On 10/15/X1 you purchase 10 head of steers weighing an average of 500 pounds for $75 per cwt. from XYZ Livestock. On 5/15/X2 you resell these 10 steers averaging 1200 pounds for $65 per cwt. The entries would be made in the FARM CHECKING register as follows:
| Date | Num | Payee | Memo | Category | Amount | Balance |
| Opening Balance | 13,860.00 | |||||
| 10/15/X1 | 1001 | XYZ Livestock | 10 hd, 5000 lbs, $75 | [Resale Inv] | -3,750.00 | 10,110.00 |
| 5/15/X2 | DEP | XYZ Livestock | 10 hd. Sold | --SPLIT-- | 7,660.00 | 17,770.00 |
| **Split Screen Detail** | ||||||
| Category | Memo | Amount | ||||
| 1. LS Sold:PFeeder | 10 hd., 12000 lbs, $65 | 7,800.00 | ||||
| 2. Feeder LS:Cost | -3,750.00 | |||||
| 3. [Resale Inv] | 3,750.00 | |||||
| 4. Marketing:Mkt LS | sale deductions | -140.00 | ||||
The above entries in the FARM CHECKING register would result in the following entries in the RESALE INV register:
| Date | Ref | Payee | Memo | Category | Amount | Balance |
| Opening Balance | 0.00 | |||||
| 10/15/X1 | XYZ Livestock | 10 hd, 5000 lbs, $75 | [Farm] | 3,750.00 | 3750.00 | |
| 05/15/X2 | XYZ Livestock | 10 hd. sold | [Farm] | -3,750.00 | 0.00 |
The purchase price of $3750 reduces the checking account balance by that amount and adds it to the [Resale Inv] asset account. When the cattle are sold in May of the following year, the $6500 is deposited in the farm checking account. To create the deductible expense, the [Resale Inv] account is reduced by $3750 and the expense category, Purch Feeder LS, is increased by $3750. This has no effect on the checking account, but establishes the cost basis for the cattle for tax and P&L statement purposes. Since there are purchased cattle on hand at the end of 20X1, the cost basis of the purchased cattle for balance sheet purposes is $3750, the amount in the [Resale Inv] account.