year supplies or buying live stock. when the overpayments exceed the | (5) With the balance in the undivided bal- underpayments. anee account at the end of the year (4) With the net gain at the end of the when the underpayments exceed the fiscal year when. it is distributed in overpayments. accordance with board action. (6) With net loss at the end of the fiscal year when it is transferred to the net worth account. The expenses of the ordinary shipping association fall into two classes, namely: Expenses incurred in preparing cars for shipment, which are not borne by the association but charged to the shippers and deducted from their returns; and, expenses which are not charge- able against any particular carload, that 1s, the overhead expenses, such as telephone, stationery and printing, advertising, interest on borrowed money, premium on manager’s bond, and similar items. All such overhead. expenses and any other items not charged to shippers and deducted from returns should be entered under “ gen- eral expense ” in the loss and gain account. The income from which such expenses are met will be entered under “income” in this ac- count. This income will usually consist. of membership dues,’ in some cases supplemented by a special charge against shipments for this purpose. At the end of the fiscal year, after the necessary ad- justments have been made, the loss and gain account will show either a net gain or a net loss, which should then be carried to the net worth account, or otherwise distributed as decided by the board of directors. 6 See note on page 11. 7If the law under which the association is incorporated regards membership fees as capital contributions the same as capital stock, the amounts so collected should be credited to the net worth account as they represent the members’ equity in the business. The same procedure should be followed even though the association is not incorporated, when more than a nominal fee is collected for the purpose of purchasing and installing scales, equipping yards or for other similar purposes. ? ; \ ee, ee Sgt +; LIVE-STOCK SHIPPING ASSOCIATIONS. 21 NET WORTH. Debit: (1) With the excess of. liabilities over ane at the time of opening the oO. (2) With the par value of shares of stock retired, or memberships redeemed Beer such memberships are redeem- 1 (3) With the net loss transferred from the loss and gain account at pe end of the fiscal year. Credit : (1) With the par value of shares of stock outstanding at the time of opening the books. (2) With the excess of assets over liabili- ne at the time of opening the 00 (3) With the par value of additional shares of stock sold. (4) With the membership fees paid in, in ease of associations incorporated under laws which hold memberships redeemable. (5) With net profits transferred from the loss and gain account at the end of the year. It seldom occurs that the total resources of a concern exactly equal the total liabilities. If the resources at the time of opening the books exceed the liabilities, a free surplus exists. This balance represents the proprietors’ (members’ or stockholders’) equity or interest in the business and will be entered on the credit side of the net worth ac- count. Sales of shares of capital stock, if any, will also be entered in this column. However, if the liabilities or debts exceed the resources, the balance will represent the amount by which the association is unable to meet its obligations 100 cents on the dollar. The balance in this case will be entered in the debit column. At the end of the fiscal year the stockholders’ or members’ equity will be increased or decreased by the amount of the net gain or net loss shown by the loss and gain account. In addition to the above, the following accounts are frequently needed. FEDERATION DUES. Debit: (1) With payments of current dues to State or district federation on ac- coe of membership in such federa- ions, Associations which are members of a State or district federation of shipping associations, whose membership fees are collected out of the proceeds of shipments, will need a federation dues account. Any excess of the total collected over the amount paid out will repre- sent the amount due the federation at any given time. Credit : (1) With deductions from proceeds of the ile of live stock for federation ues, YARD AND OFFICE EQUIPMENT. Debit: (1) With the value of equiptment at the time of opening the books. (2) With the purchase price of additional equipemnt bought. (8) With the freight and installation costs of equipment. Space is provided for two additional accounts. Credit : (1) With cost value of property sold or otherwise disposed of. (2) With estimated depreciation at the end of the fiscal year. Associations which have invested money in yard and office equipment should use one pair of these columns for keeping track of such property. INDEBTEDNESS. Debit: (1) With payments made in settlement of outstanding obligations. Credit : (1) With the amount of outstanding obli- petions at the time of opening the (2) With. Sabeeabht obligations incurred because of money borrowed or sup- plies purchased on account. 22 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Where indebtedness is incurred an account should be opened with indebtedness or accounts payable, which will be credited with any obligation incurred and debited when it is paid. MERCHANDISE. Debit: Credit : (1) With the invoice price of supplies | (1) With amounts received for supplies bought. whether collected in advance or on (2) With freight and other direct handling delivery of supplies. charges, such as extra, labor, etc. If supplies of any kind are handled, an account should be opened with merchandise, which will be debited with the purchase price, freight, and any other direct costs incidental to the handling of such merchandise. The account will be credited with sales. When all of the merchandise has been sold the account will show either a gain or a loss, which should be transferred to the profit and loss account or prorated back to members at the end of the year. If a larger number of accounts is needed than space is provided for in the cash journal, a short sheet providing space for six to eight accounts may be inserted between the left-hand and the right-hand pages of the journal. However, where the number of accounts needed is relatively large, a ledger should be used and the form of the cash journal modified accordingly, ADVANCES TO SHIPPERS. Some associations regularly make advances to shippers, if re- quested, at the time of the delivery of live stock. Where this is done, one of the blank pairs of columns in the cash journal should be headed “ advances.” All advance checks should be recorded in the cash journal as all other checks are recorded, and the amounts charged to the advances account. Deductions for advances will then be made on the prorating sheet, the amount being entered, with an appropriate notation, in the membership column. The advances deducted in making settlement will appear as one of the deductions on the credit side of the home statement on the shipment record envelope. The advances account will be credited when the entry for the settlement is made in the cash journal. As advances do not affect the value of live stock or the expenses of shipping, no record of the advances need be made in the shipment summary record. SALES SUBJECT TO INSPECTION. Separate returns are usually rendered to cover animals sold subject to inspection, even though the terminal weight of such animals has been included in determining the expense rate on the remainder of the shipment. A separate prorating sheet should be filled out when the returns for such animals are received, and a separate entry made in the cash journal simialr to that made for regular settlements. AJ] the papers concerned in such sales should be pinned together and filed in the envelope with the other papers for the shipment. When animals sold subject to inspection are condemned it some- times happens that their tankage value does not cover the expenses. In such cases, the shipper owes the association the difference. As — sida Faia ae ae ee ee pe ee LIVE-STOCK SHIPPING ASSOCIATIONS. 23 no debit will consequently appear in the live-stock account, when the cash journal entry is made the advances account should be debited. for the amount due from the shipper when such amounts are collected either in cash or by deduction from a subsequent shipment, the ad- vances account will be credited. THE NEED OF PERMANENT RECORDS. Even when ordinary care is taken to file and preserve the papers containing information regarding the business transacted, it seems to be the general experience that sooner or later many or all of the papers are mislaid or destroyed. Unless the data they contain have been recorded in permanent book form, the association is unable to show what business has been done in the past or to verify the details of transactions. RECORDS AS A PROTECTION TO MANAGERS, DIRECTORS, AND OTHERS. Embarrassing situations traceable to this lack of records develop frequently. In a recent instance a question arose as to whether or not the funds of the association had been properly accounted for. Neither the secretary nor the manager had preserved a permanent record of the shipments made or other business done. As a result the association was unable to prove that the funds had not been properly accounted for, and the manager was unable to prove that he was free from blame. The fact that it was the practice to “ check out” each shipment completely did not save the situation. Many an honest man- ager or officer has found himself in an exceedingly embarrassing osition because of his failure to keep the few books needed to enable an to prove conclusively that his record is clear. Fidelity insurance companies usually require that proper records be kept as a condition to bonding officials responsible for the funds of an association. In view of the responsibility which rests upon the manager and the board of directors in such matters, they should, for their mutual pro- tection, insist that a complete, permanent record be made of all busi- ness transacted, that this record be kept in the same manner from year to year, irrespective of changes in the management. Further- more, all accounts of sales and other details supporting records and working sheets should be preserved so as to make possible a verifica- tion of the entries made in the shipment summary record and the cash journal. Only when kept in this way will the records adequately serve as a protection to the manager, the directors, and the members, and be a reliable guide in determining business policies. RECORDS AS A GUIDE TO MANAGEMENT. Mismanagement is one of the most frequent causes of failures in business generally. The remedy for a large number of the cases of mismanagement is to substitute facts for guesswork in the determina- tion