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1. Fill in lines A, B, C, D, F, H, and J (the lines are highlighted)
2. Use the information you just calculated and the Balance Sheet for I.M. Farmer and the Statement of Owners Equity (these are both in PowerPoint 2) to calculate the following. I know these numbers seem as though they dont fit, but go through the process and show me your work. The opportunity cost of (unpaid) management =$30,000 and the opportunity cost for (unpaid) labor = $42,000.
3. 1. Rate of Return on Assets Assume the Beginning Year Total Asset Value = $690,000 (Use the Market Values)
4. 2. Rate of Return on Equity
5. 3. Operating profit margin ratio
6. 4. Opportunity Cost of all Capital given a 5% interest rate.

      REVENUE		Total
      Crops and Feed Sales	$ 100,000
      Livestock Sales	$ 180,000
      Inventory changes: Crops	$ 4,000
      Inventory changes: Livestock	$ (1,500)
      Accrual adjustments: accounts receivable	$ 2,000
      Government Payment	$ 3,400
      Other Income	$ 2,800
      A. TOTAL REVENUE
      EXPENSES
      Feed Purchased	$ 9,000
      Market Livestock Purchased	$ 110,000
      Hired Labor	$ 21,000
      Livestock Expense	$ 4,700
      Crop Expense	$ 66,000
      Fuel, Oil	$ 7,200
      Repairs and Maintenance	$ 5,800
      Machine Hire	$ 1,500
      Taxes	$ 6,500
      Insurance	$ 3,000
      Other Cash Expenses	$ 2,300
      B. TOTAL CASH EXPENSES
      C. NET CASH INCOME (A - B)
      Depreciation: Machinery and Equipment	$ 4,700
      Depreciation: Building & Improvements	$ 6,300
      D. TOTAL DEPRECIATION
      E. INTEREST PAID ON DEBT		$ 21,000
      Accrual Adjustments (Expense items):
      Expense items accrued but not paid	$ 9,500
      Expense items paid but not accrued	$ (32,000)
      F. ACCRUAL ADJUSTMENTS
      G. VALUE OF HOME CONSUMPTION	$ 500
      H. NET INCOME FROM OPERATIONS (C-D-E-F+G)
      I. Gain/Loss on sale of capital assets:	$ 680
      J. NET FARM INCOME (H+I)

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