It is the beginning of 2023 and Miller Farms has hired the accounting firm of PTB Farm Accountants to compile their financial records for the year. Dr. Berends, the owner/manager of PTB Farm Accountants, has assigned you the task of preparing Miller Farmss financial records for 2023. PTB Farm Accountants use the accrual adjusted approach to farm accounting. To get things started properly, you have a meeting with the proprietor, Kevin Miller, and learn the following: Kevin Miller is the sole proprietor of Miller Farms, a beef cattle and pistachio ranch. The Ranch is in the community of Foothills, California in Fresno County. He runs a cow-calf operation and sells the calves after weaning to a feeder operation. For the cow-calf operation he grows alfalfa and feed corn. Some of the harvested alfalfa and feed corn is used to feed animals on the farm, but he produces more than can use so he sells the rest to earn revenue for the farm. Miller Farms also has a good size pistachio orchard and sells the nuts to the Fresno Nut Cooperative, of which he is a member. Mr. Miller runs the operation as the owner/manager and provides much of the labor for the farm. However, he does have one hired hand, Selena Jimenez. Kevins wife, Lucinda, works as a real estate agent for a company in the city of Fresno and plays no role in the management of the farm, though Kevin does consult with her on major financial decisions. Kevin has provided a balance sheet for December 31, 2022 (last year), which you will need to receive from Dr. Berends. It contains the asset, liability, and equity values for Miller Farms as of that date. All the prior years accounting activities have been completed and Mr. Miller is properly prepared to start the 2023 fiscal year. This balance sheet is your starting point for the semester-long farm accounting project. We will refer to this balance sheet as Miller Farms beginning of year (BOY) Balance Sheet. Mr. Miller is a Fresno State Agricultural Business graduate and understands basic accounting and financial statements. He has been managing the operation since 1988. Initially, the farm was owned by his parents. When they passed away, he inherited the property and has been running it as his own operation since 12/31/2004. Kevin acquired the land and buildings as a $1,400,000 inheritance from his parents. When acquired, the land represented $1,000,000 of the propertys value with buildings and improvements made up the remaining $400,000. Since Kevin has no interest in selling the property in the foreseeable future, he keeps this valuation on his books. Real estate comprises the majority of Mr. Millers owner equity. Kevin and Selena do most of the labor needed on the farm but at times of high need (e.g., harvest time) Kevin may hire workers or contract out the work to custom hire organizations. Kevin owns a variety of machinery and equipment, the original cost of which is reported on Miller Farmss balance sheet (see Machinery and Equipment under Non-Current Assets). Assume all of the equipment, except a pickup truck and a hay baler were purchased on 12/31/2013. The pickup truck was purchased three years ago, and the hay baler was purchased three years ago. Some of their equipment is nearing the end of its 1 Please note: the information is the project is intended for use as a learning exercise for AGBS 31-Farm Accounting. It should not be construed as factual or typical information for the actual farming practices of raising beef cattle, alfalfa, corn, or pistachios. Much of the information for the project has been dramatically simplified or modified from real world farming conditions to meet the learning objectives of the course and the instructor.

useful life, but Kevin only plans on replacing the corn planter in the upcoming year. The cow-calf enterprise has breeding livestock of various ages with a total original cost of $88,000. The accumulated depreciation represents the depreciation amounts for their real estate improvements, field equipment and machinery, office furniture and equipment, the establishment costs of the alfalfa and pistachio acreage, and breeding livestock. The Farm Financial Standards Council (FFSC) recommends reporting accumulated depreciation as a summary account for all assets rather than reporting individual depreciation amounts. The FFSC guidelines are used in this class. Mr. Miller currently has two loans: 1) A 10-month operating loan for $40,000 at 3% originated on November 15, 2022, and due on September 15, 2023. This is a current liability (e.g., Notes Payable Due within One Year). 2) A 4-year equipment loan for $180,000 that originated on March 26, 2021. He has already made some payments and the current outstanding balance is $95,000. The next payment is scheduled for March 26, 2023, and will require a principal payment of $34,000 plus accrued interest. He owes $34,000 on the loan in the next 12 months (the current portion of a noncurrent liability) and $61,000 beyond the next 12 months (a noncurrent liability). Balance Sheet notes regarding liabilities: +++++ CHECK THIS BELOW VERY CAREFULLY ++++++ NOTE: Please read the following very carefully as it explains the values on the balance sheet and the starting balances in your ledger. THIS IS VERY IMPORTANT!! A The BOY Balance Sheet total for Notes Payable Due within One Year is $74,000. This includes the amount associated with the existing operating loan ($4,000) plus 2023s payment on the sprayer loan ($34,000). NOTE: The starting BOY LEDGER balance for Notes Payable Due within One Year is $40,000. B Long term notes payable are a noncurrent liability as the loan covers multiple years The current portion of the loan is equal to $34,000 and are included under the Notes Payable Due within One Year on the Balance Sheet (see footnote A above). The amount owed after the next twelve months is $61,000 and recorded under noncurrent liabilities on the Balance Sheet under Notes Payable, Non- Current. NOTE: The starting BOY LEDGER balance for Notes Payable, Non-Current is $95,000.

