Assume a famer has an accounting period running from January 1 to December 31. Use the following information obtained for the past calendar year accounting period to complete an income statement and answer questions 1 through 12. Inventory Values s Livestock January 1 $32,850 $18,600 December 31 $25,440 $31,500 Revenue and Expenses Crops Sold Insurance Depreciation Feed Purchased Property Taxes Misc. Expenses Market Livestock Sold Repairs Fertilizer Exp. Supplies Labor Hired Fuel Expense Gain on mach. sale Change in interest payable 28,900 21,200 3,400 5,800 91,660 12,100 9,400 4,800 22,600 5,800 11,100 (2,400) $189,600 3,800 33,400 Feeder Livestock Purchased. 46,500 6,410 4,800 4,700 Gain on Sale of breeding stock 7,600 8,890 9,780 +1,400 Interest Paid Seed Purchased Vet. & Health Expense Income from Custom Work Gov't payment income Chemical exp. Change in acct. payable Other Information $ 38,000 10,700 $402,000 $375,675 Average Asset Value (2007) $785,000 Family Living Expenses Income Tax Paid Owner's Equity (12/31) Average Equity Value Opportunity Cost of Operator Labor 24,000 Opportunity Cost of Operator Management Opportunity Cost of Capital 12,000 9% Questions 1 through 7 and 9 through 11 are worth 1.5 points each Questions 8 and 12 are worth 2.5 points each 1. What was Net Farm Income from Operations? 2. What was Net Farm Income? 3. Compute Retum to Management: 4. Compute Retum to Labor: 5. Compute Retum on Assets: (%) 6. What is Return on Equity (in %)? 7. What is the Operating Profit Margin Ratio? S. Compute the Asset Tumover Ratio which is Total Revenue divided by Total Assets. What does this value mean? How do you interpret it? 9. How much did I. M. Famer's equity increase or decrease during the past year? 10. What was I. M.'s equity on January 1? 11. Value of Farm Production is a concept defined as Total Revenue minus livestock purchased minus feed purchased. What was I. M's Value of Fam Production for the past year? 12. What does Value of Farm Production Measure?