Your parents run a farm and ranch with 1500 acres of cropland and 250-head cow-calf operation. The cropland is used in a hay, grain, potato rotation. Calves are born in January March. The top end of heifers will be kept as replacements. The remaining calves are sold in November. Bulls are purchased. Last year over Christmas your parents asked you to construct some financial statements for the farm. They thought all this education should be useful for something. They also wanted better information to take to the bank to get financing. You replied that you had not taken that class yet. However, you told them you remembered from the accounting class you had as a freshman that you needed a balance sheet at the beginning and end of year to construct an accurate income statement.

You and your parents decided to take and inventory last year and gathered the information needed for a balance sheet on New Years Eve. The plan was that you would take APEC 5015 and become a financial statement expert. They would keep track of what they paid for different things. Then over Christmas break in December 2011 you would gather information for an ending balance sheet.

Now it is January 2012. The notes that you took on December 31, 2011 and 2010 are below. Also, the information your parents gathered on transactions during 2010 are below. You feel this is a great time to apply what you learned in APEC 5015. Your parents will have a set of financial statements from which they can assess the farms financial position. You should assume that the farm is a proprietorship.

You and your parents decided to not capitalize and depreciate the cost of raised breeding livestock. Instead, you established a base value of $550 per head. You also discussed having financial statements that were for just the farm versus the farm and family combined. You and your parents could not agree on which would be more appropriate. You decided to prepare them both ways and then decide later. Everyone was in agreement that financial statements on both a cost basis and market value would be useful.

The second project will be to analyze the financial statements that you create here.

Use the information below to prepare the following financial statements:

18 points Balance sheets (6) Cost based beginning and ending farm and market value beginning and ending farm and consolidated.

12 points Income Statement (1)

10 points Cash flow Statement (2) for farm and consolidated

10 points Owners equity statement (3) for farm both book value and market value. and consolidated

50 points calculate ratios and write a 3-5 page paper.