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Many farm operations use the cash-basis system and record revenue only when cash is received and record expenses only when cash is paid. The accrual-adjusted approach provides a more accurate picture of the financial performance and financial position of a farm business. The adjustments presented in this chapter provide the means to convert a cash-basis system to an accrual-adjusted system. These procedures allow the farm accountant to provide accrual-adjusted financial statements for lenders and other parties who need to make meaningful comparisons with the past performance of the farm business or with other farm operations. The procedures for the adjustments discussed in this chapter include those involving inventories, prepaid expenses, 2 depreciation expense, accrued expenses, accrued 1 4-2 . For the following scenario: a) calculate the Change in Purchased Feed Inventory and the Change in Crop Inventory, b) prepare the journal entries for the adjustments, and c) indicate the effects on the income statement for purchased feed, raised feed, and raised crops. 2 Steve and Chris harvested a grain crop in July and sold part of it for $13,500. The Farmers stored the rest of the crop, 3 valued at $5,500 at the end of the year. They had no stored crop on hand at the beginning of the year. The Farmers 4 completed the harvest of hay for their cow herd on August 1, and the value of the hay is $4,500 at harvest time. At the 5 end of the year, they determined that $2,300 worth of that hay is still on hand on December 31 when they are 6 preparing financial statements. Steve and Chris had no raised feed on hand at the beginning of the year. The Farmers 7 purchased pelleted feed for $2,000 and salt and mineral blocks for $350 on October 15. This purchase was paid for on 8 the day it was purchased and was recorded in the Purchased Feed account. The Farmers determined that the pelleted 9 feed on hand at the end of the year cost approximately $500 and the salt and mineral blocks on hand cost 10 approximately $250. The Farmers had no purchased feed on hand at the beginning of the year. 11 12 13 Many farm operations use the cash-basis system and record revenue only when cash is received and record expenses only when cash is paid. The accrual-adjusted approach provides a more accurate picture of the financial performance and financial position of a farm business. The adjustments presented in this chapter provide the means to convert a cash-basis system to an accrual-adjusted system. These procedures allow the farm accountant to provide accrual-adjusted financial statements for lenders and other parties who need to make meaningful comparisons with the past performance of the farm business or with other farm operations. The procedures for the adjustments discussed in this chapter include those involving inventories, prepaid expenses, 2 depreciation expense, accrued expenses, accrued 3 4 Complete the following transactions 5 4-2 . For the following scenario: a) calculate the Change in Purchased Feed Inventory and the Change in Crop Inventory, b) prepare the journal entries for the adjustments, and c) indicate the effects on the income statement for purchased feed, raised feed, and raised crops. Steve and Chris harvested a grain crop in July and sold part of it for $13,500. The Farmers stored the rest of the crop, valued at $5,500 at the end of the year. They had no stored crop on hand at the beginning of the year. The Farmers 4 completed the harvest of hay for their cow herd on August 1, and the value of the hay is $4,500 at harvest time. At the 5 end of the year, they determined that $2,300 worth of that hay is still on hand on December 31 when they are 6 preparing financial statements. Steve and Chris had no raised feed on hand at the beginning of the year. The Farmers 7 purchased pelleted feed for $2,000 and salt and mineral blocks for $350 on October 15. This purchase was paid for on 8 the day it was purchased and was recorded in the Purchased Feed account. The Farmers determined that the pelleted 9 feed on hand at the end of the year cost approximately $500 and the salt and mineral blocks on hand cost 10 approximately $250. The Farmers had no purchased feed on hand at the beginning of the year. 12 13 Many farm operations use the cash-basis system and record revenue only when cash is received and record expenses only when cash is paid. The accrual-adjusted approach provides a more accurate picture of the financial performance and financial position of a farm business. The adjustments presented in this chapter provide the means to convert a cash-basis system to an accrual-adjusted system. These procedures allow the farm accountant to provide accrual-adjusted financial statements for lenders and other parties who need to make meaningful comparisons with the past performance of the farm business or with other farm operations. The procedures for the adjustments discussed in this chapter include those involving inventories, prepaid expenses, 2 depreciation expense, accrued expenses, accrued 1 4-2 . For the following scenario: a) calculate the Change in Purchased Feed Inventory and the Change in Crop Inventory, b) prepare the journal entries for the adjustments, and c) indicate the effects on the income statement for purchased feed, raised feed, and raised crops. 2 Steve and Chris harvested a grain crop in July and sold part of it for $13,500. The Farmers stored the rest of the crop, 3 valued at $5,500 at the end of the year. They had no stored crop on hand at the beginning of the year. The Farmers 4 completed the harvest of hay for their cow herd on August 1, and the value of the hay is $4,500 at harvest time. At the 5 end of the year, they determined that $2,300 worth of that hay is still on hand on December 31 when they are 6 preparing financial statements. Steve and Chris had no raised feed on hand at the beginning of the year. The Farmers 7 purchased pelleted feed for $2,000 and salt and mineral blocks for $350 on October 15. This purchase was paid for on 8 the day it was purchased and was recorded in the Purchased Feed account. The Farmers determined that the pelleted 9 feed on hand at the end of the year cost approximately $500 and the salt and mineral blocks on hand cost 10 approximately $250. The Farmers had no purchased feed on hand at the beginning of the year. 11 12 13 Many farm operations use the cash-basis system and record revenue only when cash is received and record expenses only when cash is paid. The accrual-adjusted approach provides a more accurate picture of the financial performance and financial position of a farm business. The adjustments presented in this chapter provide the means to convert a cash-basis system to an accrual-adjusted system. These procedures allow the farm accountant to provide accrual-adjusted financial statements for lenders and other parties who need to make meaningful comparisons with the past performance of the farm business or with other farm operations. The procedures for the adjustments discussed in this chapter include those involving inventories, prepaid expenses, 2 depreciation expense, accrued expenses, accrued 3 4 Complete the following transactions 5 4-2 . For the following scenario: a) calculate the Change in Purchased Feed Inventory and the Change in Crop Inventory, b) prepare the journal entries for the adjustments, and c) indicate the effects on the income statement for purchased feed, raised feed, and raised crops. Steve and Chris harvested a grain crop in July and sold part of it for $13,500. The Farmers stored the rest of the crop, valued at $5,500 at the end of the year. They had no stored crop on hand at the beginning of the year. The Farmers 4 completed the harvest of hay for their cow herd on August 1, and the value of the hay is $4,500 at harvest time. At the 5 end of the year, they determined that $2,300 worth of that hay is still on hand on December 31 when they are 6 preparing financial statements. Steve and Chris had no raised feed on hand at the beginning of the year. The Farmers 7 purchased pelleted feed for $2,000 and salt and mineral blocks for $350 on October 15. This purchase was paid for on 8 the day it was purchased and was recorded in the Purchased Feed account. The Farmers determined that the pelleted 9 feed on hand at the end of the year cost approximately $500 and the salt and mineral blocks on hand cost 10 approximately $250. The Farmers had no purchased feed on hand at the beginning of the year. 12 13