It was deemed advisable to write off 20% of the accounts of Tools, and Drawings and Patterns. Also, to reserve from profits $2,000 for supersession of patents in addition to providing for the reduction in the life of the patent.
Interest has accrued on bonds payable for one month, and there is accrued amortization.
Bright—Special account shows the balance due on Bright’s embezzlement. The company holds good collateral in the form of stock for the full amount.
Trunks in Process, October 31, 1917, comprised raw materials $3,115, direct labor $1,120, and factory burden $749.20.
The account, Freight and Express Outward, represented items charged to customers on account of outward freight charges assumed by us and still owing to the transportation companies.
It was ascertained that on Oct. 31, 1917, the patents had 164 months yet to run, and that the policy is to depreciate the value remaining at the end of each fiscal period over the remaining life of the patents.
Royal leather stock was being held because of trade advantages secured thereby.
Claims against transportation companies represented claims for damage acknowledged as good by the companies.
Instructions
In a footnote to the balance sheet call attention to the contingent value of donated land. Extreme conservatism might require the setting aside of a reserve of surplus covering any expenditures on the land, such as assessments for street improvements, inasmuch as the same contingency attaches to them as to the land. So long as a good balance of general surplus is maintained, a special reserve is not usually considered necessary.