7-1 Match the following terms with the definitions below. a. Current market value b. Current market value method C. d. e. Discounted cash flow method Historical cost Historical cost method f. Net realizable value method Basis of valuation from a historical event and can be verified if records exist. Values are sometimes difficult to obtain or verify. Method of valuation in which the value shown on the balance sheet is the book value. Method of valuation based on an exchange in which neither the buyer nor seller are forced to engage in the transaction. Method of valuation that is particularly relevant for raised crops and livestock. Method of valuation used for certain types of lease arrangements. 7-2 Prepare a bank reconciliation for the Farmers from the April bank statement and cash account below. Beginning Balance JE# Debits Credits Balance Jan. 2 Set up farm bank account 1 $ 20,000 es $ 20,000 Feb. 1 Income tax payment 31 $ 2,160 $ 17,840 Feb. 12 Mar. 1 Transfer from personal checking account Money borrowed to purchase land 3 100 $ 17,940 6 $ 120,000 $ 137,940 Mar. 1 Money borrowed to purchase tractor Mar. 1 Mar. 1 Purchase of land Purchase of tractor Mar. 10 Sale of bull to neighbor Mar. 31 Bank service charges Apr. 1 Apr. 17 Employee paycheck Purchase of cattle tags T22 7 50,000 $ 187,940 9 $ 120,000 $ 67,940 11 46,000 $ 21,940 10 XX 26 22 es $ 900 $ 22,840 sssssss $ 15 $ 22,825 $ 1,018 $ 21,807 75 $ 21,732 April Bank Statement Beginning cash balance Steve and Chris Farmer Deposits: 4/1/2018 Total deposits Other credits: Checks: No. 1003 Total checks Other debits: Electronic payment for payroll taxes Electronic payment for FUTA Electronic payment for SUTA Total other debits Ending cash balance $21,925.00 $900 $900.00 $0.00 $1,018 ($1,018.00) $ 274.00 $ 9.60 $ 27.60 ($311.20) $21,495.80 7-3 Using the following information, calculate the bad debt adjustment and the net accounts receivable. Then record the adjustment in a journal entry for Accounts Receivable. Suppose that the Farmers determined that accounts receivable at the end of 20X4 were $10,800. Steve and Chris decide to be conservative and adjust their account receivable for bad debts. They decide to use an estimate of .5 percent of the accounts receivable amount as the percentage of bad debts. Accounts receivable at the end of 20X3 was $12,500. 7-4 Classify the following inventory items and designate the valuation method for each: net realizable value (NRV), lower of cost or market (LCM), or cost (C). Raised feeder pigs Purchased feed pellets for use Raised oats for use Purchased feeder calves Purchased fuel Purchased seed for use Raised corn crop for sale Raised wheat crop Raised corn crop for use Raised hay for sale 7-5 Calculate the value of the co-mingled inventory items in each of the examples below. First Purchase Second Purchase Number Raised Number at Year-End C. a. b. 25 calves @ $225 per head 25 calves @ $225 per head 25 calves @ $225 per head 100 calves @ $235 per head 100 calves @$235 per head 100 calves @ $235 per head 0 100 100 150 100 100