Farm Accounts The following were the assets and liabilities of the O’Rourke family who carry on a mixed farming business on 01/01/2018: Land €900,000; farm buildings €360,000; machinery at cost €144,000; value of sheep €28,000; value of cattle/cows €115,000; cash in bank €23,200; electricity due €850; wages due €1,100. Required: (a) Calculate the O’Rourke family capital on 01/01/2018. (20) The following is a summary of the farm’s receipts and payments for the year ended 31/12/2018. Receipts Sale of wool €200 Sale of lambs €32,600 Milk €94,000 Single farm payment €24,100 Sale of cattle €51,700 Payments Purchase of sheep €6,600 Purchase of cattle €42,350 Fertiliser €13,800 Electricity €15,300 Repairs €18,900 Wages €34,500 The following additional information is available: (i) Closing stocks 31/12/2018: Value of cattle/cows €122,000 Value of sheep €31,000 (ii) The single farm payment is to be divided (allocated) between the two enterprises in the ratio: Cattle/milk 80% Sheep 20% (iii) Fertiliser, electricity, repairs and wages to be divided (allocated) equally between the two enterprises. (iv) Lamb used by the family during the year was €650. (v) Milk used by the family during the year was €1,300. (vi) Electricity due on 31/12/2018, €470.

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Farm Accounts The following were the assets and liabilities of the O’Rourke family who carry on a mixed farming business on 01/01/2018: Land €900,000; farm buildings €360,000; machinery at cost €144,000; value of sheep €28,000; value of cattle/cows €115,000; cash in bank €23,200; electricity due €850; wages due €1,100 - Leaving Cert Accounting - Question 4 - 2019

Question 4

Farm Accounts The following were the assets and liabilities of the O’Rourke family who carry on a mixed farming business on 01/01/2018: Land €900,000; farm buildin... show full transcript

Worked Solution & Example Answer:Farm Accounts The following were the assets and liabilities of the O’Rourke family who carry on a mixed farming business on 01/01/2018: Land €900,000; farm buildings €360,000; machinery at cost €144,000; value of sheep €28,000; value of cattle/cows €115,000; cash in bank €23,200; electricity due €850; wages due €1,100 - Leaving Cert Accounting - Question 4 - 2019

Step 1

Calculate the O’Rourke family capital on 01/01/2018

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Answer

To calculate the O’Rourke family capital on 01/01/2018, we summarize the assets and liabilities:

Assets

Land: €900,000
Farm buildings: €360,000
Machinery: €144,000
Stock of cattle: €115,000
Stock of sheep: €28,000
Bank: €23,200

Total Assets = €900,000 + €360,000 + €144,000 + €115,000 + €28,000 + €23,200

This gives:

$ext{Total Assets} = 900,000 + 360,000 + 144,000 + 115,000 + 28,000 + 23,200 = 1,570,200$

Liabilities

Wages due: €1,100
Electricity due: €850

Total Liabilities = €1,100 + €850

This gives:

$ext{Total Liabilities} = 1,100 + 850 = 1,950$

Capital Calculation

To find the capital:

$ext{Capital} = ext{Total Assets} - ext{Total Liabilities}$

Substituting our values:

$ext{Capital} = 1,570,200 - 1,950 = 1,568,250$

The O’Rourke family capital on 01/01/2018 is €1,568,250.

Step 2

Prepare an enterprise analysis account for ‘cattle/milk’ for the year ended 31/12/2018

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Answer

Enterprise Analysis Account: Cattle/Milk for the year ended 31/12/2018

Income
Sale of milk: €94,000
Sale of cattle: €51,700
Single farm payment: €19,280 (80%: €15,424)
Total Income =
$ext{Total Income} = 94,000 + 51,700 + 15,424 = 161,124$

Less: Cost of Sales

Closing Stock (Cattle) 31/12/2018: €122,000
Purchases of Cattle: €42,350

Total Cost of Sales = €122,000 + €42,350 = €164,350

Expenditure

Fertiliser: €13,800
Electricity: €15,300 (Including adjustment)
Repairs: €9,450
Wages: (€34,500/2) = €17,250

Total Expenditure =
$ext{Total Expenditure} = 13,800 + 15,300 + 9,450 + 17,250 = 55,800$

Profit Calculation

Profit = Total Income - (Cost of Sales + Expenditure)
$ext{Profit} = 161,124 - (164,350 + 55,800) = 161,124 - 220,150 = -59,026$

Step 3

Prepare an enterprise analysis account for ‘sheep’ for the year ended 31/12/2018

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Answer

Enterprise Analysis Account: Sheep for the year ended 31/12/2018

Income
Sale of wool: €200
Sale of lambs: €32,600
Single farm payment: €19,280 (20%: €3,856)

Total Income =
$ext{Total Income} = 200 + 32,600 + 3,856 = 36,656$

Less: Cost of Sales

Stock (Sheep) 01/01/2018: €28,000
Purchases of Sheep: €6,600
Closing Stock (Sheep) 31/12/2018: €31,000

Total Cost of Sales =
$ext{Total Cost of Sales} = 28,000 + 6,600 - 31,000 = 3,600$

Expenditure

Fertiliser: €6,900
Electricity: €15,300 (Including adjustment)
Repairs: €9,450
Wages: (€34,500/2) = €17,250

Total Expenditure =
$ext{Total Expenditure} = 6,900 + 15,300 + 9,450 + 17,250 = 48,900$

Loss Calculation

Loss = Total Income - (Cost of Sales + Expenditure)
$ext{Loss} = 36,656 - (3,600 + 48,900) = 36,656 - 52,500 = -15,844$

Calculate the O’Rourke family capital on 01/01/2018

Assets

Liabilities

Capital Calculation

Prepare an enterprise analysis account for ‘cattle/milk’ for the year ended 31/12/2018

Enterprise Analysis Account: Cattle/Milk for the year ended 31/12/2018

Expenditure

Profit Calculation

Prepare an enterprise analysis account for ‘sheep’ for the year ended 31/12/2018

Enterprise Analysis Account: Sheep for the year ended 31/12/2018

Expenditure

Loss Calculation

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