Question

Table 1: Records of JKJ Farm as of January 2017. Amount $ Items Vehicles Cash in the bank Land Current portion of term debt Accounts payable Depreciation on machinery Breeding stock Hay on hand Income tax payable Other accrued expenses Calves to be sold in 15 days Grain on hand Accounts receivable Real estate debt Prepaid expenses Notes payable on machinery (due in 6 years) Vehicles Buildings 7,000 60,000 400,000 57,000 123,000 3,700 131,000 19,000 16,800 19,700 48,000 40,000 40,000 30,000 10,000 71,000 4,900 56,000 1. From Table 1, prepare a balance sheet for JKJ farm by arranging the items under following sub-headings: Current Asset; non-current assets; current liabilities, noi current liabilities. 2. Calculate (a) Total Assets (b) Owner's equity

Answer 1

JKJ Farm
Balance Sheet
Assets	$	$
Non Current Assets:
Vehicles	11,900		=7000+4900
Land	400000
Buildings	56000
-Depreciation on Machinery	-3700
Breeding Stock	1,31,000	5,95,200
Current Assets:
Cash in Bank	60,000
Hay on Hand	19000
Calves to be sold in 15 days	48000
Grain on Hand	40000
Accounts Receivable	40000
Prepaid Expenses	10000	2,17,000
Total Assets		8,12,200
Equity & Liabilities
Equity:
Share Capital
Retained Earnings
Total Equity		4,94,700	=812200-101000-216500
Non Current Liabilities:
Real Estate Debt	30,000
Notes Payable on Machinery	71000	1,01,000
Current Liabilities:
Current Portion of Term Debt	57,000
Accounts Payable	1,23,000
Income Tax Payable	16800
Other accrued Expenses	19700	2,16,500
Total Equity & Liabilities		8,12,200

(a) Total Assets	$8,12,200
(b) Owner's Equity	$4,94,700
(c ) Working Capital
=Current Assets-Current Liabilities
=217000-216500	$500
(d) Current Ratio
=Current Assets/Current Liabilities
=217000/216500	1.002
(e ) Debt/Asset Ratio
=Total Debt/Total Assets
=(101000+216500)/812200	0.3909
(f) Debt/Equity Ratio
=Total Debt/Total Equity
=(101000+216500)/494700	0.642
(g) Equity/Assets Ratio
=Total Equity/Total Assets
=494700/812200	0.609
(h)
Current Ratio is just around 1. So LIQUIDITY condition require more attention for improvement.