of business policies. The judicious use of the figures covering the business from the time the association is organized eliminates much of the guesswork. For this purpose summaries are needed showing the values, numbers, weights, shrinkage, itemized expenses, losses, and other information resulting from the sale of live stock. These data are also needed in calculating averages which throw light on the relative economy of different methods of handling stock, the relative 24 BULLETIN 1150, U. S. DEPARTMENT. OF AGRICULTURE. advantages or disadvantages of shipping to different markets, and in directing the attention of the management to variations in the rates of expenses, losses and shrinkage, with a view to ascertaining the causes of such variations and reducing these costs to a minimum. Each manager believes he is doing the best that can be done, until he learns that others have obtained better results than he. If all managers kept the essential figures In a uniform manner it would be a simpler matter to compare notes and ascertain “how it was done.” The relatively small amount of time required to keep these records will be found to have been well spent when information is desired regarding the results of operations. The time required in the prepa- ration of the annual report can be reduced to the few moments needed in copying the desired totals from the records. The value of these figures for publicity purposes is frequently overlooked. Many associations obtain valuable publicity by submit- ting their monthly and annual reports to the local papers to the county agents, to federations of cooperative live-stock shippers and by mailing mimeographed copies to the members. MONTHLY AND ANNUAL REPORTS. Illustrations of the different schedules which a satisfactory report should include will be found on the following pages. ‘These sched- ules consist of the following: A. Financial statements. 1. Statement of resources and _ liabilities, 2. Statement of income and expenses. B. Statement of results of shipping. 1. Volume and value of live stock handled. 2. Analysis of expenses and deductions. 3. Analysis of shrinkage. 4. Analysis of losses. C. Report of money handled. 1. Cash receipts and disbursements. 2. Bank reconciliation. 3. Analysis of undivided balance account. 4. Analysis of insurance fund account. ANNUAL REPORT OF THE BROOKRIDGE COOPERATIVE SHIPPING ASSOCIATION FOR THE FiscaL YEAR ENDING DECEMBER 31, 1921. A. FINANCIAL STATEMENTS. A 1.—Statement of resources and liabilities. Resources. Liabilities. Cashtin: pan ke hs ake $19. 62 | Notes payable___________--__ $200. 00 Prepared expenses (feed)... 17.50 | Insurance fund___--__-_--_-- 500. 00 Hoquipmentsc $225. soci: $1,255 —_—_——_ Less depreciation _____ 50 700. 00 1, 205. 00 Net worth. Tes | COADILaL StOCK Dard Ml oe er ciel en 1, 242.12 | Surplus beginning of @preiet }) srcd pe by ee 00 1, 242, 12 F ‘ 4 LIVE-STOCK SHIPPING ASSOCIATIONS. 25 A 2.—Statement of income and expenses. Net’proceeds received=tor live stock_..._.- $192, 478. 56 Badilroad: claims eollected!+ eross..2.2 + I aie 1, 016. 21 LMCOY 5 Ss Reo! ir || Is ESAs 2 SSN eee nr a ere oe EOE DINE WR NPD 193, 494. 77 Net amount paid shippers for undamaged stock______ $188, 230. 46 Th@sses paid. 22 UPL ee 6 2 a oe ese ee 1, 287. 90 TOA DA. ShipMers- see a ee 189, 518. 36 Add increase carried forward in insurance fund held TORSMCNEHE Of SHIMNERG: -s— 2 ee ree es 500. 00 Pee eCCEIPN ET Om STLUDOLS = ere eae ee ee ee 190, 018. 36 Baraneeravalable Lor -OXpenses 2 eee ee 3, 476. 41 AVm@cash INeCOINErShip. Tees received 220 ry | Mare Ne et ee 40. 00 PEO beh EOS Se hI CO 1G eo ca ee tee eee en eee ee a eee 3, 516. 41 ; Expenses. AEE IS COMMISSION ee o eee ks osteo Ts ea $2, 339. 40 MEO Cea CAT: COMPING te te ae eg nl hg See a gs 646. 89 PRURORBEY. Stns mame capes: SMa See eee ee 203. 50 SiG whe COTA ION, CUGS 260 oe oe le 62. 50 FI Eades rete coer ail 9 Seen ree she ee ek PC ese a 3, 2026 20 Preminm on manager’s bond: -_.—--—__.. $37. 50 LET RESIST eet or Gp ERE) Geen ee na coh sles 16. 00 WEPFeCclation 232 BA ewer. Se hieestensy PMT | ois 50. 00 BSinpine nan: wre tionery so eo 00 BESET @ PONG TAG 2 ete eon es Sy a ye eR 2. 50 Miscellaneous 222 >.> eee 1) BINA 2. 00 117. 00 Tora rOrcall expenses: <8 on ee ola 3, 369. 29 Nef prefit.ecarried. tousurplus 2) ham eriyat 147. 12 B. STATEMENT OF RESULTS OF SHIPPING. B 1.—Volume and value of live stock handled. Number of carloads. Number of head. Kind of live stock. ——_—S 7 This year. | Last year. apis year. | Last year. TORS Serer eee cine oor ae Sea oo oina ees Soca Sec cetinele pes 120 92 8, 815 6, 610 Gatilewen sree are oO ee 2 1 Mixed. 2 Ba) eee re ea ate cM tee Total 125 Te (ie ee ay Poses Hogs. Cattle. Patennemles valves io = Wee eo ess S208 OTS. 21 $4, 792. 21 AWaided-oniof insurance: funda" — 8 + se 1, 287. 90 pt ope ee NCAR, ae te 203, 261. 11 4, 792. 21 Total expenses and deductions________________ eee etfs te 701. &3 Paid: shippers vs __ see ee 185, 427. 98 4,090. 38 8 Home net value less gain in undivided balance plus insurance paid. 33703 °—23——4 26 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. B 2.—Analysis of expenses and deductions. Hogs. Cattle. Rrermei: switching. “war. tax. en $9, 429.16 $390. 16 Weel Ces kee See aebe aes aS ay ee ee 971. 73 28. 50 Wepre eal exe pe et bs wh ee Se 8 1, 055. 88 39. 68 Selling .commissionG 24:5 _—. _...~f..$h fawnawe Uimep. 2, 239. 57 99. 03 INSpection aHeaGuIsHTaANGe 8 SF he 8 ee? 32. 80 . 35 Total freight and terminal expenses________ 13, 729. 14 dot. 12 Manazers commission 227 ees 2, 248. 95 90. 45 Deducted ser imnsirance. 2 se oe 1, 133. 89 38. 12 Len Cte x pense: sr 1s Set Pees a ae ee 634. 01 12. 88 State-7eberation. dues: = Seer ree eee 60. 61 1. 89 Membership : fees: deducted... Fe ee ee 20. 00 Undivided balance: OSL EIS et eke ne oe en en eee es eee ee $17. 35 1.4 1 PSE RTS 9 aS ERS SS oe ae C09 A SR Be Oe 10. 82 6. 53 . 70 TT Paral Nome Geuucnons ee eee eee ne 4.103. 99 144. 11 Total all expenses and deductions_________ 17, 833. 13 701. 83 B 3.—Analysis of shrinkage. Hogs. Cattle FGI Werte Ses st ree ee ee pounds__ 2, 290, 951 95, 880 Mar REE Wert p52 ATU £ op cet. See a ee a ee do_____ 2, 271, 489 93, 620 Shirrsplcaees: 8-00 02 a IE) dota 19, 512 2, 260 Shrinkaze, per 100 pounds !.@) ea) |: ae 0. 852 2) 254 Average value of shrinkage, per 100 pounds, market Ses RBS 51] ree aha |_| i ee ecm nos *7. 034 *10.6 B 4.—Analysis of losses. INEOIBER OF eee 0s enn on 106 Number Jor “cripples! 222 ee OE 142 Total damaged 3 22 BUT OT ROP as Bis 248 TOSSES “Poti 6 a es eee peepee agers ne gee eg ge $1, 287. 90 CHS CCONEEECE SO SFOSS ee 5 a a SES eo ree $1, 016. 21 GOSS (COM CERO NSTC e a 8 ok EE ake) A ee 203. 50 Wet amount of claims chliected #0 92 a eee 812. 71 INE. TASSes 2 OP OFS SATS Be) Bee) ESR Ee Nea eee ae ae eee 475. 19 Net losses, per 100 pounds market weight, cents____________________ 2. 09 Net losses.of- sales value, percents. bs 6 ee ee 0. 235 C. REPORT OF MONEYS HANDLED. C 1—Cash receipts and disbursements. Receipts. Cash balance Jan. 1, 1921 Received for live stock: IE Pepper re ys rents eS eas PS $188,244.07 OFT AE (2 Lake Sea ee ery ae eee SR Ae eS EES 4,234.49 ROR oe ele ne alee ee ee hee See $192,478.56 Capital Shock ‘Solde sng se 2S ae ee eae 400.00 Membership fees. Cag =e i ee ee 40.00 Orme wed «tt pial as: att on Ss ee ee 400.00 Chiims Collecteea23 2250S i ie ee ieee 1,016.21 Total Treceipig. 920i 4a01 2b ig (Sud HOR Oa Be Re es OE $194,334.77 — +For method of calculation, see footnote on p. 39. LIVE-STOCK SHIPPING ASSOCIATIONS. 27 Disbursements. Net value of live stock: Eg es os I I ee ee ee $184,166.61 [yh |) (Es NR ES mace teasenp oes cyan cel I Bes ea 4,091.15 Te) ee eae 188,257.76 Less: Membership fees___----_-_-_=___ $20.00 Undivided balanece____-=__--____ 7.30 27.30 Paid shippers for undamaged live stock_____ 188,230.46 BOSSES EE Ohm a te eee prereset 1,287.90 Moka aids ppercss =e ta ee we ie eS $189,518.36 SEE NESS iG MISES aed SUG TLS eS a aR vl Rp 1,000.00 PER OR GE EBT SSO ETN C1 COU ED C22 ot or) SS Sy Renee ey et eee 250.00 He ERTS TEE ECG ae a Se Sa ate ep AN ee SY Pe en 5.00 MMA ACE SS CUMEBISSIONS <2 sort ee ern ee ee 2,339.40 Beeds bedding ete) costiial 0 ZAUiiti era si) 2th JIP9 29 664.39 Attorney’s fees, collecting claims______________________ 203.50 etakel Federation.diues 14 2 2d 22 A, Pe i 62.50 Raid, tor certificate of capital stock «2s ry 5.00 EP eHOLCeE, SLaUet ane ee sr Matar Stl ee 200.00 Premium pn “manager's bond. = 22.2 i=) tet 37.50 Printingandistitionery. 132 ac) ys eal toiyies eal ae 9.00 eres Gees Pe ee eed ee Bo EY et Meee 16.00 GIO PHOQHUCL 22 sw Malia Dee mae et eye ot La) ele 2.50 REISE GIENCUTS C XPEI SON te 2 ane re Ey Eh eee eee 2.00 Mofalidishursements) 12 eos evra ihs bh spr aig sree $194,315.15 I AGO eo ea og i ee A 19.62 C 2.—Bank reconciliation. Balance as per bank! Statemeng si Jill 2S iS Sith) Geary Si ea $102. 12 Less outstanding checks as follows: GO cud ete Oe eee a ee Ue Ps $20. 00 INA) EE oy eee ee es ees a ee Sk eek 62.50 - 82:50 rt ESR CCROH OUI TDOOKS = noes SS hie eC a ee 19. 62 C 3.—Analysis of undivided balance. IRS PADGETT tee Se On De a ea a eg a Be NI mec I SEN ORE $000. 00 Ra eEeE ERSTE NLIDIINIEWE ES LOE ee NS ih yk a le es $18. 71 Pee Cane SH IpIHeD ES: 221s = ete 2 ee 11. 41 InRECSS- OneeaisS over lOSSeS. == S20 ea EES 7. 30 Rramsterredstodassrandyeainut. si = 7. 30 SeeINT ETCH MME TORIVike) EOE ease ts 20 As tre hot er Rn eee er oe A ee 000. 00 C 4.—Analysis of insurance fund account. peace ear cue. SPO ATE Menge el ee ees Pe ieet Rad Gale $000. 00 Deducted during 1921: SOG a se Ee a Ma a ae oe 2S $1, 133. 89 Gene, 2 Ae a ad Bp BEES at 2 a ee ee 2 Oe 38. 12 LTE GDS TG EI BS ae A a CONT Tos, a 1, 172. 01 PA ClAINS- COHEELCG = 1, 016. 21 Total credits__________ AY a) Si egeiheaal id hea ag ables 9 se sy 2,188. 22 28 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Losses paid: BEET 55M UT a 2 Sen ae $1, 287. 90 Ca GLe aoe ai a hey Das ne i Sn ee See 000. 00 “ROCA TOSSES: yy eal Ce oe et Sie eaves! 1, 287. 90 ATTOBHE eS LOCS is Sa sal ees ans Re 203. 50 FTN AD LETT ES SA hi ge Ea eS poe ae $1, 491. 40 Credit balance: ese os al ea a 696. 82 Deduct amount transferred to loss and gain_______________ 196. 82 Net increase carriedetonward. oo) 2 25 oo a a ee $500. 00 TO Gal Ge Tae SOT Will Cee ee a ae pr aee ~~ 500. 