HOW TO KEEP FARM ACCOUNTS. 



44. FIRST ENTRY is to give the owner (Fox) credit for his 

 investment. This is always the first entry when the boolcs are 

 opened. We find his investment as follows: The statement of 

 his Resources and Liabilities shows his net worth to be f 10,246.31 

 of which $413.00 is in cash (money on hand). By deducting his 

 cash on hand from his Net Worth we have $9,833.31 which repre- 

 sents the net cash value of his Farm, Production, Feed, Imple- 

 ments and Bills Receivable. Therefore, we credit J. Fox (or the 

 owner) by entering on the debit side of the Cash Book |9,833.31j 

 the net cash value of his investment and the $413.00 cash on hand 

 (Refer to Plate 8, item da). Also turn to paragraph 112. 



45. THE SECOND ENTRY is to credit Bills Payable for 

 $2,000.00, the amount of notes Fox is owing to the First National 

 Bank. (Refer to Plate 8, item db.) Also refer to paragraph 138. 



You are wondering why we Credit Fox and Bills Payable, 

 when we enter the«e items on the debit side of the Cash Book. 

 The reason is this: The Cash Book is the cash account. We 

 charge (debit) it for all cash we receive and credit it for all we pay 

 out. But the Cash Book on the farm must take the place of the 

 Journal and when we open (begin) the books, we must of course 

 credit Fox (the owner) for the amount of money he has invested. 

 He now has $9,833.31 in land, live-stock, implemeats and $413.00 

 in cash, all of •which he is using in his business of farming. He 

 must open an account in the Ledger that will represent his interest 

 in his business. Hence, he must be credited for the amount in- 

 vested and the cash he is using. 



46. WE NEXT DEBIT the following accounts with the 

 amount of each as shown by the inventory. Clovermead Farm 

 (Plate 9, item ca. and refer to 118), Production (Plate 9, item cb. 

 and refer to 156), Implements (Plate 9, item cc. and refer to 172), 

 Feed (Plate 9, item cd. and refer to 167), Bills Receivable (Plate 9, 

 item ce. and refer to 144). These items are those that Fox has his 

 money invested in. And as we have previously learned that there 

 must be a debit for every credit, we debit each for the amount 

 invested, because we have given Fox credit for them. If they 



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