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1. Construct a balance sheet for Platte Valley Paul's business including both the cost and market basis of valuing of assets. Relevant information regarding Paul's

1. Construct a balance sheet for Platte Valley Paul's business including both the cost and market basis of valuing of assets. Relevant information regarding Paul's inventories and accounts payable as of Jan 1, 2019: a. Paul bought a used Case IH Maxxum 140 tractor with loader for $85,500 with $12,000 cash and an 9-year amortized equal payment loan from Low Valley Bank at 5.20% interest for the remaining $73,500. Annual principal and interest payments ($10,433) are due November 1 each year. The tractor is being depreciated using a double declining balance method over 12 years with a salvage value of $15,000. b. Paul purchased an eighty-acre tract of land from a neighbor for a total of $439,000. Included with the land were a set of outbuildings that were considered to be jointly worth $129,000 of the overall purchase price paid. The entire purchase was made with a cash down payment of $100,000 and the balance ($339,000) was financed under a 20-year mortgage from Federal Land Bank with an effective interest rate of 3.97 percent annually. The loan was amortized so that annual principal and interest payments of $24,878 are due on June 1 each year. Paul depreciates the outbuildings on a 16-year straight line method with a combined total salvage value of $25,000. c. Paul purchased a used Kenworth W900L semi truck with both flatbed and grain trailers for $73,000 cash. It is being depreciated using an 8- year time-and-a-half declining balance method with a $23,000 salvage value. a. Cash, checking and savings balances total $8,597. b. Paul owes $6,275 to Valley Supply for supplies delivered in 2018 but not yet paid. c. Paul estimates his tractor has market value of $45,000 and his truck $65,000. d. Recent sales in the area indicate that Pauls land is now worth $475,000 plus $120,000 for the outbuildings. e. Paul has 8,300 bushels of corn in storage valued at $3.35 per bushel and 178 ton of alfalfa hay valued at $165 per ton. f. Farm input supplies on hand are valued at $13,560. g. Paul has an outstanding operating loan for $48,000 that he obtained on April 1 of the previous year (2018) from Last National Bank. Interest is charged at 6.1% per annum and the entire balance (principal and interest) is due May 1 (2019). h. In December 2018 Paul delivered 55 ton of alfalfa hay to Wishmore Feedlot under a contract at $130/ton but has yet to be paid. i. Real estate taxes of $1,890 have accrued for 2018 (they will be payable in two installments in 2019). j. On March 1, income and social security taxes for 2018 of $23,800 will be due (these are personal obligations NOT obligations of the business).

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Land Loan: Principal Interest Date Payment Payment 6/1/2015 $ 6/1/2016 $ 11,419.70 $ 13,458.30 $ 6/1/2017 $ 11,873.06 $ 13,004.94 $ 6/1/2018 $ 12,344.42 $ 12,533.58 $ 6/1/2019 $ 12,834.50 $ 12,043.50 $ 6/1/2020 $ 13,344.03 $ 11,533.97 $ 6/1/2021 $ 13,873.78 $ 11,004.22 $ 6/1/2022 $ 14,424.57 $ 10,453.43 $ 6/1/2023 $ 14,997.23 $ 9,880.77 $ 6/1/2024 $ 15,592.62 $ 9,285.38 $ 6/1/2025 $ 16,211.65 $ 8,666.35 $ 6/1/2026 $ 16,855.25 $ 8,022.75 $ 6/1/2027 $ 17,524.40 $ 7,353.60 $ 6/1/2028 $ 18,220.12 $ 6,657.88 S 6/1/2029 $ 18,943.46 5,934.54 $ 6/1/2030 $ 19,695.51 $ 5,182.49 $ 6/1/2031 $ 20,477.43 $ 4,400.57 $ 6/1/2032 $ 21,290.38 $ 3,587.62 S 6/1/2033 $ 22,135.61 $ 2,742.39 $ 6/1/2034 $ 23,014.39 $ 1,863.61 $ 6/1/2035 $ 23,928.06 $ 949.94 S Principal Balance 339,000 327,580 315,707 303,363 290,528 277,184 263,311 248,886 233,889 218,296 202,084 185,229 167,705 149,485 130,541 110,846 90,368 69,078 46,942 23,928 (0) Tractor Loan: Interest Payment Principal Date Payment 11/1/2013 11/1/2014 $6,611.02 11/1/2015 $6,954.79 11/1/2016 $7,316.44 11/1/2017 $7,696.89 11/1/2018 $8,097.13 11/1/2019 $8,518.18 11/1/2020 $8,961.13 11/1/2021 $9,427.11 11/1/2022 $9,917.32 3,822.00 3,478.23 3,116.58 2,736.12 2,335.88 1,914.83 1,471.89 1,005.91 515.70 Principal Balance 73,500 66,888.98 59,934.19 52,617.76 44,920.86 36,823.73 28,305.55 19,344.42 9,917.32 0.00 Land Loan: Principal Interest Date Payment Payment 6/1/2015 $ 6/1/2016 $ 11,419.70 $ 13,458.30 $ 6/1/2017 $ 11,873.06 $ 13,004.94 $ 6/1/2018 $ 12,344.42 $ 12,533.58 $ 6/1/2019 $ 12,834.50 $ 12,043.50 $ 6/1/2020 $ 13,344.03 $ 11,533.97 $ 6/1/2021 $ 13,873.78 $ 11,004.22 $ 6/1/2022 $ 14,424.57 $ 10,453.43 $ 6/1/2023 $ 14,997.23 $ 9,880.77 $ 6/1/2024 $ 15,592.62 $ 9,285.38 $ 6/1/2025 $ 16,211.65 $ 8,666.35 $ 6/1/2026 $ 16,855.25 $ 8,022.75 $ 6/1/2027 $ 17,524.40 $ 7,353.60 $ 6/1/2028 $ 18,220.12 $ 6,657.88 S 6/1/2029 $ 18,943.46 5,934.54 $ 6/1/2030 $ 19,695.51 $ 5,182.49 $ 6/1/2031 $ 20,477.43 $ 4,400.57 $ 6/1/2032 $ 21,290.38 $ 3,587.62 S 6/1/2033 $ 22,135.61 $ 2,742.39 $ 6/1/2034 $ 23,014.39 $ 1,863.61 $ 6/1/2035 $ 23,928.06 $ 949.94 S Principal Balance 339,000 327,580 315,707 303,363 290,528 277,184 263,311 248,886 233,889 218,296 202,084 185,229 167,705 149,485 130,541 110,846 90,368 69,078 46,942 23,928 (0) Tractor Loan: Interest Payment Principal Date Payment 11/1/2013 11/1/2014 $6,611.02 11/1/2015 $6,954.79 11/1/2016 $7,316.44 11/1/2017 $7,696.89 11/1/2018 $8,097.13 11/1/2019 $8,518.18 11/1/2020 $8,961.13 11/1/2021 $9,427.11 11/1/2022 $9,917.32 3,822.00 3,478.23 3,116.58 2,736.12 2,335.88 1,914.83 1,471.89 1,005.91 515.70 Principal Balance 73,500 66,888.98 59,934.19 52,617.76 44,920.86 36,823.73 28,305.55 19,344.42 9,917.32 0.00

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