00 ANALYZING THE BUSINESS. If the information contained in the records and reports is to be utilized to the fullest extent in determining business policies, it must be analyzed and reduced to terms which will serve as measures of efficiency. The most successful association is the one which, first, receives the higMst price obtainable for each class and grade of live stock, and, second, pays the shipper the largest proportion of each dollar of gross sales, considering the services performed. The analysis presented in Table 1 is based on the actual results ob- tained by three Iowa shipping associations in shipping hogs in 1921. Tt will be noted that even these associations, selected at random from the same territory, show wide differences in expenses, shrinkage, and losses. The extent to which these differences are justified must be de- termined by the management of each association in the light of its local conditions and other factors. It is not the purpose here to at- tempt to explain these differences, but rather to emphasize the fact that only by keeping adequate records and analyzing the results will the leaks in the marketing of live stock be revealed and their causes eliminated. : TABLE 1—COomparison of the results obtained by three Iowa associations in shipping, 1921. Association | Association | Association A. B. C. Numbers of straight carloads shipped... - if EN eae tee era eon 120 140 144 Marketsicoy witichtshippedecre ss oc.ss.cesas ne eee aeeee ee aaae x X&Y X&Z Cents per 100 | Cents per 100 | Cents per 100 lbs.1 lbs.1 lbs.1 LRAT A TPS NANA ONE WWTP Ub. cy He AUR A ain ar ood dono a osu ; 41.5 34.0 38.5 1 (6 [eect ae a a ca pa nae Ae ie Ne a ee a set 4.3 2.6 shal PNPAT GLO el ra let aN 7000. (5 LE AAU I aS pe ays ae STS Ra a 4.6 Ps | 3.8 Selling*commission | 20/0) Hiuswsnys! Bee co eee hunk. Ace) 9.9 7.4 8.8 IMSprance MMS MeECEOMes Hees Se Ney ee ee Nala en oes orate 0.1 0.1 0.1 Total freight and terminal expenses...................-- 60. 4 46.8 54.3 IMAI AS CTZSCOIMLTITSSI OMe ae fr cere ee eee 9.9 6.8 ba WocalveaTiexpEMSe ey yee mee ia ol anal ie eR ey Ht 1.9 2.3 Insurance chance etwas os sae ee mca re meee eee eras te 5.0 6.0 5.0 HeGSTaAtlON GUS Hey Lacie wes whee ho eseereu Nene hene aloo Rt ate 0.3 0.3 0.3 Undivided balance and membership fees...............--- 0.1 0.2 0.0 Total home expenses and deductions. ...........-.----- 18.1 15.2 havens bes: Total all expenses and deductions. ...............-.----- 78.5 * 62.0 67.6 Less undivided balance, insurance fund balance, and mem- Dership fees ee ONUs eee whet oli es re ee ir en ene eo 3.0 2.9 0.3 Netishippingiexpenses ia eae caene eee eee eee ree 75.5 59.1 67.3 1 Based on market weight. LIVE-STOCK SHIPPING ASSOCIATIONS. 29 Taste 1.—Comparison of the results obtained by three Iowa shipping associa- tions in shipping, 1921—Continued. Association | Association | Association A. B. C. Cents per 100 | Cents per 100 | Cents per 100 lbs lb lbs bs. S. : COSHORSHET ALC en yen eee ee eras Ament Seen, Cae AE ee 7.03 9.75 12. 25 Total of net expense and cost of shrinkage............. 82. 53 68. 85 79. 55 General expenses, not included in above..................---- 0.5 0. 70 0.30 Pasnranee rine: clrarges © certs VSR eTar Ok Soe EE oe eas 5.0 6.0 5.0 OSSesrpala ts 2 Thon She tere Se ees esnane | peer . fate aay Bet! 2.0 WIAIMSICONECLER MOU ee eee el ine nore es lee See a its 3.6 2.1 0.0 INetfosseswggay Seg 5 METRES | 2 SS ee 21 3.6 2.0 Per cent of gross sales value paid shippers...............-- Ife 91.8 94.2 93.0 Average price paid shippers per 100 pounds, dollars.........-.. 8. 16 8.48 | 9.10 | 2 Calculated as follows, i. e., for hogs: Paidshippers zor hops! (Statementy ll) see sk cee oe a sen oe Sone eae bee teas Seon eech ese’ $185, 427. 98 Add excess of insurance fund charge over losses paid, including net amount of claims OUECHEG EE TLY oe aCe pases ers oS peeing ee! Perper eas ho ers ee ea 658. 70 PRA SMITIGITTORG Mala CO— PITT Ne yee eg PS FN ae ne eee coc cet ddpoccenee 6. 53 TP yiie P8S Sak SI Rags s bbe oe oo Oak RA RN Ua CRN OES UMN ieee e Bok NUM ODE MREE seer ea re 186, 093. 21 Deduct proportionate share of general expenses not deducted in determining amount Paid Shippers*aboves. seuss h se hee ee es eee Pisce lie teas re 2 112.32 INE walligmE hogs 2h ehh a ee 28o. FI Ce ei ete Pe oe lS 185, 980. 89 $185,980.89 2,271,439 (market weight)=8.188¢=net value of hogs per lb.; 19,512 pounds of shrinkage, at 8.188¢=$1,597.64— Total cost of shrinkage; $1,597.64+2,271.439 (market weight)=7.034¢=Cost of shrinkage per 100 lbs. WHO SHOULD KEEP THE BOOKS? The question frequently arises as to whether the manager or one of the officers should keep the records. Although local conditions will to a considerable extent decide this question in each case, it will ordinarily be found more convenient and satisfactory if the books are kept at the place of business or some other place where they are accessible to the members and the management. Inasmuch as practically all the business contacts with members and others are made by the manager, he is most frequently called upon to answer questions regarding the business, and, therefore, has occasion most frequently to refer to the books. Furthermore, the manager of the association is in a position of leadership, and the directors and members look to him to take the initiative in determining the busi- ness policies. Unless he has the figures regarding the business con- veniently available for constant reference and, analysis, he is in very much the same position as the pilot without a compass It is not, of course, always possible in practice to make ideal arrangements regarding the clerical work. In fact, the manager who understands the handling and marketing of live stock and who is also qualified or adapted to do clerical work is the excep- tion rather than the rule. The disbursement of the funds and the bookkeeping is therefore frequently done by some other officer of the association, usually the secretary, or the local bank. In some cases, the manager attends to the prorating and issues the checks for live stock and the secretary-treasurer issues the checks for the home expenses. The chief disadvantage of the latter plan is that all of the records are seldom, if ever, available at one place or at one time. The prime considerations to be kept in mind are: (1) Safeguard- ing the funds which can be accomplished by bonding those responsi- 30 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. ble for the funds, by monthly audits by an auditing committee, and annual audits by a qualified, disinterested accountant; (2) havin all of the records accessible at one place, preferably at the place o business, or at the bank; (3) having the records kept up to date and according to approved methods. If neither the manager nor the secretary is qualified to do the clerical work some one who is qualified can usually be induced to assume this responsibility. Econ- omy in the matter of keeping the records is usually dearly bought. Whether the manager or the secretary keeps the books, or whether the work is delegated to hired help, it is highly desirable that both the manager and one or more members of the board of directors possess a sufficient knowledge of accounting so that they can intelligently judge the results obtained and the method of obtain- ing them, and can supervise the work when delegated to hired help. MARKETING METHODS. The foregoing discussion of forms, accounts, and procedure is based on certain conclusions reached after an extensive study of cooperative live stock marketing methods. In view of the many different methods used in handling the business at home as well as at the markets, this discussion of records and accounts would be incomplete unless supplemented by an analysis of the business prac- tices. Moreover, only by free and thorough discussions of the dif- ferent methods used will real progress be made in standardizing the practices and in eliminating those methods which are unsound and uneconomical. CERMINAL MARKET METHODS. The chief objective of the cooperative live stock shipping move- ment is to obtain for the shipper the actual market value of his particular kind and quality of live stock, less the actual cost of marketing it. The extent to which this ideal will be realized de- pends upon the prevailing methods of selling and weighing the live stock at the central markets and handling it at home, and upon the mehods used in prorating. A clear understanding of the methods of handling the live stock at the terminal markets is nec- essary if real progress is to be made in realizing this ideal. The prevailing method of handling hogs seems to be to sell and weigh by grades and to prorate the shrinkage either on the entire load or separately on the bulk of the load and on the throwouts and packers. On some markets a considerable number of hogs are sold as straight carloads, the salesman pricing the animals in each individual lot on their merits and prorating the shrinkage either on the entire load or separately on the bulk of the load and on the throwouts. Less frequently loads are sold according to marks, unless it happens that given lots fall into specific grades which are sold to different buyers. In such cases the shrinkage is ascertainable separately for each lot and may be charged to the individual owners as it actually occurs. Much the same methods are used in handling calves and sheep, except that selling and weighing by grades prevail to a greater extent than in the case of hogs. The grading frequently consists merely of culling out the off grades and selling the bulk of the load as a separate lot. | | LIVE-STOCK SHIPPING ASSOCIATIONS. 31 Cattle are generally sold and weighed by ownership, each owner being charged with the actual shrinkage on his animals. However, when the cattle in a load run fairly uniform as to grade and quality, they may be sold as one lot. Even in such cases individual weights are usually obtained. The same methods do not predominate to the same degree on all the markets. The practice of selling and weighing by grades pre- vails to a greater extent on some markets than on others, depend- ing partly on custom, the adequacy of the handling facilities, the practices of packer, order and other buyers, the volume of co- operative shipments, and partly on the custom and attitude of the salesmen of commission firms. Whether or not a market is receiv- ing shipments from territory in which cooperative shipping is of recent origin also has its influence. It may be said, however, that on all markets the commission firms which solicit cooperative ship- ments (and most of them now do so) attempt in so far as it is possible to carry out the instructions of the managers with respect to selling, weighing, and prorating. Naturally the manager of a shipping association is vitally con- cerned in having the live stock handled in such a way as to net the shipper the largest possible return. In order that the manager may attain this end what shall be his instructions to the commission firm regarding methods of weighing and selling? The following discus- sion of the relative merits of the different methods should aid him in deciding this question in the light of the conditions under which he is operating. The question seems to resolve itself into three main problems: (1) Selling the live stock so as to obtain the largest gross amount pos- sible; (2) weighing so as to reduce the shrinkage to the minimum; (3) selling and