Sec. 3] CAPITAL AND INCOME ACCOUNTS 261 
Capitan Account AT END oF YEAR 1903 
Assets Liabilities 
Factory . . . . -° $279,500 Bonds . . . - . $100,000 
Repair fund . . . . 20,500 Capital and surplus . 200,000 
$300,000 $300,000 
INCOME ACCOUNT DURING YEAR 1903 
Capital Source Income Outgo Net 
Factory Product . $40,000 Running 
expenses $15,000 + $25,000 
Repair fund Interest New invest- 
received 500 ment . 10,000) 
Interest re- — 10,000 
invested . 500 
Bonds Interest . 5,000 — 5,000 
Capital and 
Dividends 10,000 — 10,000 
surplus 
$40,500 $40,500 000 
Here we see that the repair fund has absorbed in outgo 
another $10,000 of new investment, and that it has yielded 
an income of $500, which, however, has been immediately 
reinvested and appears as outgo also. The consequence is 
that in the capital account at the end of the year, the factory, 
which has depreciated now to $279,500, has, synchronously 
with its depreciation, acquired a repair fund enough to 
bring up the total value of the assets to $300,000. The 
value to the stockholders, therefore, remains stationary at 
$200,000, on which amount they have received their stand- 
ard income of $10,000. 
§ 4 
During the next year, We shall suppose, the extraor- 
dinary repairs again need to be made. Inasmuch as during 
this year the plant has continued to depreciate, the special 
repairs will amount, approximately, to $31,500, whereupon 
the repair fund is sold and the cash employed in actual 
repairs. The accounts for the year 1904 will then be as 
follows: —