BOOKKEEPING 



paid for at the outset, the capital account is 

 usually called Capital Stock Subscribed. When 

 all the authorized capital has been issued and 

 paid for, a journal entry debiting Capital Stock 

 Subscribed and crediting Capital Stock will 

 wipe out the former account, leaving the state 

 of the books the same as in the first two 

 examples. 



If stock subscribed is not paid for at the' 

 time of its sale, this, too, must be shown by 

 the books. In such cases it is usually the 

 practice to collect money from the stock- 

 holders in installments. The original journal 

 entry would be something like this: 



,si.>t, BOOKKEEPING 



assets (see GOOD WILL), an entry recording this 

 must be made before the transfer of stock to 

 them is shown. If Gordon and Steele were 

 to be given $1500 more than the net assets 

 of their balance sheet, the entry might be this : 



As fast as money was paid to the company by 

 the subscribers, the proper installments would 

 be credited and Cash debited. When all the 

 installments had been paid the installment 

 accounts would balance and could be closed. 



If the proprietors of a business are paid 

 more for it than the value of their actual 



Profit and Loss. Except in the case of 

 certain corporations in the state of New York 

 (see STOCK, CAPITAL) the account for Capital 

 Stock is never affected by profits and losses. 

 When the gains of a company are sufficiently 

 large, a dividend is declared. The entry at 

 such a time is a debit to Profit and Loss and 

 a credit to Dividend. Later, when the divi- 

 dend is paid, there is a debit to Dividend and a 

 credit to Cash. The balance of profit not given 

 out in dividends is left as a credit to Profit 

 and Loss or transferred to an account called 

 Surplus or to Undivided Profits. If the com- 

 pany loses so much money that its original 

 capital is lessened, there will be a debit balance 

 under Profit and Loss, or an account called 

 Deficit. 



Farm Bookkeeping 



There is no class of business man to whom 

 the keeping of good accounts will be more help- 

 ful than to the farmer. There are many farm- 

 owners and farm-renters in the world who con- 

 tinue raising unprofitable crops year after year 

 because they are unaware that they are doing 

 so. For instance, a farmer may be making 

 money on corn and losing on wheat, but be- 

 cause he has a profit from his operations as a 

 whole he does not discover this. Or it may 

 be that he is deriving less income from the 

 farm which he owns than he would from in- 

 vesting his money elsewhere and renting a 

 farm. In fact, a pamphlet issued by the United 

 States Department of Agriculture says there 

 is reason to believe that the majority of farm- 

 ers are really living on the interest of their 

 investments rather than on the profits from 

 their farms. 



Farm bookkeeping is not difficult. Only a 

 few minutes a day are necessary on the average 

 farm to preserve thorough records. But the 

 difficulty has been that there has been nobody 

 to teach a farmer how to keep his books, for 

 the reason that accounts of the style kept in 



cities are usually quite unsuited to the country. 

 Recently, however, the United States govern- 

 ment has studied the matter, and several bulle- 

 tins on the subject have been issued by the 

 Department of Agriculture, which it will pay 

 any farmer to read. To comprehend them 

 thoroughly he should have an understanding 

 of the principles explained in the earlier part 

 of this article and under the head ACCOUNTING. 

 To open books for the farm an inventory 

 must be taken of all property. Some of the 

 accounts to be opened will be exactly similar 

 to those described above; an instance of this 

 is Machinery. In addition there will be such 

 accounts as Live Stock and Poultry. The 

 account for Real Estate (including buildings) 

 will be charged for rent, taxes, insurance, re- 

 pairs and depreciation and credited at the end 

 of the year for its service to the different 

 parts of the farm. Cash, bills and accounts 

 are the same as for city bookkeeping. Reason- 

 able wages should be credited to the farmer 

 and any members of his family who do work 

 which would otherwise have to be paid for. 

 Household Expense should be kept separate 