weighing in such a way as to make possible a fair division of the total returns and the shrinkage among the different shippers. SELLING METHODS. Selling each owner’s live stock separately is usually impracticable, except in the case of cattle. More time and labor is required to handle a load under this method and it is more difficult to find buyers who are willing to take the time and trouble to make their purchases piece- meal. More sorting is required, resulting in more shrinkage, and the number of drafts on the scales is increased. The net return is more likely than not to be disappointing to the shippers. The chief advantage claimed by many shippers for this method is that it materially reduces the shrinkage, but it is doubtful if this is the case. The chief objection is that when the animals are not of uniform grade and quality, the pricing of the load according to grades is based on the salesman’s opinion rather than on actual sales which, unless arrived at conscientiously, may result in an unfair dis- tribution of the returns among the shippers. This objection can, how- ever, be overcome to a considerable extent, if not entirely, by home grading by a competent manager. ; The main disadvantages of selling by ownership might be avoided by selling the carload as a unit for a flat sum. Some salesmen main- tain that more can usually be obtained for a straight carload than for a load which is divided into several lots according to ownership. on BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. It is reasonable that buyers prefer to buy in larger units than the individual lots of live stock in a typical cooperative shipment. Ié is even claimed that it is often possible to “ work off ” inferior animals to better advantage by this method than by grading the load; in other words, to “ make the good hogs sell the poor ones.” The ex- . tent to which careful buyers can be imposed upon to this extent is a question. Selling according to quality or grade predominates on many of the important markets and is without doubt the most desirable method, especially where the animals in the load represent a con- siderable range in quality and where the spread in the market price for the different grades 1s wide. Each shipper’s animals then actu- ally sell on their merits, as nearly as this ideal can practically be approached. Excessive shrinkage is avoided, and buyers, not being compelled to take undesirable animals in order to get the desirable ones, are inclined to bid more nearly what each grade is actually worth. More than this, no manager can hope to obtain for his ship- pers. Where a shipping association has a sufficient volume of busi- ness, this sorting can be done at the shipping point and only animals of one grade loaded in a car. WEIGHING. The methods used in weighing the animals are of at least as much concern to the manager of a shipping association as the methods of selling. He is concerned not only in keeping the shrinkage down to the minimum, but also in dividing the total shrinkage on a fair basis among the different shippers. As each group of animals sold at a given price must be weighed separately, it follows that the method of sale determines to a large extent the method of weighing. The weighing problem resolves it- self into the question of the merits of dividing shrinkage according to ownership or of prorating it uniformly on some fair basis. Weighing by marks.—The advantage claimed for the method of weighing by marks is that the actual shrinkage incurred on each lot can be definitely ascertained and charged to the individual shipper. This is always desirable in the case of cattle, as the shrinkage differs widely on account of the wide differences in the quality and condition of the animals and on account of different methods of feeding and handling the cattle. These differences are of less significance in the case of calves. Wide differences often occur in the shrinkage of different lots of hogs and sheep. Hogs or sheep coming from green pastures will shrink more than those coming from the feed lot. Animals driven or hauled different distances to the shipping point often show considerable differences in shrinkage. One of the prob- lems of the manager is to single out the shipper who feeds heavily before delivering his live stock. Weighing by ownership is the most effective method of doing this. Managers frequently request sepa- rate weights only on lots which they suspect have been filled before delivery. The chief disadvantage of weighing by marks is that excessive shrinkage usually results. Extra shrinkage resulting from weighing according to marks has been reported as high as several hundred pounds in some cases. Naturally this difference will vary with the Ll LIVE-STOCK SHIPPING ASSOCIATIONS. 33 number of lots in the load. This difference in shrinkage is due to loss of fill, respiration, and to the fact that yard scales usually register weights in 10-pound intervals. Another objection which is made to this method of weighing is that more facilities and labor are required at the yards, which eventually must be reflected in higher yardage and commission rates. The premium often paid by order buyers, who are usually eager to get their cars loaded promptly for shipment east, is sometimes lost to cooperative shippers because of the delay occasioned by weighing by marks. Altogether, this Bots of weighing does not make for economy in live-stock mar- eting. Weighing by grades—The disadvantages of weighing by marks may be avoided by weighing by grades. When separate weights are requested on lots which the manager suspects have been filled and when shippers have learned how to handle live stock properly before delivering it at the shipping point, weighing by grades will make possible as nearly correct a distribution of shrinkage as it seems practicable to make. GRADING AND PRORATING AT HOME. On most markets, an extra charge of $2 to $6 per carload is made when extra work on account of individual ownership is required. Some of the local packing plants and reload stations, particularly in the Middle West, refuse to handle shipments when such extra work is involved, thus practically closing such markets to cooperative association. This raises the question of the practicability of grading and prorating at home. There is a marked tendency among the older associations to perform this service at home. In some cases, where a local market is the only advantageous outlet for a shipping association, this work has been done by the manager from the begin- ning. Sucessful grading at the shipping point requires that the manager be familiar with market grades and keep closely in touch with mar- ket conditions. It also requires that there be a fair volume of busi- ness. The manager could, of course, remove the basis for the extra charge and such objections as might be made to handling cooperative shipments because of the extra service-required, by crediting each shipper with the weight of each grade of live stock delivered and dis- tributing the returns on the basis of his grading. This he could do whether the shipment consisted of one car or several. However, a further advantage, and perhaps a more important one, is to be gained when the volume of business is such that the live stock may be sorted and shipped to market as straight carloads of uniform grades. Not only is the work involved in handling reduced to the minimum, but the stock is placed before the buyers to the best advantage. In practice, only two things are necessary for the successful working of such a system, viz, a capable and impartial manager, and members who are true cooperators. This last requirement means that (1) the shippers shall ship regularly through the association, so that any slight error in sorting would average out over a Series of shipments; (2) that they shall have the cooperative point of view, So that they will be ready to accept that method of doing busi- ness which results in greatest economy and best results for all; and (8) all shippers must be so loyal to the organization and their fellow members that 34 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. they will give their stock proper treatment prior to shipment, rather than stuffing, salting, or using other devices for securing a fraudulent home weight or an excessive fill at the market.° The question of prorating at home presents somewhat the same problems as grading. No doubt commission firms in most cases are better equipped than the shipping associations to do this work. On the other hand, inasmuch as the alert manager insists on checking the work anyway, he can with but little extra effort make the original calculations. Too frequently, because of the dependence upon the commission firm to do this work, the local management is unaware of the methods used or the problems involved. A critical knowledge of these methods and problems is essential to progress in realizing the ideal of the shipping association, namely, to obtain for each shipper what his live stock is actually worth less the cost of market- ing it. Conditions are gradually becoming more favorable for grading and prorating at home. Managers and officers are acquiring experience, and the development of the local association in many States seems to be in the direction of consolidating the business under fewer and better qualified managers. The work of prorating would be greatly facilitated by the adopticn of a uniform system of records and the use of labor-saving devices, such as calculating machnes, computation tables, and suitable printed working forms and permanent records. PROBLEMS INVOLVED IN PRORATING. Much of the success of a shipping association depends upon whether the shrinkage and expenses are charged and the returns dis- tributed fairly among the different shippers. Prorating, or the calculation of the returns due the individual shippers, is therefore one of the most important operations to be performed in the manage- ment of a shipping association. Prorating Hapa the following problems: (1) Distributing shrinkage; (2) distributing the gross amount among the different grades of live stock when a carload of mixed grades is sold for a lump sum; (3) dividing the expense among the different kinds of stock in a mixed car; (4) prorating when a shipment consists of more than one car; (5) distributing the total expenses among the individual shippers according to the live stock shipped by each. Distributing shrinkage—The usual practice in distributing shrinkage is to charge cattle with their indivdual shrinkage, which of course, necessitates obtaining individual weights at home as well as at the market. In the case of hogs, calves, and sheep, however, the usual practice is to prorate the total shrinkage on some uniform basis, preferably so much per 100 pounds. Shrinkage is sometimes prorated on the head basis, which method is equitable only when the animals included are of approximately uniform size and weight. When the shrinkage differs for different grades of animals, as, for instance, between good butcher hogs and packers, the rate for each grade showing a marked difference should be calculated separately. As already noted in the foregoing, any lots of animals which may unduly influence the average shrinkage ® Cooperative Live Stock Shipping in Iowa in 1920, by E. G. Nourse and C. W. Ham- mans, lowa Agr. Exp. Sta. Bul. No. 200. LIVE-STOCK SHIPPING ASSOCIATIONS. 