Question

Rhonda spends the rest of the afternoon taking inventory and gathering other information.  Develop a balance sheet and the information below compiled by Rhonda on February 5, 2019.  

Corn on hand                                                                                        4500 bu. @ $3.60 per bu.

Hay on hand                                                                                        75 tons @ $100.00 per ton

Growing wheat                                                                                    280 acres @ $22.50 per acre

Farm mortgage (annual payment due 4/01/19)                                                   $14,000 principal

                                                                                                                  $20,000 accrued interest

                                                                                    balance after 4/01/19 payment      $308,000

Buildings & improvements                                                                                                 $48,000

Note payable on feeder cattle (all due 11/15/19)                                                                 $34,000

Calves (to be sold in May 2019)                                                              98 head @ $275 per head

Feeder cattle (to be sold in 60 days)                                                       138 head @ $575 per head

Note payable at bank (all due 3/1/20)                                                                                 $52,000

Vehicles                                                                                                                              $15,500

Other machinery & equipment                                                                                           $80,500

Loan on beef cows (annual payment due 10/01/19)                                              $9,000 principal,

                                                                                                                    $3,900 accrued interest

                                                                                           balance after 10/1/19 payment     $38,000

Land (present market value)                                                                               200 acres @ $3100 per acre

Beef breeding cows                                                                                   106 head @ $650 per head

Bulls                                                                                                                4 head @ $1,000 each

Checking account balance                                                                                                      $5,400

Account payable at Joe's Feed & Seed                                                                                    $4,200

Account receivable                                                                                                                    $1,600

Shop Equip. (welder, lathe, drill press, etc.)                                                                           $2,000

Ford Motor Co. stock                                                                             200 shares @ $65 per share

1)         Has paid in advance for $6,000 worth of feed in order to get a good price on it.  The feed will be delivered in May, 2019

2)         Income and social security taxes on 2018 income is estimated at $7,200

3)         Rhonda contributed $50,000 to get her business started

4)         Retained earnings since the beginning of the business equals $305,000.

1.         What is Rhonda's owner's equity?

2.         How much working capital does Rhonda have?

3.         What is her current ratio?

            Explain what this ratio measures

4.         What is her debt/asset ratio?                                                                           

            Explain what this ratio measures?

5. Debt/equity ratio? Explain what this ratio measures?

6. Equity/asset ratio? Explain what this ratio measures?

Answer 1