Question
Fill in lines A, B, C, D, F, H, and J (the lines are highlighted) Use the information you just calculated and the Balance Sheet
- Fill in lines A, B, C, D, F, H, and J (the lines are highlighted)
- Use the information you just calculated and the Balance Sheet for I.M. Farmer and the Statement of Owners Equity (these are both in PowerPoint 2) to calculate the following. I know these numbers seem as though they dont fit, but go through the process and show me your work. The opportunity cost of (unpaid) management =$30,000 and the opportunity cost for (unpaid) labor = $42,000.
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- Rate of Return on Assets Assume the Beginning Year Total Asset Value = $690,000 (Use the Market Values)
-
- Rate of Return on Equity
-
- Operating profit margin ratio
-
- Opportunity Cost of all Capital given a 5% interest rate.
REVENUE
Total
Crops and Feed Sales
$ 100,000
Livestock Sales
$ 180,000
Inventory changes: Crops
$ 4,000
Inventory changes: Livestock
$ (1,500)
Accrual adjustments: accounts receivable
$ 2,000
Government Payment
$ 3,400
Other Income
$ 2,800
A. TOTAL REVENUE
EXPENSES
Feed Purchased
$ 9,000
Market Livestock Purchased
$ 110,000
Hired Labor
$ 21,000
Livestock Expense
$ 4,700
Crop Expense
$ 66,000
Fuel, Oil
$ 7,200
Repairs and Maintenance
$ 5,800
Machine Hire
$ 1,500
Taxes
$ 6,500
Insurance
$ 3,000
Other Cash Expenses
$ 2,300
B. TOTAL CASH EXPENSES
C. NET CASH INCOME (A - B)
Depreciation: Machinery and Equipment
$ 4,700
Depreciation: Building & Improvements
$ 6,300
D. TOTAL DEPRECIATION
E. INTEREST PAID ON DEBT
$ 21,000
Accrual Adjustments (Expense items):
Expense items accrued but not paid
$ 9,500
Expense items paid but not accrued
$ (32,000)
F. ACCRUAL ADJUSTMENTS
G. VALUE OF HOME CONSUMPTION
$ 500
H. NET INCOME FROM OPERATIONS (C-D-E-F+G)
I. Gain/Loss on sale of capital assets:
$ 680
J. NET FARM INCOME (H+I)
- Rate of Return on Assets Assume the Beginning Year Total Asset Value = $690,000 (Use the Market Values)
- Rate of Return on Equity
- Operating profit margin ratio
- Opportunity Cost of all Capital given a 5% interest rate.
REVENUE
Total
Crops and Feed Sales
$ 100,000
Livestock Sales
$ 180,000
Inventory changes: Crops
$ 4,000
Inventory changes: Livestock
$ (1,500)
Accrual adjustments: accounts receivable
$ 2,000
Government Payment
$ 3,400
Other Income
$ 2,800
A. TOTAL REVENUE
EXPENSES
Feed Purchased
$ 9,000
Market Livestock Purchased
$ 110,000
Hired Labor
$ 21,000
Livestock Expense
$ 4,700
Crop Expense
$ 66,000
Fuel, Oil
$ 7,200
Repairs and Maintenance
$ 5,800
Machine Hire
$ 1,500
Taxes
$ 6,500
Insurance
$ 3,000
Other Cash Expenses
$ 2,300
B. TOTAL CASH EXPENSES
C. NET CASH INCOME (A - B)
Depreciation: Machinery and Equipment
$ 4,700
Depreciation: Building & Improvements
$ 6,300
D. TOTAL DEPRECIATION
E. INTEREST PAID ON DEBT
$ 21,000
Accrual Adjustments (Expense items):
Expense items accrued but not paid
$ 9,500
Expense items paid but not accrued
$ (32,000)
F. ACCRUAL ADJUSTMENTS
G. VALUE OF HOME CONSUMPTION
$ 500
H. NET INCOME FROM OPERATIONS (C-D-E-F+G)
I. Gain/Loss on sale of capital assets:
$ 680
J. NET FARM INCOME (H+I)
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