35 should be weighed separately at the market and the owners charged with the actual shrinkage. Distributing flat sum among different grades in carload.—Where a carload of hogs of mixed grades is sold for a flat sum, the commis- sion firm usually indicates on the account sales the market value of the different animals in the shipment. Where hogs, calves, or sheep are graded locaily the proceeds are distributed on the basis of the market quotations prevailing on the day of sale for the different grades. Dividing the expenses when mixed loads are shipped—The ques- tion of mixed loads is of more importance in some localities than in others. However, nearly all associations ship some mixed. loads. Much difference of opinion prevails as to the method to be used in dividing the different items of expense between the species. It is urged by some, for instance, that the extra freight should be charged to the hogs, and by others, to the cattle, calves or sheep. Still others urge that the total expenses should be divided equally among the different kinds of stock on the weight basis. The problem of dividing the expenses centers mainly about the item of freight. Obviously, it is not fair to members shipping 16,000 pounds of hogs in a load to charge them with the freight burden due to the inclusion of 1,000 or 2,000 pounds of cattle. It would be still more unfair to charge the cattle with the extra bur- den. Even if the freight were divided equally on the weight basis, it would pay the hog shippers much better to ship their 16,000 pounds in a carload by themselves. The weight basis of division seems to be the only practicable basis. When distribution on this basis puts an undue burden on either group of shippers, the only solution is not to load in such unfavorable proportions. By educa- tional work and progressive leadership on the part of the manage- ment the community may be made to see the penalty paid for ship- ping in unfavorable proportions. It should be clear not only to the management of a shipping association but to the membership as well, that an association shipping under excessive freight burdens due to improper mixing is laboring under a considerable handicap, especially when competing with agencies which may take special care to avoid such burdens. The division of the other items of expense involves no special difficulties. The yardage charge is divided according to the rate per head actually applying on each species. The cost of corn is charged to the hogs and the cost of hay to the cattle. Inspection applies to hogs only. Fire insurance, because of the smallness of the amount, may be arbitrarily charged to the bulk of the load. The selling com- mission is a per-head charge and should be divided on that basis. For instance in shipment No. 112, on page 41, the rate applying on hogs was assumed to be 30 cents, or $15.60 for the 52 head; and on cattle, 90 cents per head or $4.50 for the 5 head. The total commis- sion at: these rates would be $20.10. If, however, $18 is assumed to be the maximum commission applymg on a single car, the pro- portion chargeable to hogs would be as $15.60 is to $20.10, or 77.6 per cent, and the proportion chargeable to cattle would be as $4.50 is to $20.10, or 22.4 per cent. The manager’s commission and the insurance fund charge for shipment No, 112 would be divided as follows: Manager’s commis- 36 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. sion, 6 cents per 100 pounds for hogs and 4 cents per 100 pounds for cattle; insurance one-half of 1 per cent of the gross sales value of each kind of stock. (See p. 41.) The local car expenses usually con- sist chiefly of feed and bedding. Each species should be charged with the feed it receives, and the bedding may be divided on the basis of the space occupied by each species in the car or on the weight basis. Ropes and special crates for vicious animals should be charged to the owners of the animals requiring their use. Prorating when shipment consists of more than one car—When several cars of the same kind of live stock are shipped the same day, should the returns, shrinkage, and expenses be averaged, or should each car be prorated as a separate unit? If 25 farmers deliver 200 head of hogs for shipment. the fact that three cars may be required to transport the hogs is and should be of no concern to them. Each patron is entitled to the same price for the same grade of live stock and should be assessed at the same rate of expense as every other patron whose stock was included in the shipment. In actual practice, however, the solution is not always so simple. When only one grade of hogs is loaded into each of several cars included in a shipment to one market, the expenses can be averaged for the entire shipment, the shrinkage in the case of the-hogs can be calculated separately for the good butcher hogs and the packers, and also for the “throwouts” when their shrink is abnormal. In the case of calves and sheep, the rates of shrinkage should be calcu- lated separately for the bulk of the load and the culls or “ throwouts,” whenever the rates show a marked difference. As each car in the above case is assumed to contain but one grade of live stock, each grade can be priced to the shippers in accordance with the actual sales. If two or more cars of the same grade sold for different prices the proceeds should be averaged. Where the shipment consists of several cars of mixed grades it is clear that all shippers should receive the same price of the same grade of stock, even though the animals were distributed among the sev- eral cars and might actually have sold for different prices. An entirely different situation is presented when part of the ship- ment goes to one market and another part to another market. In this case the shrinkage and expenses should be calculated separately for the cars going to each market. A question arises, however, as to the distribution of the net proceeds. If the manager has mis- judged the relative merits of the different markets, he finds himself in an embarrassing position when attempting to explain to a shipper why his stock brought less than that of a neighbor, whose stock happended to be included in a car shipped to another market which turned out to be the highest one that day. If the stock is graded and each grade shipped to the most advantageous market, it might still happen that the lower grade would bring the same or a higher price than the higher grade, and the manager would have the same difficulty in attempting to explain the inconsistency. In spite of these difficulties, the manager is presumed to have used his best judgment and to have patronized the market offering the best average results for each class and grade of livestock. Each ship- ment to a different market should therefore be treated as a separate unit. If dissatisfaction results frequently, it means that the manager - LIVE-STOCK SHIPPING ASSOCIATIONS. arg misjudges frequently. A thorough knowledge of the different markets, the relative costs of shipping to them, and other factors concerned are essential on the part of the management if the greatest possible success is to be achieved. Some managers shift the respon- sibility for the choice of markets to the shippers themselves or to the shipper who owns the bulk of the load. Distributing the total expenses among the shippers.—Little uni- formity exists in the methods used in distributing the expenses among the shippers. This is true whether the prorating is done at home or by the sales agency. In the case of some of the older asso- ciations, particularly in the Northwest and in some of the Corn-Belt States, all of the expenses are added together and charged to the shipper at so much per 100 pounds. In other cases the attempt of the cooperator to obtain the actual market value of his stock less the actual expenses of marketing, seems to have been interpreted as meaning that the member’s statement must show in dollars and cents how much he has contributed toward each of the six to a dozen different items of expense, calculated on two or three different bases. Between these two methods there exists a wide range of variations. Under the method of prorating illustrated in the following pages all expenses are added together, irrespective of the basis on which charge was made against the shipment as a whole, and divided among the shippers equally on the weight basis. The advantages of this method are: (1) The work involved in prorating is reduced to the minimum, as only one calculation is necessary in determining the amount of ex- penses to be charged each shipper, compared with the large number of calculations involved in the detailed method of prorating. The extra work involved in prorating is reflected in the extra charge of $2 to $6 per car made by commission firms for handling cooperative ship- ments. (2) The distribution of expenses among the shippers is as fair on the average as is practically possible. Inasmuch as each 100 pounds of livestock in a shipment receives practically the same service, it seems logical to distribute the expenses on the weight basis.2° Effi- ciency in marketing calls for handling the shipment in such a manner as will yield the highest possible net price per 100 pounds for the entire shipment, rather than striving for individual accounting of each shipper’s stock at any cost. (3) The single-rate method of prorating conveys to the shipper in an emphatic manner the factors which determine the financial results of the shipment, i. e., the weight and shrinkage, the selling price, the total expenses in dollars and cents, and the rate per 100 pounds. It is believed the educational benefits of cooperative shipping can be realized more fully by presenting the detailed information regarding expenses, etc., in the form of comparatively monthly summaries than by presenting them on the individual member’s statement. Variations in expenses, losses, and shrinkage can be explained more satisfactorily when based on more extensive data than a single shipment affords 10 Tt is sometimes urged that it is only fair that the expenses should be passed on to the shipper on the same basis as they were actually incurred. Carried out to its logical conclusion, this would necessitate the determination of the amount of feed actually consumed by each lot of live stock separately. It would mean weighing by ownership determine actual shrinkage