Theory question 109
Farm Management and Records(a) Explain briefly the term 'farm valuation'.
(b) Prepare a Profit and Loss Account for a farm from the following information: maize seeds for planting ₦25,000.00; fertilizers used ₦14,800.00; pesticides ₦20,000.00; purchase of seed yams ₦50,000.00; tractor hire ₦60,000.00; transport cost ₦10,000.00; workers' wages ₦40,000.00; sale of maize cobs ₦250,000.00; yam tubers sold ₦200,000.00; opening valuation ₦440,000.00; closing valuation ₦200,000.00.
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(a) Farm valuation is estimating the money value of all farm assets (land, buildings, machinery, livestock, produce in store) at a given time, usually at the start (opening) and end (closing) of the year
(b) Debit (expenses): opening valuation 440,000; maize seeds 25,000; fertilizers 14,800; pesticides 20,000; seed yams 50,000; tractor hire 60,000; transport 10,000; wages 40,000 – total ₦659,800
Credit (receipts): sale of maize cobs 250,000; yam tubers 200,000; closing valuation 200,000 – total ₦650,000
Net loss = 659,800 − 650,000 = ₦9,800.00
Opening valuation and costs on the debit side; sales and closing valuation on the credit side.