Livestock Reconciliation by taoyni

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									LIVESTOCK TRADING ACCOUNT FOR THE YEAR ENDED 30 JUNE

Livestock Trading        Number                $

Sheep (Wethers)
Opening Stock             2,179             $18,442
Purchases                  595              $16,065          F
Total                     2,774             $34,507
Sales                      656              $18,938          C
Deaths                     58                 $0
Rations                    20                $400
Closing Stock             2,040             $25,082
Total                     2,774             $44,420
Trading Profit/Loss                        $9,913.00

Cattle
Opening Stock             1,032            $137,920
Purchases                  23               $12,770          F
Increase                   455
Total                     1,510            $150,690
Sales                      639             $351,450          C
Deaths                      6
Rations                     6               $1,800
Closing Stock              859              $84,700
Total                     1,510            $437,950
Trading Profit/Loss                       $287,260.00

Total Livestock Profit                     $297,173          B




                                  Livestock Reconciliation
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE
Income                                             $
Profit Livestock Trading                      $297,173       B
Insurance Recoveries                             $500        N
Interest Received - Other                       $2,300       O
Landcare Subsidy                                 $130        M
Rebates Received                                $1,580       M
Diesel Fuel Rebate                              $8,000       M
Sales - Oats                                    $7,500
Sales - Wheat                                  $32,980
Sales - Wool                                   $32,000
Sale of assets - Offset disc                    $2,500       N
Contract Hay Baling                             $4,500       O
Sundry Income                                    $650        O
Total Income                                  $389,813       A

Expenses                                          $
Accountancy                                    $2,500
Agistment                                      $9,650
Animal Health                                  $9,500
Bags, Packs, Twine                             $4,500
Bank Charges                                   $1,700        Q
Bank Debit & FI Duty                            $950
Contract Work                                 $31,498
  Crop Preparation                 $1,500
  Erosion Control                  $8,500
  Land Clearing                    $4,578
  Harvesting                       $9,450
  Dam Cleaning                     $5,400
  Other                             $230
  Fencing                          $1,840
Depreciation                                  $17,500        J
Dogs & Maintenance                              $350
Donations                                       $100
Electricity & Gas                              $2,400
Entry Fees                                     $1,200
Fertilisers & Spreading                       $35,600
Farm Trees                                      $540
Fodder                                         $8,670
Freight & Cartage                             $12,560
Fuel & Oil                                    $16,000
General Expenses                                $400
Hire of Plan                                    $363
Hire Purchase Charges                           $600         Q
Insurance                                      $5,010
  General                          $2,600
  Public Risk                       $850
  Workers Compensation              $460
  Motor Vehicles                   $1,100
Interest - Bank                                $6,300        Q
Interest - Loans & Mortgages                  $28,500        Q
Interest - Hire Purchase                       $1,500        Q
Licences, Registrations, Permits               $3,050
  Vehicle                           $850
  Other                            $2,200
Machinery Leases                                 $0          Q
Motor Vehicle Expenses                         $2,863
  Fuel and Oil                     $1,867
  Insurance                         $630
  Repairs and Maintenance           $980
  Registration                      $340
  Less Personal Use                 $954
Newspapers & Magazines                          $150
Pest Control                                   $6,700
Postage                                         $250
Printing & Stationery                           $100
Property Lease Payments                           $0         Q
Protective Clothing                              $85
Rates                                          $5,380
  Shire Rates                      $3,500
  Rural Lands Board                $1,200
  Water Rates                       $680
Rent                                           $7,890
Repairs & Maintenance                         $36,550
  Plant                             $7,800
  Buildings                         $2,390
  Water Supply                      $2,460
  Fencing & Stock Yards            $16,000
  Tractors, Headers                 $2,500
  Trucks, Motor Cycles              $5,400
Registration of Cattle                           $0
Seed                                           $3,100
Shearing & Crutching                           $2,400
Subscriptions                                   $580
Superannuation                                 $6,000
Telephone & Fax                                $2,800
Tools                                           $350
Travelling Expenses                            $1,200
Wages                                           $937
Total Expenses                                $278,276       E