by lots. It might even mean that shippers should assume the risk of losses individually, 38 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. and the danger of overemphasizing the importance of minor details or drawing conclusions from an extreme instance is reduced. Whether the expenses are reduced to one rate per 100 pounds or split up into several rates and applied on different bases, present prac- tice seems to favor having each shipment bear its own expenses. There is some tendency, however, particularly among the older asso- ciations, to favor a fixed rate of expense applying over a period of time. The chief argument in favor of this method is that it spreads the risk of variations in expenses over a larger number of cars. The variations in the expenses of different shipments are likely to be greater in the case of small associations than large ones because of the greater difficulty in getting enough live stock to make a full load without excessively delaying shipments. Differences as high as 20 cents per 100 pounds are not uncommon. Certainly it is no fault of the shipper when his live stock happens to be included in a ship- ment which, because of short weight or for other reasons, incurs rela- tively high expenses. It seems entirely logical to spread this risk over a number of cars, just as the risk of loss due to dead or crippled animals is spread. | Another argument in favor of this method is that the shipper knows beforehand just what it will cost to ship. Furthermore the work involved in prorating is reduced to the minimum. If the fixed rate is to be applied fairly, however, it must take into consideration differences in the costs of shipping the different species of live stock both in straight and mixed loads, seasonal differences in costs, and differences in the costs of shipping to the different acces- sible markets. Many associations apply, even on carlot shipments owned by a single shipper, rates which reflect the difference in the amount of service required in handling them. FILLING OUT THE PRORATING SHEET. The steps followed in calculating the returns for shipment No. 111, the prorating sheet for which appears in Figure 3 on page 7, are as follows: 1. Insert shipment number, date, shipping point, car number and railway in the spaces provided therefor. 2. Fill in the blanks under “expenses.” The freight and ter- minal expenses will be obtained from the account sales received from the commission company and in this case amount to $103.63. Assume the home expenses to be as follows: Manager’s commission (6 cents per 100 pounds on market weight of 15-905). DOUNGS) ole a te eee ee $9. 54 Insurance fund (one-half of 1 per cent of gross market value of SLED SG Sos 03) ae Sisal lin epic aio tl pete Sek Teal hg SSeS yo Ss 7. 78 Local earvexpense-(S bushels: corn at 50 cents) os) ss ee ee 4.00 Dues (State; association): 022222) 205 tt eee ye ee See . 50 il 3) 9 a Ae eee Caen ely SCs Pees Sy See a eS 21. 82 3. Calculate the rate of expense per 100 pounds by dividing the total expense, $125.45, by the market weight, 15,905 pounds (market weight includes dockage, if any), which gives a result of 78.87 cents per 100 pounds. To avoid the awkward fraction in figuring the expenses, a rate of 79 cents per 100 pounds is used in calculating each shipper’s expenses in this illustration. | | LIVE-STOCK SHIPPING ASSOCIATIONS. 39 4, List each owner’s delivery of live stock according to the price ranges on the account sales (or if graded at home, according to the home grades) and insert the home weights. 5. Calculate the rates of shrinkage as follows: Shrinkage ° Home Market Kind. : Rates weight. | weight. | ths. | Ratet | usedin prorating. | |] | Per cent. | Per cent. SILECHEI OES ee = td Fe Reee ea crak 5 Sane cha Saad kee 14, 180 14, 035 145 1.02 1.00 LEASE erie | Dr CSUR 1 Se ss JE RRC See 6 ere en a 1, 905 1,870 35 1. 84 2. 00 | | | 1 The rates of shrinkage are obtained by dividing the shrinkage in pounds by the home weight. In actual practice, shrinkage is frequently computed by using even percentage figures, rather than the actual figures. This practice has been followed in the illustrations in this bulletin (1 per cent instead of 1.02 per cent and 2 per cent instead of 1.84 per cent and, as will usually be the case, has resulted in weights being used on the prorate sheet (Fig. 3) which vary slightly from those on the accounts sales (page 7). 6. Calculate each shipper’s shrinkage by multiplying the home weight by the rate determined above for each kind of live stock, and prove the shrinkage calculations by comparing the total shrink- age deducted plus the market weight with the total home weight. Where the shrinkage rate used in prorating has been rounded up or down, the total pounds of shrinkage and the total market weight as shown on the prorating sheet may be a few pounds more or less than the actual shrinkage and market weight. 7. Calculate the gross amount due each shipper, using the prices given on the account sales. In the case of dead or crippled animals, the calculations on the prorating sheet are carried through at the prices such animals would have brought undamaged. Any differ- ence in the prorated market weight and the actual weight due to averaging the shrinkage will also result in a slight discrepancy between the calculated gross sales value and the gross sales value shown on the account sales. The gross sales value obtained on the prorating sheet will also be greater than that shown in the account sales when damaged animals are calculated at the price they would have brought undamaged. ‘ 8. Calculate the amount of expenses to be deducted from each shipper’s returns by multiplying the market weight by the rate obtained under (8) page 7. Here again the total prorated expenses may differ shghtly from the actual expenses on account of rounding the expense rate up or down to facilitate calculation. 9. Ascertain the net amount due each shipper and prove the de- duction of expenses by comparing the sum of the expenses and net amount with the gross amount. 10. By carrying out the calculations indicated under “ proof of settlement ” in the lower left-hand corner of the prorating sheet, the total difference between the prorated results and the actual results of the shipment will be determined. The gross sales value will be found on the account sales. To this will be added insurance payments, if any, to obtain the total to be prorated. The total deductions will consist of the total expenses listed on the left-hand margin of the prorating sheet, plus membership fees, if any. Subtracting the total deductions from the total to be prorated will give the balance for 40 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. distribution, that is, the amount which could actually have been dis- tributed had = aes been calculated phere ele to the pound and ex- HOME EXPENSES Manager’s Commission $__. Insurance Fund - = = - Operating Expense - - = ~ : Th {if sui a gd Ree =e JeCEECHHS ECE Vv oes Sere ee Dorcel On gee ee BS OE re Wee, Z Shipment No. ” Date Ship Car Nos. Loaded Po tnd fi Z| Weight ia ap as || 28! el a | eee | baed ies 1368S a eS ee ser enn ; fe / (PE | Pee amare Be nee! bases Dae F pea el eee ee ears Bie ere cea cies poe Wie. 12.—Manifest for shipment No, 112 MANIFEST - OF LIVE STOCK SHIPPED BY a ls, At =] Se} fla ots BB sae PS pelea HERAT eT I LFF 4 54 Y Z .L 2g ei & jo) = £ § ra) 3 > 4S oo : oF 5 w On & oi | Bo BE et) es penses to the penny. In the illustration it is found that $1,430.03 was actually distributed, whereas $1,430.91 was available for distribution, hence the undistributed balance- -gain of 88 cents. oti Ta? oink . LIVE-STOCK SHIPPING ASSOCIATIONS. 4l PRORATING MIXED SHIPMENTS. The prorating of carloads containing more than one kind of live stock is discussed under prorating on page 36. However, in order to illustrate more fully the procedure involved, and assumed carload referred to as shipment No. 112 containing 13,505 pounds of hogs and 5,400 pounds of cattle is carried through the records in the following pages. Other complications such as reimbursement for dead and crippled animals, dockage, and membership deductions, are also in- troduced into this shipment. For the purpose of this illustration, it is assumed that the scale tickets show that live stock was delivered as shown in the manifest illustrated in figure 12. It is assumed that the account sales shown on this page represents the results of the sale of this shipment. [Account sales for shipment Nv. 112.] CooPERATIVE CoMMISSION Co., UNION Stock YARDS, CHICAGO, NOVEMBER 6, 1922. Sold for the account of the Brookridge Cooperative Shipping Association, Brookridge, Iowa. Dockage. - Buyer. fede ernst) Wel eG sa ee Marks. Price. |Amount. Swift o- 4.2 Doel AAOPS: 2 te. 45465) | ko. 5a| oo. = ha .|2ce- od 2-1; 20 No. mk....| $10.00 | $446.50 Hinkle... .. 1 | Dead.... DG: | Pas Taree e Se | casos TehS10). Rees 1.00 2.00 Armour 20 | Hogs. CC one iene ee [,escheuee Normark-22t2 see 9. 50 564. 30 Hinkle..... dtieCript= oe: SU Chel eee chess begs cose gel (ea ($9.50) = ane 7.00 21.70 Shh ine ie 7 | Packers 2,140 1 eseeccae 408) Vs Sasae ese ote 8. 00 168. 00 Cudahy..... 1 | Stag... DONE Rc Ss 1 {())\ ee Rea sees 7.00 14.70 Brennan 3 | Cows. SOG) (es GaSe dP toososs Sibi sees 4 Besteset seasons aesee 6. 00 198. 00 Dozs4 1 | Cow.. SOU anaes See eee eens see oe ens 7.00 65. 10 Dosa 1} Bull. x TSAO TSTO) 8 Ls eee et Bl [es net Ln ae es a 5. 00 52. 50 1, 532. 80 C. & NW. 5694, 22,000 pounds, @ 40 cents... .$88.00 | Freight....................--.-.---- . 64 SNVEECHIN pire ene ae ns 3.00 | Yardage 52, @ 12 cents; 5,@30cents 7.74 MVE cE. ot ei hese pe A ee 2 G40! in SuTa Ce ae 5 sea eee ere ee -07 Hay, 100 pounds=s- ses. sage = ee Ay ls 93::64..1 Corn, 5:bushelSssa-seee-2-2e 2 eee 6.25 Imspection: s.sa5- 22 6 sree ee eee - 20 Commission! 2-SAcae= | saes ese eee Ee 18.00 126.65 Net proceeds=.s--.2 3.55 ase ce 1, 406.15 1 Undamaged value per 100 pounds. In prorating the returns for this shipment, the shrinkage is first ascertained separately for the butcher and the packer hogs as follows: Shrinkage. Home Market Kind. No. weight. | weight. Lbs. Per cent. LS TEETUIGTS 2s" oe ee sO Ct 20 ee BOS ee ee 44 11, 035 10,915 120 11, 1087 Cecv og: Se pS eR as es cA Oe 7} 2185] 2140 45| 12.06 1 The shrinkage in pounds, divided by the home weight gives the rate of shrinkage in pounds per 100 pounds or as a percentage of the home weight. The rate of 1.1 per cent was actually used in calculating the shrink- age of the butcher hogs, but in the case of the packers 2 per cent was used instead of 2.06 per cent. The stag and the cattle were charged with their actual shrinkage. 42 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. The expenses are next divided item by item between the hogs and the cattle. The freight and terminal expenses appear on the account sales and the home expenses are assumed to be as follows: Manager’s commission: Hogs, 13,335 pounds, terminal weight, at 6 cents 100 pounds_ ye 00 Cattle, 5,280 pounds..at 4.Gents.. .. tach 2g ys eae ae 2: AD $10. 