e for the decrease in the value of the live stock under the
plant and also for the machinery. Perhaps 5% for the live stock and
10% for the machinery and tools will be a fair deduction. Under
materials and supplies those items have been inventoried which are to
be carried over each year from the preceding year. In the case of
seeds the amount required must be deducted from the amount sold, or
they must appear as a charge in the expense account. Ordinarily they
are carried over from year to year and thus become a part of the
permanent investment. Since on the farm under consideration there is a
considerable monthly income from the sale of butter fat and eggs, it
may be possible that no allowance will be needed in the inventory for
current expenses, although it is always desirable to carry a bank
account in order to be able to make favorable purchases when
opportunity offers.

As a part of the work in a course in farm management, the writer asked
each student to secure the financial history of an actual farm
covering a period of three years. The financial history of 30 farms
during the years 1901 to 1903, inclusive, and 28 farms during the
years 1902-1904, inclusive, was thus obtained and is given herewith.

SUMMARY OF FINANCIAL HISTORY OF FARMS

Average size of farm, acres 143.21 133
Average area in crops (includes pasture), acres 121.1 112

Capital at end of three-year period $14,009 $8,893
Capital at beginning three-year period 12,962 7,704
------- ------
Difference $ 1,047 $1,189

Interest on capital, $13,485, at 5 per cent[B] $ 674 $ 415
Increase in capital per annum 349 396
Average yearly receipts 3,613 2,208
Average yearly disbursements 1,907 1,221
Average yearly cash balance 1,706 987
Average yearly farm income 2,055 1,383
Average yearly labor income 1,381 968

These figures show the application of principles enunciated in this
chapter. A careful reader will have no difficulty in recognizing how
the different items have been obtained. For example, the difference
between the receipts and disburse