Net Profit/(Loss)                             $111,537




                                             Profit & Loss
BALANCE SHEET AS AT 30 JUNE
                                                       Current Year              Previous Year

Proprietors Funds                                            $                         $
Joe Farmer                                               -$5,231                   -$100,000
Mary Farmer                                               $9,768                    -$75,000
Total Proprietors Funds                                   $4,537                   -$175,000

Represented By:
Property Plant and Equipment
Land and Buildings at original value                    $750,000                   $750,000
Plant & Equipment - at Cost               $85,000                     $85,000
Less Prov'n for Depreciation              $12,000        $73,000      $10,000      $75,000
Motor Vehicles - at Cost                  $35,000                     $35,000
Less Prov'n for Depreciation              $5,500         $29,500      $5,500        $29,500
Total Property Plant & Equipment                        $852,500                   $854,500
Current Assets
Term Deposit                                             $57,000                    $57,000
Inventories                                             $109,783                   $154,168
 Sheep on Hand at Average Cost            $25,083                      $18,047
 Cattle on Hand at Average Cost           $84,700                     $136,121
Total Current Assets                                     $166,783                  $211,168
Total Assets                                            $1,019,283                $1,065,668

Current Liabilities
Creditors & Borrowings
Bank Overdraft                                           $50,000                   $57,000
Outstanding Creditors                                      $0                        $0
Livestock Account                                        $20,000                   $25,000
Total Current Liabilities                                $70,000                   $82,000
Non-Current Liabilities
Creditors & Borrowings
Hire Purchase                                            $15,000         I          $18,000
Term loan                                               $300,000         I         $320,000
Total Non-Current Liabilities                           $315,000                   $338,000
Total Liabilities                                       $385,000         X         $420,000

Net Surplus                                             $634,283                   $645,668



CAPITAL ACCOUNTS FOR THE YEAR ENDED 30 JUNE
                                                       Current Year              Previous Year
Capital and Current Accounts                                $                          $
Joe Farmer
Opening Balance                                         -$100,000                  -$125,000
Capital Contributed                                       $10,000                      $0
Dividends Received                                          $0                         $0
Share of Profit                                           $55,768                    $7,500
Total                                                    -$34,232                  -$117,500
Drawings                                                  $18,000        G          $17,500
Income Tax Paid                                           $11,000        H             $0
Capital Withdrawn                                         -$5,232                  -$100,000
Mary Farmer
Opening Balance                                          -$75,000                  -$100,000
Capital Contributed                                         $0                         $0
Dividends Received                                          $0                         $0
Share of Profit                                           $55,768                    $7,500
Total                                                    -$19,232                   -$92,500
Drawings                                                  $18,000        G           $17,500
Income Tax Paid                                           $11,000        H             $0
Capital Withdrawn                                         $9,768                    -$75,000
Grand Total                                               $4,536                   -$175,000




                                       Balance Sheet
Section 1 - Calculating your cash position
1. Total Farm Cash Income
Total farm cash income should include all cash transactions within the farm business accounts. This can be calculated in
the following way:

First, from your Profit and Loss Account (P&L) write the total income into box A.                          A=   $389,813.00

Copy the livestock trading profit or los s (from your Livestock Trading Accounts) into box B.
Note: If it is a loss, add to Total Farm Cash Income D rather than subtract.                               B=   $297,173.00


Copy the value of all livestock sales (from your Livestock Trading Accounts) into box C. Note:
If you have more than one livestock enterprise you will need to add sales for each enterprise.             C=   $370,388.00

Total Farm Cash Income = D                        D=A-B+C                                                  D=   $463,028.00


2. Total Farm Cash Costs
Here you are calculating actual total cash expenditure for the farm. This will include personal drawings from the farm
account, loan principal repayments and taxation. It will not include non-cash items such as depreciation.

