Income Statement Example

Assume U.R. Rancher has an accounting period running from January 1 to December 31. Use the following information obtained for the calendar year 2007 accounting period to complete an income statement for U.R. Then complete the calculations.

Average Asset Value $520000

Average Net Worth $350000

Building Depreciation $2700

Crops Sold $56000

Family Living Expenses $15000

Feeder Livestock Purchased $22500

Gain on Sale of Breeding Livestock $1200

Gain on Sale of Machinery $2600

Hay Ending Inventory $14300

Hay Starting Inventory $14500

Hired Labor $12400

Interest Paid $20900

Machinery Depreciation $4800

Market Livestock Sold $70500

Miscellaneous Expenses $1400

Property Taxes $2100

Purchased Feed $5800

Value of Operator Labor $12000

Value of Operator Management $4000

1. What was Net Farm Income from Operations?

2. What was Net Farm Income?

3. Compute Return to Management:

4. What was Rate of Return on Assets?

5. What was Rate of Return on Equity?