Suppose at the end of the year a farm has Total Assets of $1,000.000, of which $200,000 is current assets, $400,000 is Machinery and Breeding Livestock, and $400,000 is Land. Also suppose the firm owes $400,000 in total debt. The specifics regarding the debt are as follows: $150,000 on an operating loan, $150,000 on a machinery loan, of which $32,000 is due within the next year, and $100,000 on a land loan, of which $10,000 is due within the next year. Over the course of the year you are evaluating, this farm sold $160,000.00 worth of grain, and $32,000.00 worth of calves. Included in the grain sales were $30,000.00 of grain that had actually been produced the year before but not sold until the year you are evaluating. In addition, at the end of the year you are evaluating, the farm had $15,000.00 worth of grain held in inventory that had not been sold. a. In your spreadsheet, calculate accrual revenue for the evaluation year based on the above information.

Over the course of the evaluation year, the farm had cash operating outflows of $108,200.00, and in addition paid $16,795.00 in interest during the year. Of the operating cash outflows, $6000.00 was for seed they intend to use the following year, however, during the course of last year they did use $7,000.00 worth of fertilizer that they had paid for the year before. They had $16,000.00 in non-cash expenses (management depreciation) over the year. They paid off $42,000.00 in principle payments on their equipment and land loans during the year, and they purchased two breeding cows for $3500.00, and they purchased a new stock trailer for $8,500.00. They did not sell any equipment. The family withdrew $45,000.00 from the farm account for family living. b. In your spreadsheet, calculate accrual expenses for last year based on the above information (hint, there is some information in the discussion that is not relevant for the calculation of accrual expenses). c. Calculate Net Farm Income.