CHART OF ACCOUNTS FOR MILLER FARMS, Page 1 Code Assets 1000 Cash 1100 Accounts Receivable 1211 Feeder Livestock Inventory Raised for Sale 1221 Feed Inventory Raised for Sale 1224 Feed Inventory Purchased for Use 1301 Prepaid Insurance 1500 Breeding Livestock 1600 Machinery and Equipment 1650 Office Furniture and Equipment 1701 Perennial Crops 1800 Land, Buildings, and Improvements 1901 Investment in Cooperatives 1980 Accumulated Depreciation Liabilities 2000 Accounts Payable 2100 Taxes Payable 2200 Interest Payable 2300 Notes Payable, Noncurrent 2310 Notes Payable Due within One Year 2400 Real Estate Notes Payable, Noncurrent Equity 3100 Retained Capital 3110 Owner Withdrawals 3120 Non-Farm Income 3130 Other Capital Contributions/Gifts/Inheritances

CHART OF ACCOUNTS FOR MILLER FARMS, Page 2 Revenues 4000 Cash Crop Sales 4011 Change in Raised Feed Inventories 4101 Cash Sales of Market Livestock 4500 Gains/Losses from Sale of Culled Breeding Livestock 4700 Change in Accounts Receivable Expenses 5020 Purchased Feed 5030 Change in Purchased Feed Inventories 6100 Wages Expense 6110 Payroll Tax Expense 6221 Repairs and Maintenance 6401 Gas and Diesel 6500 Seed 6510 Fertilizers 6601 Veterinarian Expenses 6700 Insurance 6720 Electricity 6761 Membership Fees and Dues 6780 Depreciation Expense 8100 Interest Expense Income Taxes and Other Accounts 8200 Gains/Losses on Sales of Farm Capital Assets 9100 Income Tax Expense 9110 Change in Taxes Payable 9201 Extraordinary Gains/Losses

Final Project Components: BOY Balance Sheet (provided) Chart of Accounts (provided) EOY Procedures: - Depreciation - End of Year Adjustments Final Journal (includes adjusting and closing entries) Final Ledger (a new page for each account)A Adjusted Trial Balance Financial Statements: - Income Statement - Statement of Owner Equity - Balance Sheet - Statement of Cash Flows A The Cash Ledger account may require more than one page. All other accounts should not need more than one page. NOTE: All components must be typed. NOTE: The order listed above is the required order for the final project.

Regarding the final project submission: 1. Do NOT use sheet protectors. Believe it or not, it makes it difficult to efficiently evaluate your project. 2. Properly bind your project or I will not grade it. It is a pain in the you-know-what to grade a project with loose pages flying all over the place. Ideally, they should be bound in a 1 D-ring binder or be wired-bound from a copy store. Any binder larger than 1.5 will not be accepted. Projects that are simply stapled, clipped, or stuck loosely in a folder (or some combination thereof) will be considered incomplete and will not be graded. 3. Do not use the slim 1-side clip binders unless you use a big left-side margin. Otherwise, it is tough to read the left side of the page. 4. Print on only one side of each page. 5. Pay attention to the sequence of your project. It is required to follow the list on the previous page. 6. Pay attention to presentation. Lopping things off, splitting a financial statement over two pages, splitting a journal entry over two pages, not erasing my correction marks or if it is just plain messy are not proper presentation aspects. All will cause a project to lose significant points. Good written communication includes good presentation. Remember the story: you are submitting these for Mr. Miller, a gentleman who knows what financial documents are supposed to look like. 7. Put the ledger together in the same order as the chart of accounts (mandatory). 8. Include a sum line on your trial balance (mandatory)