704 idfWA IDEPARTMENT OP AGRICULTURE 



given for man labor. To make the account balance, the difference can be 

 added to or subtracted from one of the larger items or carried to the "Loss 

 and gain" account, as stated in paragraph 16. 



(22) To find the use cost of the machinery, the first machinery inventory 

 should be entered as a charge and the second as a credit to the machinery 

 account, then this account should be charged w^ith interest on the average 

 of the two inventories, as directed for the horse account. The interest ac- 

 count should be credited with the amount of this interest. 



(23) The sum of each side of the machinery account should be found and 

 the credit total subtracted from the charge total, the same as for the horse 

 account. The difference is the total use cost of the machinery for the year. 



(24) In order to distribute this cost, it may be assumed that for every 

 hour horses were worked machinery was also used. Then each account will 

 have charged against it the same number of machinery hours as horse 

 hours. To find the rate of cost per machinery hour, the horse hours already 

 charged to machinery should be first subtracted from the total hours of 

 horse labor and the total cost of machinery use divided by this difference. 

 Now the use of machinery for the year should be charged in the same way 

 that the use of horses was charged, except the charge against machinery. 

 When this is complete, the machinery account should balance within a few 

 dollars. The difference may be treated as explained in paragraph 16. 



(25) Any other accounts of convenience, such as those for fertilizer or 

 manure, if kept, should be distributed. 



(26) All the remaining items should be entered in the inventories. The 

 inventory values for the beginning- of the year should be entered on the 

 left-hand page of the separate accounts as a charge; that is, the cow in- 

 ventory should be entered on the left-hand page of the cow account, the 

 hog inventory on the left-hand page of the hog account, and the others 

 distributed in the same manner. The final inventory for the year is like- 

 wise distributed to the separate accounts, but the items are entered on 

 their respective right-hand pages. 



(27) The interest, based on the average inventories against all accounts 

 not already charged, should be charged and the interest accourit credited 

 with the total, using the same rate as that used in charging interest 

 against the horse and machinery account. 



(28) The proper charge for the use of the land should be entered. The 

 rate should be high enough so that, with the use of buildings as charged 

 in paragraph 11, it will cover interest on the investment in land and build- 

 ings, taxes on real estate, and repairs to buildings and fences, for these 

 items were charged to the real-estate account. Each crop should be 

 charged for the land it occupied and the real-estate account credited. 



(29) Both sides of the accounts not yet closed should be footed up. The 

 lesser total should be subtracted from the greater in each account. If the 

 charge side is greater the difference represents a loss, and if the credit side 

 be greater, a gain. The sample potato account given in Table II will illustrate 

 a completed crop account. 



(30) A list of the losses and gains should be made and the total of each 

 found in order to show the net gain or loss on the whole business. 



(31) Each account and the business as a whole should be studied in 

 order to learn how to improve it. 



STUDY AND INTERPRETATION OF RESULTS. 



Farm accounts are of little use unless studied and conclusions drawn 

 which will enable one to make his business more profitable in the future. 

 It is just as important to study the different items of cost and returns in 

 an account as it is to know whether or not it pays. From such a study 

 it is often possible to learn how to reduce the cost of production or in- 

 crease the returns so as to make a losing enterprise pay and to make a 



