Rhonda Rancher has applied for a loan. Her banker, Larry Loanmaker, says the old
ID: 2588392 • Letter: R
Question
Rhonda Rancher has applied for a loan. Her banker, Larry Loanmaker, says the old balance sheet on file must be brought up to date before a loan will be considered. Rhonda spends the rest of the afternoon taking inventory and gathering other information. Complete the balance sheet on the attached pages using the information below compiled by Rhonda on February 15 Milo on hand Hay on hand Growing wheat Farm mortgage (due 4/01) 4200 ewt. @$4.40 per cwt. 75 tons S50.00 per ton 280 acres S22.50 per acre S14,000 principal S20,000 accrued interest balance after 4/01 payment S208,000 Note payable on feeder cattle (all due 11/15) Calves (to be sold in May) Feeder cattle (to be sold in 60 days) Note payable at bank (all due 3/1) Vehicles Other machinery& equipment Loan on beef cows (due 10/01) 34,000 98 head @ $275 per head 138 head S575 per head S52,000 $15,500 S9,000 principal, S3,900 accrued interest balance after 10/1 payment S38,000 1020 acres $560 per acre 106 head S650 per head 4 head @ S1,000 cach S5,400 $4,200 S1,600 S2,000 200 shares S65 per share Land (present market value) Beef breeding cows Checking account balance Account payable at Joe's Feed & Seed Account receivabloe Shop Equip. (welder, lathe, drill press, etc.) Ford Motor Co. stockExplanation / Answer
Answer:
1
What is Rhonda's owner's equity as of February 15, 2004?
Answer: $560,630
Contributed capital
50,000
Retained earnings
305,000
Valuation adjustment*
205,630
Total equity
$560,630
___________________________________________________
2. How much working capital does Rhonda have?
Answer $16,530
Currrent Assets:
Current Liabilities:
Cash/checking acct.
$5,400
Account Payable
4,200
Marketable securities
13,000
Notes payable within 1 year
86,000
Inventories
Current portion of term debt
23,000
Crops
22,230
Accured Interest
23,900
Livestock
106,300
Income taxes payable
7,200
Accounts receivable
1,600
Other accrued expenses
0
Prepaid expenses
6,000
Total Current Liabilities
$144,300
Investment in growing crops
6,300
Other current assets
0
Total Current Assets
$160,830
Noncurrent Liabiltiies:
working capital
=Current Assets - Current Liabelity
=160,830-144,300
=$16,530
_______________________________________________________
3. What is her current ratio?
Answer : 1.11
Current ratio
=Current Assets / Current Liabelity
=160,830/144,300
=1.11
__________________________________________________
4
What is her debt/asset ratio?
Answer__.41_________
Currrent Assets:
Current Liabilities:
Cash/checking acct.
$5,400
Account Payable
4,200
Marketable securities
13,000
Notes payable within 1 year
86,000
Inventories
Current portion of term debt
23,000
Crops
22,230
Accured Interest
23,900
Livestock
106,300
Income taxes payable
7,200
Accounts receivable
1,600
Other accrued expenses
0
Prepaid expenses
6,000
Total Current Liabilities
$144,300
Investment in growing crops
6,300
Other current assets
0
Total Current Assets
$160,830
Noncurrent Liabiltiies:
Notes payable
Machinery
0
Noncurrent Assets:
Breeding Livestock
38,000
Real estate debt
208,000
Machines and equipment
98,000
Breeding livestock
72,900
Total Noncurrent Liabilities
$246,000
Buildings and improvments
48,000
Total Liabilities
$390,300
Land
571,200
Other noncurrent assets
0
Owner Equity:
Total Noncurrent Assets
$790,100
Total Assets
$950,930
Contributed capital
50,000
Retained earnings
305,000
Valuation adjustment*
205,630
Total equity
$560,630
Total liabilities and owner equity
$950,930
=debt/asset
=390,300 /950930
=0.41
_________________________________________________________
5. What is her debt/equity ratio?
=debt/equity
=390,300 / 560,630
=0.70
Answer : 0.70
_________________________________________________________
6. What is her equity/asset ratio?
equity/asset ratio
=560,630 /950,930
=0.59
Contributed capital
50,000
Retained earnings
305,000
Valuation adjustment*
205,630
Total equity
$560,630
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