From the Profit and Loss Accounts copy the total expenses figure into box E.                               E=   $278,276.00

From the Livestock Trading Accounts copy the value of all livestock purchases into box F.
Note: If you have more than one livestock enterprise you will need to add purchases for each
enterprise.                                                                                                F=   $28,835.00

From the Capital Accounts, copy total drawings into box G.                                                 G=   $36,000.00

From the Capital Accounts, copy the total of any income tax paid by the partners into box H.               H=   $22,000.00

From the Balance Sheet, you need to establish if any loan principal repayments were made.
From the non-current liabilities , subtract the total non-current liabilities for the current year from
the total non-current liabilities for the previous year. If the answer is a positive figure, a principal
repayment has been made and the liability has decreased. Copy the difference into box I.
Note: If the answer is a negative figure, do not write this in box I.                                      I=   $23,000.00

Copy depreciation from your tax return P&L into box J.                                                     J=   $17,500.00

Add all cash expenses (and adjust for depreciation costs) to determine total cash expenses.
Copy total cash expenses to box K.

Total Farm Cash Costs = K                         K=E+F+G+H+I-J                                            K=   $370,611.00


3. Net Cash Flow
Net Cash Flow is total cash income less total cash expenses. Copy net cash flow to box L.

Net Cash Flow = L                                 L=D-K                                                    L=   $92,417.00




                                                       Calculations
Section 2 - Calculating business performance
4. Total Farm Business Income
Total farm business income should not include off-farm income such as earnings from sale of assets, rural subsidies and
grants, contract work, diesel fuel rebates and interest received.

From your Profit and Loss Account (P&L), write the total income into box A. (The same as box
A on page 1.)                                                                                        A=     $389,813.00


Copy the total of all subsidies received (e.g. diesel rebate, RAA interest subsidies) into box M.    M=      $9,710.00

Copy any profit from sale of assets and any income from insurance recoveries (other than those
from the loss of crops or livestock) from your P&L, into box N.                                      N=      $3,000.00

Copy the total of any other non farm related income (interest, contract work, Drought Relief
Payments, etc) from your P&L into box O.                                                             O=      $7,450.00

Total Farm Business Income = P                 P=A-M-N-O                                             P=     $369,653.00


5. Total Farm Business Costs
Here you are calculating total farm business costs, excluding finance costs, capital payments, personal expenditure, income
tax and unpaid labour. It will include non-cash items such as depreciation.

From your Profit and Loss Account (P&L), write the total expenses figure into box E. (The same
as box E in Section 1.)                                                                              E=     $278,276.00

Copy the total of all subsidies received (e.g. diesel rebate, RAA interest subsides) into box M
(the same as box M above).                                                                           M=      $9,710.00

Copy your finance costs from your Profit & Loss into the spaces provided. If you do not have
any leases or HPs leave those blank:
                                            Bank charges                                                     $1,700.00
                                            Interest charged                                                 $34,800.00
                                            Machinery leases                                                   $0.00
                                            Hire purchases                                                   $2,100.00
                                            Property lease payments                                            $0.00
Write the Total Finance Costs in box Q.                                                              Q=      $38,600.00

Write total farm costs into box R.

Total Farm Business Costs = R                  R=E-M-Q                                               R=     $229,966.00


6. Net Farm Business Income

Net farm business income is total farm business income (P) less total farm costs (R)
                                              S=P-R                                                  S=     $139,687.00


7. Operators Allowance

This reflects what your labour input is worth. What would it cost to replace all the family labour
on the farm (e.g. A farm manager would be paid approx $36000 per year)? Write your estimate
in box T. Refer to Worksheet 2.
                                               T = Value of operator's labour input                   T=     $54,000.00


8. Operating Profit

Operating profit represents the return to capital, labour and management (before finance costs
are included). Write this in box U.


