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Income Statement Assignment Ramona Rancher has an accounting period from January 1st to December 31st ....

Income Statement Assignment
Ramona Rancher has an accounting period from January 1st to December 31st . Use the following information to complete an income statement for Ramona and evaluate the income statement.
Inventory Values
January 1st 2018 December 31st 2018
Crops $32,850 $27,440
Livestock $17,600 $29,500
Revenue and Expenses
Depreciation $26,700 Crop sold $169,800
Feed Purchased $19,800 Insurance $3,800
Prop. Taxes $3,400 Interest paid $36,400
Misc. Expenses $4,800 Feeder livestock Purchased $46,500
Market Livestock sold $81,660 Seed purchased $6,240
Repairs $12,100 Vet. and health expenses $4.800
Fertilizer Expenses $9,400 Custom work (income) $3,400
Supplies $4,800 Breeding livestock sale(gain) $4,600
Labor Hired $20,600 Govt. payments (income) $9,890
Fuel Expenses $5,800 Chemical expense $6,780
Gain on Machinery sale $9,100 Change in payable +$1,400
Change in interest payable ($3,400)
Other information
Average Asset Value (12/31/18) $785,000 Family living expense $38,000
Opportunity cost of Labor $24,000 Income tax paid $10,700
Opportunity cost of Management $12,000 Average Owner’s Equity (12/31/18) $394,000
Opportunity cost of Capital 9%

Income Statement Questions:
What was Net Farm Income from Operations?
What was Net Farm Income?
What is Return on Assets(ROA)%?
What is Return on Equity(ROE)%?
What is the Operating Profit Margin?
What is the Asset turnover ratio?
What is the Operating expense ratio?
Net Farm income from operations ratio?
Can you know if equity went up or down from the income statement?
How can you know?
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Answer #1
Solution:
Income Statement at December 31
Revenues:
Cash crop sales $169,800
Market live stock sales $81,660
Inventory Changes:
Crops ($5,410)
Market Live stock $11,900
Government program payments $9,890
Gain on Breeding live stock $3,400
Custom work income $4,700
Total Revenue (a) $275,940
Business Expenses(Direct):
Feed purchased $19,800
Purchased market livestock $46,500
Cash Operating Expenses:
Fertilizer Expense $9,400
Fuel expenses $5,800
Labor hired $20,600
Chemical Expense $6,780
Seed purchased $6,240
Insurance $3,800
Vet. & Health Expenses $4,800
Repairs $12,100
Property Taxes $3,400
Misc. Expenses $4,800
Supplies $4,800
Adjustments:
Change in accounts payable $1,400
Depreciation $16,700
Total Operating Expenses $166,920
Interest paid $36,400
Change in interest payable ($3,400)
Total Interest expense $33,000
Total Expenses (b) $199,920
Net farm income from operations (a-b) $76,020
Gain on sale of machinery $9,100
Net Farm Income $85,120
1) Net Farm Income from Operations is $76020
2) Net Farm Income is $85120
3) Return on Assets = Net income / Average Assets = $85120 / $785000 = 10.84%
4) Return on Equity = Net Income / Average Owners' stock = $85120 / $394000 = 21.60%
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