lo May. 1909.] Book-keeping for Farmers. 309 



1 . To ascertain the amount of the purchases, the creditors at the begin- 

 ning of the period are deducted (that is, entered in the Cr. columns) 

 and the creditors at the end of the period added (that is, entered in the 

 Dr. columns). The result will be equal to the purchases made. 



2. To ascertain the amount of the sales, the debtors at the beginning of 

 the period are deducted (that is, entered in the Dr. column) and the 

 debtors at the end of the period added (that is, entered in the Cr. 

 columns). The result will equal the sales for the period. 



3. The stocks on hand at the beginning of the period are added to the 

 purchases (that is, entered in the Dr. columns) ; and (4) the stocks on hand at 

 the end of the period are added to the sales (that is, entered in the Cr. 

 columns). The effect above described in i, 2, 3 and 4 is produced bv the 

 entries made of the opening balances and closing entries as shown in '"' B." 



The difference between the corresponding Dr. and Cr. columns equals 

 the gross profit or loss on the particular branch of the business. 



Ad-justments bctiuecn departments. — It will be necessary to make some 

 adjustments to ascertain the net profits or losses. 



Consumption of produce from the farm is equivalent (i) to a sale on 

 the part of the business and (2) to the withdrawal of capital by the farmer. 

 It is therefore entered on both sides (i) on the Cr. side of the items 

 -consumed and (2) on the Dr. side of the capital account. 



Consumption of farm produce by stock is equivalent (i) to a sale on 

 the part of business represented by crops and (2) a purchase on account 

 of the live stock. No money passes, only a value being fixed for the pur- 

 poses of adjusting the profits. Crops account is credited and the cattle 

 and pigs account debited. 



Depreciation. — Depreciation of the farm implements and plant must 

 l3e added to the losses, as the wear of the waggons, carts, ploughs and 

 machinery is certainlv a loss ; therefore the depreciation is entered in the 

 Cr. column of the waggons, &c., account, and then added to the losses as 

 shown in " B." 



Xct Profit or Net Loss. — The difference between the corresponding Di. 

 and Cr. columns after making the adjustments and allowing for deprecia- 

 tion will be the j\et Profit or the Net Loss. 



If the sum of the Cr. column is greater than its corresponding Dr. 

 column, the difference is profit and is inserted in the Dr. column to make 

 it balance (t). If the sum of the Dr. column is greater than its corre- 

 sponding Cr. column, the difference is a loss and is inserted in the Cr. 

 •column to make it balance {u). 



Having treated all the revenue columns in the way indicated, the 

 totals of the balances inserted in each side respectively are added in the 

 inner column and the difference between the two inner columns extended 

 in the capital account column, being the net profit (r) or net loss. The 

 farmer will now be able to see not onlv his profit or loss as a whole, but 

 flow much of it is contributed by each branch of his business. 



Balances Brought Down. — The debtors inserted in the Cr. columns at 

 the end of the period should be brought down in their corresponding Dr. 

 columns on the opposite side as thev will also be the debtors at the com- 

 mencement of the new period. 



The creditors inserted in the Dr. columns at the end of the period 

 should be brought down in their corresponding credit columns on the 

 ■opposite side as they will also be the creditors at the commencement of 

 the new period. 



