CHAPTER 7 (c) Fixed Assets


Land and Buildings Machinery


Financial Assets Investment


Current Assets Debtors (12,000 + 1,600 + 390) Cash


Cattle Stock 31/12 Grain Stock 31/12


Current Liabilities Creditors (11,000 + 500 + 750) Bank Overdraft Working Capital Total Net Assets


Financed By Capital (260,000 + 20,000 EU Grant) Net Profit


less Drawings Capital Employed [3] [2]


12,250 7,400


[3] [1] [1] [1]


13,990 1,500


25,000


12,000 52,490


(19,650) 32,840 275,840 [2]


280,000 [1]


2,730 [5]


282,730 (6,890)


[1] 275,840 Milk


Repairs (1,200 @ 20%)


Balance Sheet for Lynch Farm as at 31/12/2013 Cost [2] [2]


150,000 100,000 250,000


Depreciation - [2]


20,000 20,000


Net Book Value [1]


[1]


150,000 80,000


230,000 [2]


13,000 243,000


Debtors People who owe us money. Debtors on the face of the account 12,000 + Milk cheque due 1,600 + Investment interest due 390


Creditors Creditors on the face of the account 11,000 + Electricity due 500 + Vet fees due 750


Drawings 450 240


Light and Heat (7,500 @ 20%) 1,500


EU Grant Income received from the European Union that does not have to be repaid but has certain conditions that must be met. It is capital introduced to the farm.


(d) Why farmers prepare a full set of accounts:


1 To file for tax returns. Farmers pay self assessment tax. [3] 2 To show financial institutions when applying for a loan, their collateral and their ability to repay. [3]


3 To see whether they are making a profit or a loss. [3] 4 To compare different sections of the farm’s activities. [3] 5 To help plan for the future and budget. [3]


7


Depreciation (10,000 @ 20%) 2,000


Bank


2,700 6,890


This is accumulated depreciation – all depreciation to date. Cost less Net Book Value 100,000 - 80,000 10,000 depreciation had accumulated before the question and a further 10,000 this year.


95


Note


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