276 FARM ACCOUNTING 



Interest on Mortgage account at the close of the } 

 This leaves the accounts of the productive elements 

 charged with the same amount of interest that they would 

 contain if there were no mortgage on the property. In- 

 terest on Investment account having a credit balance will 

 show an income. The income shown, however, will b< 

 than if the mortgage did not exist. 



Interest on Livestock. Both the landlord and tenant 

 farmer consider interest on livestock as an element of cost. 

 In either case, Interest on Investment is credited and the 

 appropriate livestock account charged with 4% on the 

 investment at the beginning of the year. Fractional parts 

 of a year may be considered in some cases, as in buying 

 stock to feed for market. The interest on draft animals is 

 ultimately absorbed by the productive elements when the 

 total cost of maintaining them is charged over the several 

 accounts at the close of the year, as explained under 

 "Horse Labor Record" and "Exchange Labor. " 



After charging the Swine account, for example, with 

 interest on the investment in swine, use of the builil 

 feed, labor and ntnf other charges, and en Siting // ?////> 

 income of all sorts, the balance of the account (if ft cm 

 shows the income due to the farmer for the risk involved 

 and to compensate him as a manager. He has already 

 considered his compensation as a laborer by the regular 

 charge of $600 for the year, part of which u-ns charged 

 to Swine account through the labor record. If the account 

 shows no balance, it means that he has been compensated 

 for his time as a laborer, and for his investment, but that 

 he has received nothing for his managing abilitjf, nor for 

 his risk of operation. The same principles would apply 

 to cattle, sheep or poultry. 



Interest on Equipment. The amount of interest on 

 equipment is charged to Equipment Expense account and 

 credited to Interest on Investment Account. Such an en- 