11 Insurance fund one-half of 1 per cent of gross sales value_____________ 7.66 ocainedr exprenSeo tila VA PCRS se ESR R SS a BAS PEE So A Se eee nee ee 3. 50 Statesrederation Ques. S222) 655) ee ae ee . 50 PEO at es se a oe ok eI een ee ee PRT! Also deduct membership fees $2 (Johnson $1, Peterson $1). The division of the expenses is shown in the following table. The total expenses are shown in the first column, the amount chargeable to hogs in the second column and to cattle in ‘the third column. The total expense for each species is then determined and the rate per 100 pounds calculated on the basis of the terminal weights.” Hapenses. Expenses. Total. Hogs. | Cattle. ireient switchin sand warjtax. ooo. Stee ood See esiooticee ae retin ciee $93. 64 $67. 42 $26. 22 Yardage STERIC SE ae ae A a oT ee A ae ENE an Ae ET SRS 7. 74 6. 24 1.50 GGG SRE 5 a Apia Rea Se ee eS Sy asim ee Pee et Sores ibe), es 8 7.00 6. 25 .15 LS TGS DS EY OT eee ae Po a2 soso sone Sece ene esos ease Seco aaesee 227 . 20 -07 DeMine (COMMISSION: 5-225 shana ee wee cao com Se enone nl 5 eee a eee 18. 00 13, 97 4. 03 Motalemarketiexpenses-ce 2 . wes See cee es casos See ecm ae ee ee Nee 126. 65 94, 08 32. 57 Mana cers COMMISSION: os. 622. Sater oe te oc Sean ace see eee eee 10. 11 8. 00 2.11 MRSULANCG RUNG. Seles SSS Ok ee ee ee siete = ck! Sy cveiata rm Seon einisls 7. 66 6. 08 1.58 Operating expenses! $3150; ‘dies S050 soe we as Sec sedi sess ct eee Bae 4,00 2. 88 1.12 LUGUPI SOT yGo.g0 SECS. eee eRe aE ape or bd Sane oe ee see atom 21.77 16.96 | _ 4. 81 Totaliexpenses=22s%e see: oc s cee sree eee ee teen eee ee eee ee eee ee eee 148. 42 111. 04 37. 38 Rate per lOO POUNGS S62 eee ve oo to Secs co eee eee eee Cents a) 2eeree micas 83. 28 70. 8 To facilitate the calculation of the expenses to be charged each shipper, the rate for hogs was rounded down to 83 cents and for cattle up to 71 cents. All data needed in prorating are now before us. A separate pro- rating sheet is used for each kind of live stock, and after the ex- penses have been transferred to the prorating ‘sheets the calcula- tions are carried out as explained in prorating shipment No. 111. Referring to the accompanying prorating sheets for shipment No. 112, (See Figs. 13 and 14) it should be noted that in calcu- lating the returns for the hogs, nothing appears on the prorating sheet to indicate that one hog was dead and another crippled. As these hogs were received in good condition they are to be paid for at the price they would have brought undamaged and the difference is to be charged to the insurance fund account. These animals are therefore included with the undamaged animals in carrying out the calculations. The amount of $25.75 appearing opposite “ insurance paid” under proof of settlement includes $18, the difference between the $2 which the dead hog actually brought and the $20 it would 2 See discussion of method on p. —. LIVE-STOCK SHIPPING ASSOCIATIONS. 43 have brought undamaged at $10 per 100 pounds, according to nota- tions made on the account sales by the commission firm. ‘Similarly the loss on the crippled hog amounts to $7.75, making a total of $25.75 for both hogs. } Slade ssa HRRTTTTPEFEaeeGu oO } —————— — ——- Ee ES ee 2 ieeesisee (TP lever Jobe bod re iAz E (COREE eee E fant ae ee S : aaa ae” iE) i 8 | " eaag SOTA RRA eeE 3 ne eat as ae MMMM ie _ ESSERSE RSE ORR ABBEMBRE BEER SEEA pees fa ac Oe La bi Ba WL cd ade iee IES oS Bie ES Bs Fs a ld | 2 2 ie ESE! © [——————— Nae te a no a ae DB Ne | aa ya 4 | Saat eee fos win bed dO Pel I eles F ec e of lca BEER EERE EEEEEEE Pia ess MTTIEEGIEEEAIIIMA rt HEE x je is S rie Fal ald pes aE 3 past attr : 5 a 2) a 3 : ay | nA) ri = & EXPENSES Commission d Bedding e =e = w = c we PROOF OF SETTLEMENT ,; Shipping Assn, Form No,3 y 2 S Z 5|s| 5 eda o ec e ei SS Gal: One. e Insurance Fund Total Deductions F Sellin, The items of 25 cents, undivided balance-loss on the prorating sheet for hogs, and the 11 cents, undivided balance-gain on the pro- rating sheet for cattle, may be analyzed as follows: Hogs: Losses. Gains. Peemeterexnense 1s as. ois s SON s el pdt 04 ¥ixpenses prorated_____.____-_-___----_--_-------- 110. 67 "LOY S)Sh ig ee ore et mage sa eee et ae — $0. 37 Actual shrinkage on packer hogs---------------- 45 Ibs. Shentace) procated. | 2!) ol, ile ee a 44 lbs. TV SS non a ak ile NIRA ee ee a 1 1b.@8¢ 08 44 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Hogs—Continued. Actual shrinkage on butcher hogs___-____________ 120 Ibs. HPV SE TOT at OU 2 I ee are 122 lbs GETS ea a et oe SS ty Js 21bs.@10. DTT Fj eu a Sa ai ae I oS 2S we OS op eT Wagdiyided: balance-loss. 7. 5 ee a ee eee eee . 20 .25 Cattle: Actual OXpPenses 22. sea ee $37. 38 expenses. prorated 2) Ft 3 Se ee ee 37. 49 Undivided ‘balance-ram.— =. 6 i te ee ee ee eee Se ae es a Fi biise baad TTT TTT TTT TT ss cece ee oO | SRRUNGEPERRESE 2 25 nal IE RAPER EASES See AEE ee ele é Hire “ea [3 AMOUNT || TOTAL Le oo 2d ae ° a _ nasal fast IBA ee asd Sia ee ES |g | |e a ey ee ilies frie IEE ° <* Bie a FOR WEIGHT 2 || MARKET "i i PRORATING SHEET ae oe PRICE eTHt Sor aE PEEUUUEEEOUEEEL Hl rige BHaRES aS . Oonpre at SSS R EXPENSES ‘oss Sales Value 10 be Prorated Shipping Assn. Porm 74,9 Bal, for Distribution 4 t = s ES < 5 7 3 5 = Selling Commission Operating Expense Home Expe Total Exp Shipping Point. N = a = =z Ay BS Eg Ee 2 Dat A member's statement showing the results of the sale of the se E Hee HELE Losses. Gains, $0. 20 . 20 ae i! Wie. 14.—Prorating sheet for cattle, shipment No. 112. live stock delivered by Axel J ohnson in shipment No, 112 is shown in Tigure 15, See lctle , Bical edit eae. a. ee a Bye an LIVE-STOCK SHIPPING ASSOCIATIONS. 45 The data to appear on the shipment record envelope for ship- ment No. 112 are shown in Figure 16. It will be noted that when the undivided balances on both prorat- ing sheets are combined for this shipment, there was a net overpay- ment of 14 cents, which is obtained by subtracting the underpayment of 11 cents on the cattle sheet from the overpayment of 25 cents on the hog sheet. Shipping Association Form No. 4 MEMBER’S STATEMENT Shipment Nala Attached find Check for Balance due $... 4: Fe lA. Please ask about anything not understood. Complete statement of each shipment is on file. (Tear Off Before Depositing) sevese TOW2 a csseesaconesneonL ne SOME M rie @.192.2— Pip otheoder of Cee NV oz ales 0 Y- re 2 Sas = See +t Lee, oe as DOLLARS Fig. 15.—Member’s statement showing the results of sale of stock included by Axel Johnson in shipment No. 112. By referring to the illustrative entries in the shipment summary record for shipment No. 112 it will be noted that the data are sum- marized separately for hogs and cattle. Reference is made to trans- action (14), on page 49, for the cash journal entry to be made for the settlement for this shipment. SHORT WEIGHT AND MIXED CARLOADS. The following tables * are presented to illustrate the effect on the freight cost per 100 pounds of shipping carloads containing less than a Tables prepared by C. W. Crickman, assistant in agricultural economics, Iowa State ollege. 46 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. the minimum weight and of shipping mixed carloads containing hogs and cattle. The figures apply to a standard 36-foot single-deck car and the rates used were 36 cents per 100 pounds for hogs and 34 cents for cattle. Similar tables may be readily constructed for other kinds of live stock. for cars of different capacity, for different minimum weights. and based on different rates. Shipment No_//2— SHIPMENT RECORD ENVELOPE Sy PONY GS gy See a i __Commniasion Co Teclededl Soo PL Mee eee eee Car Now C7 FL ~Sb oe Fic. 16—Shipment record envelepe for shipment No. 112. Taste 2—Freight cost on short-weight cars. | | Hogs. Caiile. 2 *, ‘ < BREE BARES OA1D OD ih He OD FP hand By referring to Table 2 it will be seen that the cost of freight rises rapidly as the weight of live stock loaded falls below the | LIVE-STOCK SHIPPING ASSOCIATIONS. Av minimum weight. The matter of getting the proper weight into the car is often a difficult problem for the manager to solve. Even though the member is under contract and delivers the exact number of head of live stock listed, his estimates of the weight are often wide of the mark. The result is a constant swinging from short- weight to overloaded cars. The properly loaded car is, of course, not necessarily the ene which contains at least the minimum weight. In fact, experience seems to show that, particularly in the case of hogs, the saving in freight cost resulting from loading to the minimum weight or over it is frequently more than counterbalanced by lees heavy shrinkage and losses due to dead and crippled animals. The alternative of shipping a short-weight partly-filled carload of hogs, cattle, or sheep is of course to ship a mixed load.1t When the manager has a choice, his problem is to decide which is the more economical alternative. Many communities, however, pro- duce live stock in such quantities and in such proportions that the mixed carload is the rule rather than the exception. In this case the manager’s problem is to select such proportions of two or more different kinds of live stock as will reduce the freight burden to the minimum. ' From observations made, it would seem that this problem is not generally understood, and that relatively little attention is given to an effort to obtain just the right mixture which can be shipped at the lowest costs. It is probable that careful study of the proper load will reflect as large savings to the shippers as can be made in any other way. ILLUSTRATIVE TRANSACTIONS. Notr.—See Figure 8 for cash journal entries for the following transactions. For the purpose of this illustration, it is assumed that totals have accumulated in the different accounts as indicated below, as a result of the business transacted up to November 1, 1921. This business is assumed to consist of livestock handled as summarized on the first line in the shipment summary record (see p. 9). Eighty shares of capital stock at $5 per share have been sold; $300 have been bor- rowed at the bank, and $1,000 have been invested in scales and other equipment. The manager has been paid in full and the deductions for local car expenses just equal the amount which has been dis- bursed for this purpose. The totals which have accumulated are shown in the following trial balance. Trial balance November 1, 1921. Debits. Credits. SS ek Oa ee eR eae, Sees $172, 655. 49 $172, 079. 47 na Sina rae ee ee IS a 170, 965. 03 170, 965. 03 Mataners Feuniinission 220 = FO. Sot So) eile 2, 070. 09 2, 070. 09 Insurance fund (including railway claims)--_~~ 1, 226. 00 2, 025. 51 Rewer Caepernses 20 2 TT) te Bitielid Aiea) 578. 60 578. 