                                                     Calculations
                                                U=S-T                                                   U=    $85,687.00


9. Business Return

This represents the return earned after allowing for the cost of borrowed funds and leases. Any
money remaining is for capital expenditure, loan repayments and profit. Write this in box V.
                                               V=U-Q                                                    V=    $47,087.00

10. Total Assets

Transfer the Total Assets from Worksheet 1 to box W.
                                              W = Total value of assets                                 W = $3,000,000.00


11. Total Liabilities

Total liabilities (all current and non-current liabilities) are shown on the Balance Sheet as at 30th
June each year. Be sure that only 'real' debts are included as non-repayable family debts may
only be included for tax purposes. The Total Liabilities goes in box X.
                                                   X = Total liabilities                                X=   $385,000.00


12. Net Worth

This is the value of the farm business at any given point in time. This is the difference between
what you own and what you owe. This is calculated by subtracting your liabilities from your
assets.
                                               Y = Net Worth = W - X                                    Y = $2,615,000.00




                                                      Calculations
Section 3 - Calculating your financial indicators
1. Ratio of Total Liabilities to Total Farm Cash Income
This provides a measure of the size of your farm business debt in relation to the income generated from your business.

                                               Total Liabilities                                      X
                                               Total Farm Cash Income                                 D           $0.83

2. Total Farm Business Costs as a percentage of Total Farm Business Income
This provides a check on the level of costs in relation to income. (Care should be taken in years of abnormally high or low
returns.) This tells how much is available to meet capital, finance, personal and tax expenses. Generally, a ratio of 65% or
less is acceptable but this will depend on the industry and commodity prices.

                                               Total Farm Business Costs             100           R 100
                                                                                x                    x
                                               Total Farm Business Income             1            P   1          $0.62

3. Finance Costs as a percentage of Total Farm Business Income
This provides a general indication of how sensitive your farm business is to changes in interest rates. The lower this figure
the less your business is affected by changes in finance costs. If this ratio is too high then you will have trouble making
principal repayments.

                                               Total Finance Costs                   100           Q 100
                                                                                x                    x
                                               Total Farm Business Income              1           P   1          $0.10

4. Equity
Equity is net worth expressed as a percentage of total assets. It is possible to build up a picture over time by comparing
each year's results. This can give you an indication as to whether your equity is increasing or decreasing, if total debts are
changing or if your asset values have improved over time.

                                               Net Worth                             100           Y 100
                                                                                x                    x
                                               Total Assets                           1            W   1          $0.87

5. Return to Capital
This is a measure of how well the farm business has used total assets to make an operating profit. This is a measure of the
profitability of your business. This can be used to compare other ventures with your farm business.

                                               Operating Profit                      100           U 100
                                                                                x                    x
                                               Total Assets                           1            W   1          $0.03

6. Return to Equity
This measures your business return as a proportion of your own capital in the business. This figure can be compared with

                                               Business Return                       100           V 100
                                                                                x                    x
                                               Net Worth                              1            Y   1          $0.02




                                                    Calculations
Section 4 - Making sense of it all
Once you have completed the exercises for several years it is possible to look for trends in the Financial Performance
Indicators. The trends are more important than the actual figure for any one year.

Below is a chart on which you can plot the performance indicator results for each year. Write the year above the
arrowed lines at the point close to the result for each year. Repeat this for each indicator and year you have done the
figures for and write them all on the table below. The performance indicators for the worked example (in the back
envelope) are shown below as red stars on the table to help you. The numbers in the boxes represent the scale for
each performance indicator.



                                    Table 1. Financial Performance Indicator Summary

                    Indicator                          Poor             Marginal     Satisfactory            Strong


1. Ratio of liabilities to income
                                                                    2.5              1.5               0.5



2. Farm business costs to business income
                                                                    75%             65%               55%



3. Farm finance costs to business income
                                                                    25%             15%                7%



4. Equity
                                                                    40%             65%               85%



5. Return to capital
                                                                    -5%              0%               +5%



6. Return to equity
                                                                    -5%              0%               +5%




                                              Additional Calculations
Additional Calculations

								
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