You use the calendar year for your financial records. It is January 1, 2021, and you are putting together your annual net worth statement (aka balance sheet). Use the information below to develop this beginning of the year balance sheet for 2021. Use the Chapter 4 Balance Sheet Assignment Fall 2021 on D2L. Then complete the analysis at the end of the balance sheet. You will use accrual accounting. You MUST use formulas. Not everything on here belongs in the balance sheet. Remember that current is this year, intermediate is 1-10 years (for liabilities, this would be things like car loans: loans that would be paid off in the next 1-10 years), and long-term relates to land and loans related to land. You have $50,000 farm-related cash on hand in checking and savings. 1. Inventory of Crops and Livestock is as follows: a. Total corn in storage is 25,000 bushels. Current market price is $4.50/bu. b. Total Soybeans in storage are 3,500 bushels. Current market price is $10.75 c. 21 steer calves valued at $1,000.00/head. d. 16 heifer calves valued at $900.00/head. e. 49 bred cows (worth $1,200 each) and 2 bulls (worth an average of $2,500 each). (Hint: cows and bulls are your breeding livestock) 2. Feed and supplies: a) Corn silage: 300 tons valued at $35 per ton b) Haylage: 100 tons worth $75 per ton c) Hay: 150 tons worth $125 per ton d) Corn Stalks: 50 tons at $35 each 3. Your current operating loan (due within one year) with Farm Credit is $90,000, with accrued interest of $4,500. 4. In November of 2020, you prepaid $36,000 for corn seeds for 2021 s crops. 5. You have 500 gallons of diesel fuel on hand (currently worth $2.25/gallon) 6. Your machinery and equipment have a depreciated book value of $235,000 from your depreciation schedule, but you estimate its market value at $355,000. 7. The farm has several buildings that have a depreciated book value of $190,000. Your estimated market value is $385,000. 8. You sold a heifer calf to your niece for a 4-H project. You re still waiting for her to pay you the $700 you agreed upon. 9. You own 640 acres of farmland that was purchased in bits and pieces over the years for a total of $2,500,000. Currently, land in your area is valued at $8,500/ac. 10. You own hunting cabin and a little land, worth $75,000 and a personal car worth $12,000. 11. You make some money on the side doing trucking, earning $38,000/year. 12. On December 20th, 2020, you picked up more hay for your livestock worth a total of $10,000. You will not pay for this feed until mid-January of 2021. The hay is included in your inventory above. 13. You still owe Soil Testers, Inc. $1,000 for soil sampling. 14. Your neighbor still owes you the second of two installment payments of $8,000 for helping with 2020 s harvest. 15. The vet bill arrived in the mail today (January 1) and showed the farm s outstanding vet bill for 2020 at $1,500. 16. On your farm s credit card, you have a balance of $4,200. Your personal credit card has a balance of $2,500. 17. You started the year with student loans totaling $16,000, but you paid off $3,000 in principal (balance remaining: $13,000) and $600 in interest. +Below find a listing of longer-term liabilities: Description Purpose Date Incurred. Mortgage Tractor loan Pickup loan Barn loan Equipment loan Land loan 4WD tractor F350 Forage Harvester 2018 2013 2015 2014 2016 Original Amount To analyze the balance sheet, calculate the following: Current Ratio, Market Value Working Capital, Market Value Debt to Asset Ratio, Market Value $800,000 $636,000 $140,000 $70,000 $40,000 $15,000 $275,000 $230,000 $50,000 $10,000 Equity to Asset Ratio, Market Value Debt to Equity Ratio, Market Value Net Capital Ratio, Market Value Debt Structure Ratio Remaining Current Balance at Portion end of 2021 (paid 2021) $32,000 $20,000 $4,400 $19,500 $10,000 Interest Accrued Jan. 1, 2021 $12,250 $2,000 $900 $1,000 $500 What is the strongest part of the operation (liquidity or solvency)? Explain. What is the weakest part of the operation (liquidity or solvency)? Explain. Why is it recommended that farmers use market basis even though other businesses are told to use cost basis? Explain AgEc 271-Farm & Ranch Management 1 Chapter 4 Balance Sheets 1 75 Points FARM ASSETS 5 6 7 8 Crops held for sale Checking and Savings Accounts 9 Feed/bedding on hand 10 Prepaid expenses 11 Market livestock 12 Accounts receivable 13 Miscellaneous 14 15 A. Total Current Assets 16 17 Breeding livestock 18 Machinery and Equipment 19 B. Total Intermediate Assets 20 31 32 33 34 A 35 36 21 22 Buildings/improvements 23 Farmland 24 C. Total Long-term Assets 25 D. Total Farm Assets (A+B+C) 26 27 28 29 30 37 38 39 40 41 42 43 44 current assets intermediate assets long-term assets Current Ratio Working Capital, Market Value Debt to Asset Ratio, Market Value Debt to Asset Ratio, COST Value Equity to Asset Ratio, Market Value Debt to Equity Ratio, Market Value Net Capital Ratio, Market Value Debt Structure Ratio Cost Value What is the strongest part of the operation (liquidity or solvency)? Explain. What is the weakest part of the i operation (liquidity or solvency)? Explain. Why is it recommended that farmers use market basis even though other businesses are told to use cost basis? B C Market Value FARM LIABILMES Ratio Equations Market Ratios current liabilities Accounts payable Short-term notes and credit lines Accrued interest-short -Intermediate -long-term Principal due in 12 mo.-intermediate -long-term E. Total Current Liabilities intermediate liabilities Notes and contracts, remainder F. Total Intermediate Liabilities long-term liabilities Notes and contracts, remainder G. Total Long-term Liabilities H. Total Farm Liabilities (E+F+G) L Farm Net Worth, Cost Value (D-H) 1. Farm Net Worth, Market Value (D-H) 2 pts each 16 points total Market/Cost Value owner equity owner equity 16