7-1 Match the following terms with the definitions below. a. Current market value b. Current market value method C. d. e. Discounted cash flow method Historical cost Historical cost method f. Net realizable value method Basis of valuation from a historical event and can be verified if records exist. Values are sometimes difficult te,obtain or verify. Method of valuation in which the value shown on the balance sheet is the book value. Method of valuation based on an exchange in which neither the buyer nor seller are forced to engage in the transaction. Method of valuation that is particularly relevant for raised crops and livestock. Method of valuation used for certain types of lease arrangements. Beginning Balance JEW Debits Credits Balance Jan. 2 Set up farm bank account 1 $ 20,000 $ 20,000 Feb. 1 Income tax payment 31 $ 2,160 $ 17,840 Feb 12 Transfer from personal checking account 3 $ 100 $ 17,940 Mar. 1 Money borrowed to purchase land 6 $ 120,000 $ 137,940 Mar. 1 Money borrowed to purchase tractor 7 50,000 $ 187,940 Mar. 1 Mar. 1 Mar. 101 Mar. 31 Apr. 1 Apr. 17 Purchase of land Purchase of tractor Sale of bull to neighbor Bank service charges Employee paycheck Purchase of cattle tags 9 $ 120,000 $ 67,940 11 $ 46,000 $ 21,940 10 S 900 $ 22,840 xx $ 15 $ 22,825 26 $ 1,018 $ 21,807 22 $ 75 $ 21,732 Beginning cash balance Deposits Total deposits 4/1/18 Other credits: Checks No. 1003 Total checks Other debits April Bank Statement Steve and Chris Farmer Electronic payment for payroll taxes Electronic payment for FUTA Electronic payment for SUTA Total other debits Ending cash balance $21,925.00 $900 $900.00 $0.00 $1,018 $274.00 ($1,018.00) $ 9.60 $ 27.60 (5311 20) $21,495.80 7-3 Using the following information, calculate the bad debt adjustment and the net accounts receivable. Then record the adjustment in a journal entry for Accounts Receivable. Suppose that the Farmers determined that accounts receivable at the end of 20X4 were $10,800. Steve and Chris decide to be conservative and adjust their account receivable for bad debts. They decide to use an estimate of .5 percent of the accounts receivable amount as the percentage of bad debts. Accounts receivable at the end of 20X3 was $12,500. 7-4 Classify the following inventory items and designate the valuation method for each: net realizable value (NRV), lower of cost or market (LCM), or cost (C). Raised feeder pigs Purchased feed pellets for use Raised oats for use Purchased feeder calves Purchased fuel Purchased seed for use Raised corn crop for sale Raised wheat crop Raised corn crop for use Raised hay for sale 7-5 Calculate the value of the co-mingled First Purchase Second Purchase Number Raised Number at Year-End a 25 calves @$225 per head 100 calves @ $235 per head 0 100 b. 25 calves @$225 per head 100 calves @ $235 per head 100 150 C 25 calves @ $225 per head 100 calves @$235 per head 100 100