Keeping ag records
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Keeping Ag Records. Road to FFA Degrees and Awards. Why are records kept?. Inflow and outflow of money Determine earnings Observe financial progress Determine which enterprises are profitable Income taxes Management Decisions Future Planning FFA Degrees and Awards. What is a Budget ?.

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Keeping ag records

Keeping Ag Records

Road to FFA Degrees and Awards


Why are records kept

Why are records kept?

  • Inflow and outflow of money

  • Determine earnings

  • Observe financial progress

  • Determine which enterprises are profitable

  • Income taxes

  • Management Decisions

  • Future Planning

  • FFA Degrees and Awards


What is a budget

What is a Budget?

  • List of anticipated income and expenses for a given period of time

  • Will the business be profitable?

  • Summarizes where money will be needed

  • Basis for business agreements

  • Information for securing credit

  • Standards for checking progress

  • Basis for business planning


When should a budget be developed

When should a Budget be developed?

  • First step in planning an enterprise

  • Decision to carry out enterprise should not be done until budget is completed

  • Cover period of natural production (yr)


What is included in a budget

Expenses:

land or facilities rent

machinery

feed

seed

fertilizer

pest control

Income:

sales of products

products used at home

Include both cash and noncash items

increase or decrease in inventory

used at home

What is included in a budget?


Budgeting practices

Budgeting Practices

  • Use Current Prices

  • If prices vary, use highest cost, lowest income

  • Custom rates for machinery

  • Depreciate capital items (buildings)

  • Products used at home = income

  • Self -labor not included

  • Change in inventory = income or expense (which ever is appropriate)


Keeping ag records

  • Develop a budget for the following:

    10 acres of land renting at $30/acre

    3 acre-feet of water at $5/acre-foot

    seed at $5/cwt...... planted at 70#/acre

    Fertilizer at $2.20/acre

    Machinery $2.50/acre

    Pest control $4/acre

    Sale of grain at $3/bu at 25 bu/acre

    sale of straw at $10/acre

    finance charges: borrow $400 with 10% interest/yr for 6 months


Budget

Expenses

Rent$300

Water$ 15

Seed$ 35

Fertilizer$ 22

Machinery$ 25

Pest$ 40

Interest$ 20

Total Expenses $457

Income

Grain$750

Straw$100

Total Income$850

Profit$393

Budget


Keeping ag records

  • Develop a budget for the following:

    10 feeder steers @300# each at$70/cwt......

    facilities rent: 6 1/2 months @$10/month

    20 hrs labor @ $4/hr

    9 tons hay @ $60/ton

    10 tons grain @ $80/ton

    pest control @ $2/head

    machinery cost @ $10/hr , 3 hrs

    Sale 10 hd weighing 800# @ $85/cwt.......

    sale 10 ton manure @ $3/ton

    finance charge: $2000 loan for 6 months @ 10% interest


Budget1

Expenses

10 steers $2100

rent $ 65

labor $ 80

hay $ 540

grain $ 800

pest cont. $ 20

machinery $ 30

interest $ 100

Total Cost $3735

Income

steer sale$6800

manure sale$ 30

Total Income$6830

Profit$3095

Budget


What is a business agreement

What is a Business Agreement?

  • Lists responsibilities of each party involved

  • states how profits will be divided

  • states who will perform the labor

  • who will make managerial decisions

  • when and how expenses will be paid

  • provides a legal document should problems arise


When should a business agreement be developed

When should a Business Agreement be developed?

  • After the budget is done

  • dates, names of all parties

  • kind, size, location, duration of enterprise

  • equipment, facilities, labor, financing

  • what student receives

  • what parent or other provides

  • financing arrangements

  • signatures


What is an inventory

What is an Inventory?

  • itemized list of all personal and real property (assets) on hand at any time

  • assets = items owned

  • Beginning Inventory

  • Ending Inventory

  • Ending Inventory becomes Beginning Inventory of next cycle


Value of an inventory

Value of an Inventory

  • used to determine Net Worth

  • may be only place where a profit appears

  • business management decisions

  • show change in resources

  • needed for credit

  • depreciation for income taxes


Inventory

Inventory

  • Beginning Inventory: complete after business agreement

  • Physical count: how many?

  • Determine value:

    • Current Market Value (if sold today)

    • Remaining Investment Value (depreciation)


What is depreciation

What is depreciation?

  • Method of expensing capital items

  • Depreciable Assets have a useful life of more than one year

  • decrease in value

  • used in business

  • machinery, equipment, purchased breeding stock, buildings

  • Non-depreciable: don’t decrease in value (feed, market livestock, raised breeding livestock, land)


How do you calculate depreciation

How do you calculate depreciation?

  • Straight Line:

    • Cost divided by years of use

  • If asset is only owned for part of a year, depreciation is taken for that part of a year

    • buy cow in July for $1000

    • useful life of 10 years

    • normal depreciation = $100 / yr

    • half year depreciation = $50


How do you calculate depreciation1

How do you calculate depreciation?

  • Remaining value = cost minus total depreciation taken

  • Buy a cow for $1000 on Jan 1, 1995

  • Useful life of 10 yrs

  • Annual depreciation = $1000

  • What is the remaining value on Jan 1, 1997?

  • $1000 - ($100 x 2) = $800


Inventory practices

Inventory Practices

  • include all enterprise resources

  • current prices for non-depreciable assets

  • raised livestock are not depreciated

  • use salvage value for depreciated assets that are completely depreciated

  • develop depreciation schedule


Develop a beginning inventory

Develop a Beginning Inventory

  • 10 hd feeder steers

    • avg. wt = 600# @ $75/cwt....

  • 5 tons alfalfa hay @ $75/T

  • 3 tons barley @ $90/T

  • 1 1/2 tons oats @ $80/T


Beginning inventory

Beginning Inventory

  • Steers$4500

  • Alfalfa$ 375

  • Barley$ 270

  • Oats$ 120

  • Total Value$5265


Income and expense

Income and Expense

  • record of all cash and non-cash transactions

  • begin this section when project begins

  • record all transactions as soon as they occur

  • date, item, cost or amount

  • describe entries as much as needed

  • qty and price should be directly related

    • qty = 75 pounds, price = $.04/LB

    • qty = 10 tons, price = $50/T


Concluding records

Concluding Records

  • When should record books be closed?

    end of calendar year or production cycle

  • Summarize records


Why should records be summarized

Why should records be summarized?

  • basis for new enterprises

  • help to adopt approved practices

  • basis for expansion of enterprises

  • help in making accurate budgets

  • help in setting up goals


What records are summarized

What records are summarized?

  • Inventory

    Gain or Loss

  • Income

  • Expenses

    (Income + Inventory) - Expenses

  • Production Records

    • bushels/acre

    • cost/bushel

    • profit/acre


What is a net worth statement

What is a Net Worth Statement?

  • Lists all assets (items owned)

  • Lists all debts (money owed to others)

  • Assets - Debts = Net Worth

  • True measure of financial growth


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