190 FARM ACCOUNTING 



paying for the labor might refuse to pay the laborers for 

 that class of work on the ground that he was to pay only 

 the wages necessary to operate, the farm, and not for the 

 purpose of adding to the wealth of the first partner. 



10. "rtie period of the partnership should be definitely 

 stated and the terms of dissolution whether each i> tn 

 take the specific equipment and livestock he invested as 

 far as practicable, or whether In- is to take an equivalent 

 value regardless of the units of prop. -rty. Provision for 

 renewal of agreement might be made. 



11. If one partner, an expert in his line, is to receive a 

 commission based on the "profit" from ! rf cattle, for 

 example, the articles of copartnership should define the 

 word "profit" stating whether it is to he determined after 

 considering all charges for feed, labor, depreciation of 

 equipment, proportion of general expense, interest on in- 

 vestment and so on as calculated under the cost system, 

 or whether it merely means selling price minus a fair es- 

 timate of time and feed used. 



12. It is advisable for the articles of copartnership to 

 state what system of accounting shall be used whether or 

 not cost records are to be employed. 



Dissolution of Partnership. In dissolving a partners)] ip 

 the resources are divided in proportion to the capital ac- 

 counts, after distributing profits or Invs.-s up to the date 

 of dissolution. Illustration 35 shows a trial balance after 

 closing, at Feb. 28, 1917, just before dissolution. It also 

 shows the journal entry made upon dissolution. 



By posting the entry shown, all accounts in the ledger 

 are closed. The transaction supporting this entry was 

 the distribution of the physical property, in such a way 

 that Emery got $2800 of it and Hopkins $1800. It does 

 not show who took the horses and cattle, or whether they 

 were distributed equally. That is a matter of agreement 

 which does not require reflection in the books. The entry 



