re ———————————— 
    
   
   
  
  
    
  
   
  
   
   
  
  
  
  
   
  
  
   
  
  
  
  
  
  
  
  
  
  
  
  
   
    
     
CAPITAL AND INCOME ACCOUNTS 
CAPITAL ACCOUNT AT BEGINNING OF YEAR 1901 
Assets Liabilities 
Factory . . . . . $290,000 Bonds .. . . . $100,000 
Capital and surplus . 190,000 
$290,000 $290,000 
CapriTAL Account AT END oF YEAR 1901 
Assets Laabilities 
Factory . . . . . $300,000 Bonds -. ... . . $100,000 
Capital and surplus . 200,000 
$300,000 $300,000 
INncOME ACCOUNT DURING YEAR 1901 
Capital Source Income Outgo Net 
Factory Product . $40,000 Running ex- 
penses . . $15,000 
Special repairs . 20,500 + $4300 
Bonds Interest . . 5,000 — 5000 
Capital and 
surplus Assessment 500 Dividends . . 000 + 500 
$45,500 $45,500 000 
§ 3 
Had the repair bill been distributed over the two years, 
the dividends to the stockholders, instead of being $20,000 
the first year and less than nothing the second, would have 
been $10,000 in each. In order to make their income thus 
stable and “standard ’’ instead of irregular, it is only neces- 
sary to employ a special repair fund. This accumulates for 
a few years as a separate investment, and is then con- 
verted back into the plant itself, which meanwhile will 
have continued its depreciation. We shall assume that this 
plan is adopted, beginning with the year 1902, for which the 
capital and income accounts will be as follows: — 
CAPITAL ACCOUNT AT BEGINNING OF YEAR 1902 
Assets Liabilities 
Factory... . . $300,000 Bonds . . . . 4 $100,000 
Capital and surplus . 200,000 
$300,000 $300,000