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Dean Farmer recently won the lottery, and used his winnings to purchase a farm in 2018....

Dean Farmer recently won the lottery, and used his winnings to purchase a farm in 2018. Dean did not go to college, but rather grew up on a farm, worked as a cabinet maker for 10 years, and then won the lottery. He was able to generate a beginning balance sheet, however he did not have experience with depreciation or market adjustments.

  1. Beginning Cost Basis Balance Sheet
  1. In addition to the original $75,000 operating loan at the beginning of the year, Dean took out an additional operating loan of $67,000 in July as a source of new financing for the year. Both loans are due on February 15, 2020.
  1. Dean also had records of his current account balances as of December 31, 2019

Cash

24,000

Interest payable

10,650

Fuel and oil expense

37,000

Interest paid

11,850

Property tax payable

16,000

Supplies on hand

18,000

Labor expense

18,000

Repair expense

36,900

Property taxes paid

15,000

Insurance expense

10,500

Accounts receivable

32,000

Feeder livestock purchases

20,000

Feed purchases

15,000

Crop sales (corn and wheat)

350,750

Corn Inventory

120,000

Principal paid-Beef Loan

10,000

Prepaid expenses

20,000

Principal paid-Farm Mortgage

20,000

Livestock sales

17,500

Government program payments

2,000

Crop expenses

220,000

Other livestock expenses

12,000

Market Livestock Inventory

36,000

Accounts Payable

17,000

Wheat Inventory

50,000

Feed on Hand

70,000

Create the Beginning Balance Sheet (Jan 1, 2019) in a new spreadsheet.

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Answer #1
For Dean
Cost Basis Balance Sheet as at 1-1-2019
A Equity and Liabilities Amount ($)
1 Share capital (Balancing figure in Balance sheet) 617750
2 Non Current Liabilities
(i) Long Term Borrowings (given) 75000
3 Current Liabilities
(i) Accounts Payable 17000
(ii) Other Accrued Expenses (Note 2) 53500
Total 763250
B Assets
1 Non Current Assets
2 Current Assets
(i) Inventory (Note 3) 520750
(ii) Livestock (Note 4) 33500
(iii) Feed (Note 5) 55000
(iv) Supplies on hand 18000
(v) Accounts Receivable 32000
(vi) Cash (Note 1) 104000
Total 763250
Note 1: Cash workings
Closing balance of Cash (31-12-2019) 24000
Add Back: Expenses paid during the year
Fuel and oil expense 37000
Labor expense 18000
Property taxes paid 15000
Feed purchases 15000
Prepaid expenses 20000
Crop expenses 220000
Interest paid 11850
Repair expense 36900
Insurance expense 10500
Feeder livestock purchases 20000
Principal paid-Beef Loan 10000
Principal paid-Farm Mortgage 20000
Government program payments 2000
Other livestock expenses 12000
Less: Cash realised during the year
Livestock sales 17500
Crop sales (corn and wheat) 350750
Net Opening Cash Balance 104000
Note 2: Other Accrued Expenses
Particulars Closing Payable Paid Opening Payable
Property Tax 16000 15000 31000
Interest 10650 11850 22500
Total 53500
Note 3: Inventory
Closing Inventory:
Corn 120000
Wheat 50000
Total Closing Inventory 170000
Total Sales (Corn and Wheat) 350750
Therefore, Total Opening Inventory 520750
Note 4: Livestock
Total Closing Livestock Inventory 36000
Livestock Sales 17500
Feeder livestock purchases 20000
Therefore, Total Opening Livestock 33500
Note 5: Feed
Total Closing Feed on Hand 70000
Feed purchases 15000
Therefore, Total Opening Feed 55000
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