Question
The accountant for Johnson Farms has prepared the following accrual-adjusted income statement (Table 6.5) and balance sheets (Table 6.6). Please refer to the tables provided
The accountant for Johnson Farms has prepared the following accrual-adjusted income statement (Table 6.5) and balance sheets (Table 6.6). Please refer to the tables provided at the end of this exercise.
Supplemental information:
(i)Owner withdrawals for unpaid labor and management were equal to $19,000 during 2013.
Using the income statement and balance sheets for Johnson Farms, calculate the ratios and measures listed below for 2013.Set up the formulas and show all the numbers you use in you use in your calculations:
a.Current ratio=current assets /current liabilities
b.Working capital
c.Debt-to-equity ratio
d.Debt-to-asset ratio
e.Equity-to-asset ratio
f.Rate of return on farm assets
g.Rate of return on farm equity
h.Operating profit margin ratio
i.Asset-turnover ratio
j.Operating-expense ratio
k.Depreciation-expense ratio
l.Interest-expense ratio
m.Net-farm-income-from-operations ratio
Table Johnson Farms' accrual-adjusted income statement for the year ended December 31, 2013.
Cattle sales.......................................................
$566,000
Hog sales.........................................................
217,000
Corn sales........................................................
185,000
Government program payments..............................
27,000
Custom work....................................................
33,000
Adj. for increase in accounts receivable................
45,000
Adj. for decrease in inventory...........................
(31,000)
Gross Revenues.......................................
$1,042,000
Feed expense....................................................
187,000
Purchased market livestock...................................
352,000
Labor expense..................................................
115,000
Seed...............................................................
44,000
Chemicals........................................................
26,000
Fuel...............................................................
19,000
Utilities...........................................................
16,000
Repairs...........................................................
5,000
Veterinary and medicine.......................................
11,000
Rent expense....................................................
42,000
Property taxes...................................................
8,000
Depreciation expense..........................................
56,000
Adj. for increase in accounts payable...................
4,000
Operating Expense.............................................
885,000
Interest expense.................................................
140,000
Total Expenses..................................................
1,025,000
Net Farm Income from Operations...........................
17,000
Gain (loss) on sale of capital assets........................
2,000
Net Farm Income...............................................
19,000
Miscellaneous revenue (expense)............................
(3,000)
Income Before Income Taxes................................
16,000
Income taxes paid..............................................
6,000
Adj. for increases in current portion of deferred taxes
1,000
Income tax expense.............................................
7,000
Net Income......................................................
$9,000
Table Johnson Farms' balance sheet as of December 31, 2012, and December 31, 2013.
2012
2013
Assets
Cash.....................................
$5,000 The first number is for the year 2012
$2,000 The second number is for year 2013
Accounts receivable...................
148,000
193,000
Inventory................................
290,000
259,000
Total current assets................
443,000
454,000
Breeding livestock.....................
95,000
97,000
Less:accumulated depreciation....
(14,000)
(18,000)
Equipment..............................
620,000
610,000
Less:accumulated depreciation.....
(124,000)
(167,000)
Buildings................................
384,000
384,000
Less:accumulated depreciation.....
(33,000)
(42,000)
Land......................................
575,000
575,000
Total noncurrent assets...........
1,503,000
1,439,000
Total farm assets...........................
$1,946,000
$1,893,000
Liabilities
Accounts payable.......................
$58,000
$62,000
Short-term notes payable..............
423,000
477,000
Current portion of term debt..........
102,000
102,000
Current portion of deferred taxes.....
25,000
26,000
Total current liabilities............
608,000
667,000
Noncurrent portion of term debt......
967,000
865,000
Deferred taxes-noncurrent............
16,000
16,000
Total noncurrent liabilities............
983,000
881,000
Total liabilities..........................
1,591,000
1,548,000
Retained capital........................
335,000
325,000
Valuation equity........................
20,000
20,000
Total owner's equity..............
355,000
345,000
Total liability and owner's equity........
$1,946,000
$1,893,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Essentials Of Forensic Accounting
Authors: Michael A Crain, William S Hopwood,
1st Edition
1941651100, 978-1941651100
