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  • Sales Sales Meth: 1,80,000 $2.90 5,22,000

    Încărcat de

    Neha Garg
    1K vizualizări7 pagini
    This document contains income statements, balance sheets, and calculations for Grennell Farm using three different methods (sales, collection, production). It also includes questions about recording the value of land under GAAP and calculating return on investment for each method. The key details are: - Income statements and balance sheets using sales, collection, and production methods with different revenue, cost of goods sold, inventory, and profit figures for each. - Land value should be recorded at original purchase price plus depreciation under GAAP, but actual worth is estimated at $2.22 million based on acreage and appreciation. - Return on investment is calculated for each method, with production method having the highest ROI at 13.

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    Titlu original

    Accounts5.2

    Drepturi de autor

    © Attribution Non-Commercial (BY-NC)

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    This document contains income statements, balance sheets, and calculations for Grennell Farm using three different methods (sales, collection, production). It also includes questions about recording the value of land under GAAP and calculating return on investment for each method. The key details are: - Income statements and balance sheets using sales, collection, and production methods with different revenue, cost of goods sold, inventory, and profit figures for each. - Land value should be recorded at original purchase price plus depreciation under GAAP, but actual worth is estimated at $2.22 million based on acreage and appreciation. - Return on investment is calculated for each method, with production method having the highest ROI at 13.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    1K vizualizări7 pagini

    Sales Sales Meth: 1,80,000 $2.90 5,22,000

    Încărcat de

    Neha Garg
    This document contains income statements, balance sheets, and calculations for Grennell Farm using three different methods (sales, collection, production). It also includes questions about recording the value of land under GAAP and calculating return on investment for each method. The key details are: - Income statements and balance sheets using sales, collection, and production methods with different revenue, cost of goods sold, inventory, and profit figures for each. - Land value should be recorded at original purchase price plus depreciation under GAAP, but actual worth is estimated at $2.22 million based on acreage and appreciation. - Return on investment is calculated for each method, with production method having the highest ROI at 13.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 7

    Case 5.

    2 Q-1
    Income Statements : Particulars Sales Sales meth: 1,80,000*$2.90 Less : CGS Op. stock/inventory + production [2,10,000* 0.513] cl. Stock 15,390 [ 30,000* 0.513] CGS Gross profit Less: Other expenses Net Profit/ Income 92,340 4,29,660 1,83,000 2,46,660 0 1,07,730 Sales Method 5,22,000

    Particulars Sales Sales meth: 1,80,000*$2.90 Less : CGS Op. stock/inventory + production [2,10,000* 0.513] cl. Stock

    Collection Method 4,62,400 [ 1,80,000*2.90 -20,000*2.98]

    0 1,07,730

    25,650= [ 30,000 +20,000]*0.513

    CGS Gross profit Less: Other expenses Net Profit/ Income

    82,080 3,80,320 1,83,000 1,97,320

    Particulars Sales Sales meth: 1,80,000*$2.90

    Production method 6,14,100 [ 1,80,000@2.90+ 30,000*3.07]

    Less : CGS Op. stock/inventory + production [2,10,000* 0.513] cl. Stock 0 [ no inventory under production method] CGS Gross profit Less: Other expenses Net Profit/ Income 1,07,730 5,06,370 1,83,000 3,23,370 0 1,07,730

    Balance Sheets: Balance Sheet Grennell Farm [in $] (Sales Method) Assets Particulars Cash A/R Amount 30,900 59,600 [20,000*2.98] Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33,000 457,500

    Inventory Land Net Building& machinery Total Assets

    15,390 3,75,000 1,12,500

    R.E (balance)

    102,890

    5,93,390

    Total Liabilities

    593,390

    Balance Sheet Grennell Farm [in $] (Collection Method) Assets Particulars Cash A/R Amount 30,900 0 Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33,000 457,500

    Inventory Land Net Building& machinery Total Assets

    25,650 3,75,000 1,12,500

    R.E (balance)

    53550

    544,050

    Total Liabilities

    544,050

    Balance Sheet Grennell Farm [in $] (Production Method) Assets Particulars Cash A/R Amount 30,900 151,700 [(20,000*2.98) + (30000 * 3.07)] Liabilities + Owners Equity Particulars Current Liabilities Owners Equity + Common paid up stock Amount 33,000 457,500

    Inventory Land Net Building& machinery Total Assets

    0 3,75,000 1,12,500

    R.E (balance)

    179,600

    670,100

    Total Liabilities

    670,100

    Q-2
    Under GAAP the value of the land should be recorded at the original price of buying + depreciation without considering the appreciation cost. But if it s actual worth is to be calculated it can be done as follows: 225000(for 100 acres) + 1995000 (1900 * 1050) = 2220000 (2.22 million dollars)

    Q-3
    ROI = Net Income / Investment Sales Method ROI=246660/2405390(560390 + 1845000) =10.25%

    Collection Method ROI=197320/2356050(511050 + 1845000) = 8.37% Production Method ROI = 323370/2482100(637100 + 1845000) = 13.03% The return of Investment is good in all cases. Hence she should retain the farm.

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