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Question: complete a balance sheet on a separate page using the...

Question details

Complete a balance sheet on a separate page using the information below compiled by Rhonda on January 22, 2019.

Grain on hand

3500 bu. @ $5.00 per bu.

Hay on hand

100 tons @ $80.00 per ton

Growing wheat

200 acres @ $69.80 per acre

Farm mortgage (due/4/1/19)

$13,000 principal

$10,000 accrued interest

balance after 4/01/19 payment $260,000

Buildings & improvements

$68,000

Note payable on feeder cattle (all due 4/15/19)

$45,000

Calves (to be sold in May 2019)

100 head @ $605 per head

Feeder cattle (to be sold in 60 days)

125 head @ $800 per head

Note payable at bank (all due 3/1/019)

$82,000

Vehicles

$30,500

Other machinery & equipment

$130,500

Loan on beef cows (due 10/01/19)

$12,000 principal,

$2,200 accrued interest

balance after 10/1/15 payment $34,000

Land (present market value)

1000 acres @ $1800 per acre

Beef breeding cows

110 head @ $1000 per head

Bulls

4 head @ $2,200 each

Checking account balance

$33,400

Account payable at Joe's Feed & Seed

$6,500

Account receivable

$3,600

Shop Equip. (welder, lathe, drill press, etc.)

$5,000

Corporate Stock

100 shares @ $90 per share

Other Information

1)

Has paid in advance for $6,000 worth of feed in order to get a good price on it. The feed will be delivered in May, 2019.

2) Income and social security taxes on 2018 income (not yet paid) are estimated at $14,200.

3)Rhonda contributed $590,000 to get her business started.

4) Retained earnings since the beginning of the business equals $655,000.

3

1.

What is Rhonda's owner's equity as of January 22, 2019?

Answer_________

2.

How much working capital does Rhonda have?

Answer__________

3.

What is her current ratio?

Answer__________

4.

What is her debt/asset ratio?

Answer___________

5.

What is her debt/equity ratio?

Answer___________

6. What is her equity/asset ratio?

Answer___________

7.

Assume you are a financial consultant hired by Rhonda to analyze her financial

condition. Based on this balance sheet, what part of her financial condition is most in need of

improvement? WHY?

8.

What does this balance sheet tell you about the amount of profit Rhonda made in 2013?

Explain your answer.

4

9.

Rhonda wants to borrow $40,000 from the bank to buy additional beef breeding cows.

They will cost $40,000. Assume the loan is made, the cows are purchased.

a)

What will Rhonda's owner's equity be immediately after the transactions are

completed if there are no other changes on her balance sheet?

Answer_________

b)

What will her debt/asset ratio be?

Answer___________

c)

What will be her debt/equity ratio be?

Answer__________

10.

If you were Larry Loanmaker, would you lend Rhonda the money? Why?

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