4. Assume I.M. Farmer has an accounting period running Use the following informa

Question

4. Assume I.M. Farmer has an accounting period running Use the following information obtained for the calen from January 1 to December 31. I.M. Farmer Income Statement December 31, 2014 Revenue: Cash crop sales Cash livestock sales Inventory changes 91,660 Crops 7.410 12,900 Market livestock Livestock product sales Government program payments Gain/loss from sale of culled breeding stock Change in accounts receivable Other farm income 8,890 7,600 4,700 ? -307,940 Total revenue Purchased feed and grain Purchased market livestock Other cash operating expenses: 21,200 46,500 Fertilizer expense Chemical expense Seed purchased Vet. & health expenses Fuel,oil Labor 9,400 9,780 6,410 4,800 5,800 22,600 Property taxes Insurance Supplies 400 3,800 4,800 5,800 Misc. expenses Adjustments Accounts payable Depreciation 1,400 28,900 186,690 Total operating expenses Cash interest paid Change in interest payable 33,400 2,400 Total interest expense Total expenses 31,000 Net farm income from operations Gain/loss on sale of capital assets 90,250 11,100 Machinery Total Net farm income 11,100 101,350

Explanation / Answer

Requirement 1 Net Farm income from operation 90250 Given in the question itself 2 Net Farm Income 101350 Given in the question itself 3 Return to management = Returns to labor and Management - opportunity cost of labor Where Returns to Labor and management = Net farm income from operation + Interest -opportunity cost of capital So, =(90250+2400-(375675*9%))-24000 34839.25 4 Return to Labor = Returns to labor and Management - opportunity cost of Management Where Returns to Labor and management = Net farm income from operation + Interest -opportunity cost of capital So, =(90250+2400-(375675*9%))-12000 46839.25 5 Return on assets = (Net farm Income from operations + interest - opportunity cost of labor) / Average asset value So, =(90250+2400-(375675*9%))/785000 7.50 % 6 Return on Equity = (net Farm Income from operation - opportunity cost of management)/average equity =(90250-12000)/375675% 20.83 % As per Chegg Policy, we are supposed to answer maximum of four sub-parts of a question. Thank You

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