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Farm Accounts Among the assets and liabilities of John and Elaine Daly, who carry on a mixed farming business, on 01/01/2014 are: Land and Buildings at cost €450,000; Vehicles and Machinery at cost €682,000; Electricity due €330; Value of Cattle €660,000; Value of Sheep due €1,600; Value of Stock of Fuel €620; three months Investment Interest due €300 - Leaving Cert Accounting - Question 4 - 2015
Question 4
Farm Accounts Among the assets and liabilities of John and Elaine Daly, who carry on a mixed farming business, on 01/01/2014 are: Land and Buildings at cost €450,00... show full transcript
Worked Solution & Example Answer:Farm Accounts Among the assets and liabilities of John and Elaine Daly, who carry on a mixed farming business, on 01/01/2014 are: Land and Buildings at cost €450,000; Vehicles and Machinery at cost €682,000; Electricity due €330; Value of Cattle €660,000; Value of Sheep due €1,600; Value of Stock of Fuel €620; three months Investment Interest due €300 - Leaving Cert Accounting - Question 4 - 2015
Step 1
Prepare a Statement of Capital for the year on 01/01/2014
Answer
To prepare the Statement of Capital for the year on 01/01/2014, begin by listing the assets and liabilities:
Assets
- Land & Buildings: €450,000
- Machinery: €682,000
- Cattle: €660,000
- Sheep: €27,600
- Milk (due): €1,500
- Lambs: €10,400
- Calves: €10,500
- Fuel: €620
- Investments (due): €300
- Bank: €27,700
Total Assets = €685,920
Liabilities
- Electricity due: €330
- Loan: €2,000
- Interest due: €1,400
Total Liabilities = €3,730
Capital Calculation
Capital (01/01/2014) = Total Assets - Total Liabilities = €685,920 - €3,730 = €682,190
Step 2
Prepare an Enterprise Analysis Account for ‘Cattle’ and ‘Sheep’ for the year ended 31/12/2014
Answer
Cattle:
Income
- Sales of Milk: €28,700
- Sales of Cattle: €40,559
- Increase in stock: €15,000
Total Income (Cattle) = €84,259
Less Expenditure
- Purchases (Cattle): €12,600
- General farm expenses (70%): €27,891
- Veterinary fees (70%): €686
Total Expenditure (Cattle) = €41,177
Profit on Cattle = Total Income - Total Expenditure = €84,259 - €41,177 = €43,082
Sheep:
Income
- Sales (Sheep & Lambs): €42,480
Less Expenditure
- Purchases (Sheep): €1,800
- General farm expenses (30%): €11,345
- Veterinary fees (30%): €294
Total Expenditure (Sheep) = €13,439
Profit on Sheep = Total Income - Total Expenditure = €42,480 - €13,439 = €29,041
Step 3
Prepare a General Profit & Loss Account for the year ended 31/12/2014
Answer
General Profit & Loss Account
Income
- Profit on Cattle: €43,082
- Profit on Sheep: €29,041
- Investment Interest: €1,200
- Forestry Premium: €300
Total Income = €73,623
Less Expenditure
- General expenses: €61,100
- Depreciation of Light, Heat and Fuel: €1,455
- Depreciation of Machinery: €6,165
- Loan Interest: €200
Total Expenditure = €68,920
Net Profit
Net Profit = Total Income - Total Expenditure = €73,623 - €68,920 = €4,703
Step 4
Step 5
(i) State the purposes of a general Profit & Loss Account
Answer
- Allocation of Income and Expenses: To determine the overall profitability of the farm by summarizing income and expenses across all activities.
- Financial Planning: To aid in budget preparation and financial planning.
- Performance Measurement: To measure the performance of different enterprises and make informed management decisions.
Step 6
(ii) State the advantages of preparing farm enterprise analysis accounts
Answer
- Resource Allocation: Facilitates better planning and resource allocation by identifying the profitability of individual enterprises.
- Decision-Making: Provides critical insights that help in making informed decisions about future investments and operational adjustments.