60 RDS SETS DSS ee ee) ee en nee eee eee ee see 55. 00 Beever Dalance 29 ee ne 8. 96 12.47 11The freight on a mixed load of live stock is calculated at the highest rate based on the highest minimum represented by the live stock in the car. 48 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. Debits. Credits IAQUEpMen E22 eer 2S 6 ST ae eg Be ee ST A O0Q 00 2 uno. Bd ree TNE GETS Sa aaa Say ey $300. 00 Toss aad. areny SFE ASS ESE ASE Ss PERS Do eek ee 18. 00 Net twOPrth areas Sir eS Sa es es & peks Reese tes pester > 400. 00 1 009 0 IS, eee nee Seas meet eet ae 2c YT 348, 504. 17 348, 504. 17 The condition of the business affairs is revealed by the following statement of resources and liabilities constructed from the balances in each of the foregoing accounts: Statement of Resources and Liabilities of the Brookridge Cooperative Shipping Association November 1, 1921. Resources. Liabilities. Cashwees. ee eal eee eC OES, $576, 02" | Notes. payable. 2 =) ee $300. 00 Hquipment 28052 3 Fs bei 1,000! 004 | Insurance® fund se tee Se ae 799. 51 —————— | Federation dues______________ 55. 00 PROUD ee cere ee Scan ays 1,576. 02 | Undivided balance____________ Sy a! Net worth Capital stock paid in_________ 400. 00 TOSS) er ter ata eee ees 18. 00 Nota a ee 1, 576. 02 November 1. é (1) The board of directors has approved both the trial balance and the state- ment of resources and liabilities constructed from it. The cash journal will, therefore, be opened by entering in each account therein the accumulated debits and credits given in the foregoing trial balance. (2) Paid Jones Feed Store for feed for shipment No. 111; check No. 101, for $4. November 2. (3) Received from Cooperative Commission Co. proceeds of shipment No. 111, $1,452.73. (4) Paid Bell Telephone Co. November telephone bill, check No. 102, $2.50. (5) Paid Eureka Printing Co. for cash journal binder $5 and stationery $5, check No. 103, $10. (The permanent binder should be debited to the yard and office equipment account and the stationery to general expense. ) November 8. (6) Settlement for shipment No. 111 as per home statement on the ship- ment record envelope for this shipment. Accounts debited. Accounts credited. THVGS StOC: 0 ts eee ae 1 EE $1°452. 73) |" Bank f(cheeks? 12) eet ee ae $1, 430. 03 ——————— | Manager’s commission ________ 9. 54 SO Ea eee ee ee Boe Pace £452.73 msuranee = funde. 2 Se eee 7.78 Local car expense____________ 4, 00 Mederation “duess2= 22) a es . 59 Undivided balance—gain_______ . 88 | MO ta] Se ek ae ee L455 27S (7) Paid Jno. Clark, manager, commission for shipment No. 111, check No. 104, $9.54. November 4. (8) Paid Blank State Bank $200 note with interest $16, check No. 105, $216. 2 November 5. (9) Paid Smith Hardware Store for rope for shipment No. 112, check No. 106, $1. (10) Paid Farmer’s Elevator Co. 40 bushels of corn, check No. 107, $20. November 6. (11) Received from Cooperative Commission Co., proceeds from shipment No. 112, $1,406.05. ‘ 4 . | Tf ne aL ~— —~ LIVE-STOCK SHIPPING ASSOCIATIONS. 49 November 7. (12) Paid Tribune Printing Co. for advertising circulars, check No. 108, $4. (18) Paid Nationai Surety Co. for premium on manager’s bond; check No. 109, $37.50. (14) Settlement for shipment No. 112. (See shipment record envelope on p. 10 for this shipment). ‘Accounts debited. Accounts credited. WUVCi SLOG ae Mo ee ee $1, 406, 05.4).;Banky (checks 3—4)—_-_ $1, 408. 17 Insurance fund (losses paid)__ 25. 75 | Manager’s commission ________ 10, 11 Undivided balance loss_______-__ 4 Insurance) fun Gecueneoe enea, 2 eae 7. 66 ——_———— |} Local car,expense___.__--=___ 3. 50 CL EET EG | oa nh pt a en 1, 451. 94 | Kederation dues.__ 2-2 ee . 00 Loss and gain (membership PEGS), LATS Cea Tee eee 2.00 Total Se 2 ee ee ae 1, 431. 94 November 25. (15) Paid United States Office Equipment Co. for Burroughs adding machine No. 36980, check No. 110, $250. (16) In order that the cash journal may show the results of all shipments made during November, as recorded in the shipment summary record, ship- ments No. 113 to No. 122 will, for the purpose of this illustration, be entered in summary form. It will. be assumed that the manager’s commission and the local car expenses have been paid in full for these shipments. The debits and credits arising from these transactions are as follows: Debits. Credits. TEES T. RA Ge aie aad Sea Be NT ASS ae arma al eon is CO ar $18, 654. 75 $18, 760. 33 VOR GIS ETE Se te Ea ali Sain i eg np el RE 18, 654. 75 18, 654. 75 Mes SCE SCOMIUSSI OIL ae ee eee 249. 66 249. 66 ) SSPE A GG: oS RU TTNG ata Se SR ln at) ep a ean 236. 65 i DA ey eae MRR ORGICH SO era re te ee 60. 79 60. 79 LEGS STE FG GING LES ago a A a i a dg lit ee RD 6. 50 Mininvicied DO dlanees ee se ee OE ee Pek 31 5. 36 37, 858. 91 37, 858. 91 Total all columns at the end of the month, entering all of the amounts on the same line. See Figure 8 on page 100. If the debits and credits arising from each transaction have been correctly en- tered, the sum of the debit totals at the end of the month should equal the sum of the credit totals. A statement of resources and liabilities based on the balances in the different accounts at the end of November appears as follows: Statement of resources and liabilities, November 31, 1921. Resources. Liabilities. Yard and office equipment_____ Si 200,00) |): bank OVerdral =.= ase $63. 52 Prepaid expense (feed) __-___ 17350 -\t Notes! payables 2:18. J = 100. 00 Due Jno. Clark, manager______ 10. 11 insirance “rand 45202 eee 674. 07 Hederatian, duess2 2 tere ee 62. 50 Emndivided, balance: === === 7. 30 Net worth. Capital stock paid in_ scaght 00 Less loss and gain___ 45. 00 355. 00 SO Gibbet aes arit et Jott P2200 Wotaliies te Vi Ie Sas 1, 272. 50 December 1. (17) Received in cash $40 from 40 new members, as per the minutes of the November 31 meeting of the Board of Directors. 50 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. December 2. (18) Paid John Clark, manager, commission on shipment No. 112, check No. 111, $10.11. December 5. (19) Received from C. & NW. Ry. $25.75 in settlement of claim of Novem- ber 7. December 6. (20) Paid Stephen Stone, attorney’s fees for collecting claim of November 7, check No. 112, $3. (21) Borrowed at the State Bank on 3 months note at 7 per cent $100 to cover overdraft. December 9. (22) Paid Sinclair Oil Co., for 10 gallons gasoline, check No. 118, $2. December 15. (23) Bought of J. Andrews, retiring member, capital stock certificates No. 24, check No. 114, $5. (24) Paid State federation dues for 1921, 50 cents on 125 cars, check No. 115, $62.50. - Fiscal year adjustments. (25) The Board of Directors voted to charge off depreciation on the equip- ment estimated at $50 for the year. (This amount will be credited to the yard and office equipment account and debited to the loss and gain account.) (26) The credits in the insurance fund account at this point exceed the debits by $696.82. The Board of Directors, it is assumed, decided to carry for- ward only $500 in this account. Hence the excess of $196.82 will be transferred to loss and gain by debiting the former account and crediting the latter. (27) The Board of Directors also decided to close the credit balance of $7.80 in the undivided balance account to loss and gain. Debit undivided bal- ance account and credit loss and gain. Had the credit balances in the two above instances been in excess of the needs of the business, the directors might have voted to re- fund the excess to the shippers as a patronage dividend. Prefer- ably such refunds should be first credited to indebtedness when the refund is decided upon by the directors, and, subsequently when paid, debited to indebtedness. Distribution of net income. The loss and gain account at this point shows a credit balance of $147.12 which represents the excess of all deductions and income over all expenses incurred. As profits can be distributed legally only by action of the Board of Directors, it is assumed the board has voted to carry the balance of $147.12 to surplus. (28)°In accordance with the above action of the Board of Directors debit loss and gain account with the balance of $147.12 and credit same to net worth. All columns should again be totaled as was done at the end of November. As this marks the end of the fiscal year, the smaller side of each account should be deducted from the larger and only the balance carried forward to the new fiscal year. LIVE-STOCK SHIPPING ASSOCIATIONS. 51 Annual report. Suggestions for the preparation of the annual report will be found on pages 24 to 28, where statements based on the illustrative figures in the accompanying cash journal and shipment summary record will be found. ’ January 2, 1922. (29) Bill Adams came to the office and stated that he had been overcharged in the settlement made for shipment No. 111. A recalculation of his expenses, which appear on the prorating sheet in Figure 4 shows the overcharge to be 71 cents. This amount is paid Mr. Adams by check No. 116. Debit undivided balance account, ORGANIZATION OF THE UNITED STATES DEPARTMENT OF AGRICULTURE. Sere OF Agriculinure "22 eee HENRY C. WALLACE. ASSESUIMTL SS CONEVOTY = =~ ee C. W. PUGSLEy. Director of Scientific Work __________-____ Bi. dD; AGE, Director of Regulatory Work_____________. WEAERCr Bureaus so 520s ea. 2 eae: CHARLES F. MARVIN, Chief. Bureau of Agricultural Economics________. Henry C. TAytor, Chief. Bureau of Animal Indusiry______--___._-__- JOHN R. MOHTER, Chief. Barca of Ciont tusirys_ Ss oe eee WILLIAM A. TAytor, Chief. TST SeS CTC Cae aa al Regal Oe eho SES W. B. GREELEY, Chief. EE OF, SC RETASUNY oe es es ZS WALTER G. CAMPBELL, Acting Chief. SSAUECAIUTOT SOUS ok re ee es MILTON WHITNEY, Chief. Bureas of Lntomology of st ess See ee L. O. Howarp, Chief. Bureau of Biological Survey____________+- BE. W. NELson, Chief. Bareau of Public: Rodis es 2 Se eS THOMAS H. MACDONALD, Chief. Fired Nitrogen Research Laboratory__._.. F. G. CoTrreiy, Director. Division of Accounts and Disbursements_.. A. ZAPPONE, Chief. Division of Publications____—_- EDWIN C. PowELL, Acting Chief. WEAR TY ke 5 A oS Eis 3 ee Se ae, CLARIBEL R. BARNETT, Librarian. Sires elaions: Service = 2 a A. C. TRUE, Director. Federal Horticultural Board___-_______-_- C. L. MARLATT, Chairman. Insecticide and Fungicide Board_____-_____ J. K. HAywoop, Chairman. Packers and Stockyards Administration____- CHESTER MorrRIL1, Assistant to the, Grain Future Trading Act Ad ater Oe Secretary. Ojice 6] -the SOUGtOr . 2 ee R. W. WILLIAMS, Solicitor. This bulletin is a contribution from Bureau of Agricultural Economics_______-. HENRY C. TAyYtor, Chief. Division of Costs of Marketing_______. £ A. V. SWARTHOUT, in charge. 52 ADDITIONAL COPIES OF THIS PUBLICATION MAY BE PROCURED FROM THE SUPERINTENDENT OF DOCUMENTS GOVERNMENT PRINTING OFFICE WASHINGTON, D. C. AT 10 CENTS PER COPY PUI-CHASER AGREES NOT TO RESELL OR DISTRIBUTE THIS COPY FOR PROFIT.—PUB. RES. 57, APPROVED MAY 11, 1922 V “4