When an agent transmits an account sales without a cash remittance, the transaction must be journalized to close the shipment account. When proceeds are to be charged to his account, the entry is: Dr. Cr. Cr. Richard Roe, Agt. $160.00 To Shipment Ledger Richard Roe Shipment No. 1 $160.00 Richard Roe, Shipment No. 1 18.00 To Profit and Loss on Shipments $18.00 If a note to cover net proceeds is received, the entry is the same except that Bills Receivable is debited instead of Richard Roe, Agt. When a loss is incurred the entry is: Dr. Profit and Loss on Shipments $18.00 To Shipment Ledger Account Richard Roe Shipment No. 1 $18.00 and postings will be made direct to all accounts affected. TREATMENT OF ACTUAL SALES =45.= The shipper may sell a portion of his produce outright, and if a large share of his business is transacted in this manner, sales can be treated exactly the same as though he was not engaged in a commission business, with separate sales book and sales ledger. Most shippers, however, will not find it necessary to segregate sales to this extent. Sales can be charged to shipment accounts in the shipment ledger, but will of course be charged at a profit, and credited to shipment account in general ledger. Payments on these accounts will be entered in the cash book as net proceeds. SHIPPER'S TRADING ACCOUNT =46.= The trading account of the shipper is made up somewhat differently than for a mercantile business where all sales are supposed to be entered at a profit. If all his produce is sold through commission merchants, and the inventory of produce in stock exactly equals the difference between purchases and shipments, the account, _profit and loss on shipments_ represents the trading profit. But this state of affairs seldom if ever exists. Either there will have been outright sales or a discrepancy will appear in the inventory. The latter is usually the case in a produce business, for some value will be lost owing to the perishable nature of the goods handled. The trading account is charged with all purchases and inventory, if any, at beginning of the period, and credited with all shipments and inventory at end of period. The trading account now exhibits the true trading profits with a complete segregation of profits from actual sales and commission sales. The inventory does not include outstanding shipments, these being treated as a separate item in the balance sheet. TRADING a/c