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Farm Accounts The following trial balance was extracted from the books of the Cantwell Family, who carry on a mixed farming business, on 31/12/2015 - Leaving Cert Accounting - Question 7 - 2016
Question 7
Farm Accounts The following trial balance was extracted from the books of the Cantwell Family, who carry on a mixed farming business, on 31/12/2015. ... show full transcript
Worked Solution & Example Answer:Farm Accounts The following trial balance was extracted from the books of the Cantwell Family, who carry on a mixed farming business, on 31/12/2015 - Leaving Cert Accounting - Question 7 - 2016
Step 1
Prepare an enterprise analysis account for 'cows/milk' for the year ended 31/12/2015.
Answer
Enterprise Analysis Account – Cows/Milk
Income
- Single farm payment: €18,700
- Sale of milk: €237,900
- Sale of cows: €34,000
- Drawings of milk: €281,500
Expenditure
- Opening stock: €169,000
- Purchases: €323,000
- Closing stock: €289,000
- Less Expenditure:
- Feedstuff: €30,700
- Fertiliser: €11,340
- Wages: €45,990
- Repairs: €4,900
Total Expenditure Calculation:
a) Total Purchases = €323,000 + €169,000 - €289,000 = €203,000
Net Profit Calculation:
Net Profit for Cows = Total Income - Total Expenditure
Step 2
Prepare an enterprise analysis account for 'grain' for the year ended 31/12/2015.
Answer
Enterprise Analysis Account – Grain
Income
- Single farm payment: €18,700
- Sale of grain: €56,300
Expenditure
- Opening stock: €0
- Closing stock: €10,400
- Less Expenditure:
- Fertiliser: €4,860
- Wages: €19,710
- Repairs: €1,950
Total Expenditure Calculation:
Total Expenditure for Grain = Fertiliser + Wages + Repairs
Net Profit Calculation:
Net Profit for Grain = Total Income - Total Expenditure
Step 3
Prepare a general profit and loss account for the year ending 31/12/2015.
Answer
General Profit and Loss Account for the year ending 31/12/2015
Income
- Contribution from milk: €150,000
- Contribution from grain: €37,800
Less Liabilities
- ESB: €9,000
- Loan interest: €14,000
- Department of buildings: €9,500
- Department of machinery: €45,000
Net Profit Calculation:
Net Profit = Total Income - Total Liabilities
Step 4
Prepare a balance sheet as at 31/12/2015.
Answer
Balance Sheet as at 31/12/2015
Fixed Assets
- Land: €950,000
- Farm buildings: €190,000 - €47,500 = €142,500
- Machinery: €225,000 - €152,000 = €73,000
Current Assets
- Closing stock – cows: €289,000
- Closing stock – fertiliser: €8,000
- Closing stock – feedstuffs: €10,400
Current Liabilities
- Bank: €12,900
- Interest due: €8,000
- Working capital: €1,260,900
Financed by
- Loan: €220,000
- Capital: €1,160,000
- Farm profit: €1,600,000
- Drawings: €28,900
Summary
- Total Assets = Total Liabilities