Generally Accepted Accounting Principles and Balance Sheet
ACC 509 Case 5-2 Response
Justin Tammany
Grennell Farm
Income Statement (Sales/Delivery Method)
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Year Ending December 31, 2009
Sales Revenue $522,000 Less Expenses Cost of Sales 92,340 Wages 72,500 Insurance 4,500 Taxes 32,500 Depreciation 28,500 Other 45,000 Total Expenses 275,340
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Net Income $246,660
Grennell Farm
Balance Sheet (Sales/Delivery Method)
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Year Ending December 31, 2009
Assets Liabilities
Current Assets Total Liabilities 33,000
Cash 30,900 Paid-In Capital 450,000
Inventory 92,100 Common Stock 7,500
A.R. 59,600
Long-Term Assets Retained Earnings 179,600
Land 375,000
Equipment 412,500
Depreciation (300,000) ________ _______
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Total Assets 670,100 Total Liabilities & O.E. 670,100
In the sales method, the revenue is recognized when the grain is purchased and received by the grain elevator. Thus, the sales revenue was calculated by multiplying 180,000 bushels by an average price of $2.90/bushel. The cost of sales was calculated by multiplying these 180,000 bushels by a total production cost per bushel of $0.531. In the balance sheet, inventory is made up of 30,000 bushels stored at the farm at a current price of $3.07. The accounts receivable balance includes the 20,000 bushels awaiting collection at a price of $2.90 per bushel.
Grennell Farm
Income Statement (Collection Method)
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Year Ending December 31, 2009
Sales Revenue $464,000 Less Expenses Cost of Sales 82,080 Wages 72,500 Insurance 4,500 Taxes 32,500 Depreciation 28,500 Other 45,000 Total Expenses 265,080
Justin Tammany
Grennell Farm
Income Statement (Sales/Delivery Method)
-------------------------------------------------
Year Ending December 31, 2009
Sales Revenue $522,000 Less Expenses Cost of Sales 92,340 Wages 72,500 Insurance 4,500 Taxes 32,500 Depreciation 28,500 Other 45,000 Total Expenses 275,340
-------------------------------------------------
Net Income $246,660
Grennell Farm
Balance Sheet (Sales/Delivery Method)
-------------------------------------------------
Year Ending December 31, 2009
Assets Liabilities
Current Assets Total Liabilities 33,000
Cash 30,900 Paid-In Capital 450,000
Inventory 92,100 Common Stock 7,500
A.R. 59,600
Long-Term Assets Retained Earnings 179,600
Land 375,000
Equipment 412,500
Depreciation (300,000) ________ _______
-------------------------------------------------
Total Assets 670,100 Total Liabilities & O.E. 670,100
In the sales method, the revenue is recognized when the grain is purchased and received by the grain elevator. Thus, the sales revenue was calculated by multiplying 180,000 bushels by an average price of $2.90/bushel. The cost of sales was calculated by multiplying these 180,000 bushels by a total production cost per bushel of $0.531. In the balance sheet, inventory is made up of 30,000 bushels stored at the farm at a current price of $3.07. The accounts receivable balance includes the 20,000 bushels awaiting collection at a price of $2.90 per bushel.
Grennell Farm
Income Statement (Collection Method)
-------------------------------------------------
Year Ending December 31, 2009
Sales Revenue $464,000 Less Expenses Cost of Sales 82,080 Wages 72,500 Insurance 4,500 Taxes 32,500 Depreciation 28,500 Other 45,000 Total Expenses 265,080