Grannell Farm

 Essay about Grannell Plantation

Case 5 – 2: Grennell Farm

Background of the Case:

Ms. Denise Grey was informed by a lawyer early this year that her deceased granddad, Jeremiah Grennell, had willed her the ownership with the 2000 – acre whole wheat farm in Iowa. Trouble Statement:

Ms. Denise Grey wants to find out if keeping the wheat plantation would income her instead of just selling that to someone else. Action Plan:

Provided the following data as selected balance sheet items, revenues and expenses pertaining to 2009: �

Units of Bushels

Accounts Receivable

Production Cost every bushel:

Expense

Beginning Inventory

0

Seed

0. 053

Wheat development

210, 000

Fertilizer and Chemicals

0. 295

Delivery to materials elevators

one hundred and eighty, 000

twenty, 000

Machines cost, gasoline, and fixes

0. 107

Grain stored at farm at end of 2009

30, 000

Part time labor and other cost

0. 058

Total development cost every bushel

0. 513

Price ($)

Price if transported to the grain elevator

money 2 . 85

Price for time of collect

$ 2 . 80

Final price per bushel upon Dec 31, 2009

$ 3. '07

Average sales price of the 20, 000 bushels

$ 2 . 98

Annual Expenses Not Associated with Volume of Production

Salaries and Wages

money 72, 500

Insurance

bucks 4, 500

Taxes*

money 32, five-hundred

Depreciation

dollar 28, five-hundred

Other expenses

$ forty-five, 000

Total cost:

bucks 183, 000

The cash flow statements of Grennell Farm would appear like the following given each approach to recognizing revenue: 1 . ) Sales Approach

Sales

(a) $522, 500

Break down of CGS

Commencing inventory

$0

Production expense

(b) $107, 730

fewer: ending products on hand

(c) $15, 390

CGS

$92, 340

Gross margin

$429, 660

Other expenditures

$183, 500

Net Income

$246, 660

2 . ) Collection Method

Revenue

(d) $462, 400

Break down of CGS

Beginning inventory

$0

Production cost

(b) $107, 730

less: ending inventory

(e) $25, 600

CGS

$82, 080

Gross margin

$380, 020

Different expenses

$183, 000

Net gain

$197, 320

3. ) Production Approach (ending products on hand is 0 for this method) Sales

(f) $614, 500

Break down of CGS

Commencing inventory

$0

Production price

(b) $107, 730

much less: ending products on hand

$0

CGS

$107, 730

Gross margin

$506, 370

Other bills

$183, 500

Net Income

$323, 370

(a) 180, 1000 [bushels shipped to grain elevators] times $2. 90 [price if shipped] = $522, 000 (b) 210, 000 [wheat production] times $0. 513 [total production cost/bushel] sama dengan $107, 730 (c) 35, 000 [grains stored at farm in 2009 end] x $0. 513[total production cost/bushel] = $15, 390 (d) 180, 000 [bushels shipped to grain elevators] by $2. 90 [price if shipped] – $20, 1000 [accounts receivable] x $2. 98 [average sale price of the 20, 500 bushels] = $462, 400 (e) (30, 1000 + twenty, 000) [grains placed at farm building in 2009 end + accounts receivable] x $0. 513 [total creation cost every bushel] = $25, 650 (f) 30, 500 [grains stored for farm last year end] x $3. 07 [closing selling price per bushel on Dec. 31, 2009] + 180, 1000 [bushels shipped to grain elevators] times $2. 90 [price if shipped] = $614, 100

Sales

Collection

Production

Resources

Cash

$30, 900

$30, 900

$30, 900

Accounts receivable

(g) $59, six-hundred

$0

(h) $151, seven-hundred

Inventory

$15, 390

$25, 650

$0

Property

$375, 000

$375, 1000

$375, 000

Buildings and Machinery (net)

$112, five-hundred

$112, 500

$112, five-hundred

Total Resources

$593, 390

$544, 050

$670, 75

Balance Sheet

Grennell Farm

intended for end of December 2009

Liabilities and Owners Value

Liabilities

$33, 000

$33, 000

$33, 000

Owners' equity

Common stock and owner's fairness

$457, five-hundred

$457, five-hundred

$457, five-hundred

Retained income

(i) $102, 890

(j) $53, 550

(k) $179, 600

Total Liabilities and Owner's Fairness

$593, 390

$544, 050

$670, 90

Drawings

$143, 770*

$143, 770*

$143, 770*

(g) 20, 000 [accounts receivable] x $2. 98 [average sales cost of the twenty, 000 bushels] sama dengan $59, six hundred (h) 20, 000 [accounts receivable] times $2. 98 [average sales cost of the 20, 000 bushels] & 30, 1000 [grains stored by farm last season end] x three or more. 07 [closing price...


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