Chapter  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 1 PRIMARY PRODUCERS LEARNING OUTCOME:  TO PRODUCE THE ACCOUNTING RECORDS AND FINANCIAL REPORTS MAINTAINED BY PRIMARY PRODUCERS  THE ACCOUNTING RECORDS INCLUDE WORKING ACCOUNTS, LIVESTOCK ACCOUNTS, A STATEMENT OF FINANCIAL PERFORMANCE AND A STATEMENT OF FINANCIAL POSITION 5

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 2 KEY TERMS  agistment  average cost  deaths  growing crop  livestock accounts  natural increase  primary producer  rations  stores

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 3 RECORDS  Agistment book  Goods and services tax  Natural increase book  Paddock book  Rations book  Records of livestock deaths  Shearers record book  Station diary  Stores record  Wages record  Wool record

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 4 LIVESTOCK ACCOUNT  Shows only the number of animals maintained on a farm as an income producer and their value

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 5 COMPONENTS OF LIVESTOCK ACCOUNT  Opening stock  Natural increase  Purchases  Deaths  Deaths by disease  Rations  Closing stock

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 6 VALUES FOR NATURAL INCREASE OF LIVESTOCK  The Income Tax Act stipulates the minimum per-head values of natural increase

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 7 OTHER COSTS ASSOCIATED WITH LIVESTOCK  These costs are entered in the profit and loss account: Ùcrutching Ùstock feed Ùveterinary fees Ùfreight charges  The number of stock killed for rations for use on the farm are credited to the livestock account

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 8 LIVESTOCK ACCOUNT DateDetailsNo. Value $ DateDetailsNo. Value $ 1.7Opening stock Deaths Natural increase180-Rations40200 Purchases Sales Profit and loss6 120Closing stock Totals Totals Illustration 5A (page 116)

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 9 VALUATION OF CLOSING STOCK ITEMNO. HEADVALUE $ Opening stock Natural increase Purchases Total CALCULATION:

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 10 RATIONS ACCOUNT DateDetails Debit $ DateDetails Credit $ 30.6Livestock a/c Drawings a/c 500 Wool a/c 700 Profit & Loss a/c Comments Drawings a/c – owner takes stock for food Wool a/c – stock used for shearers’ food Profit & loss a/c - general farmhands’ rations Illustration 5C (page 117)

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 11 PRODUCE ACCOUNTS  Separate ledger accounts should be maintained for costs and income associated with the various items of production e.g. wool and wheat  These record expenses incurred and are matched with income from sales  The result is a net gain or loss, which is transferred to the profit and loss account

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 12 PRODUCE ACCOUNTS  WOOL ACCOUNT includes Ùcost of sheep shearing Ùother expenses associated with wool production Ùincome from sale of wool bales Ùoften an opening and closing of stock on hand  SKINS AND HIDES ACCOUNT Ùskins and hides of stock killed on the farm are sold as a by-product

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 13 WOOL ACCOUNT DateDetailsDebit $DateDetailsCredit $ 1.7 Opening balance Sales Shearing costs20 000Closing balance Depreciation5 000 Repairs500 Cleaning wages800 Rations700 Profit Illustration 5D (page 118)

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 14 PRODUCE ACCOUNTS  WHEAT AND GROWING CROPS ÙCrops are usually planted in one accounting period and are not harvested and sold until the next accounting period ÙGrowing crop account ÙWheat or other cereals account

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 15 STORES USED  Stores used in farm production may be kept on the property  This account could include purchases for cash or on credit, returns, labour costs associated with distributing the stores  Items used from the store are considered to be issues

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 16 PROFIT AND LOSS ACCOUNT  Income from the livestock account and the produce account are transferred into the profit and loss account with other items covering the business overall

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 17 STATEMENT OF FINANCIAL PERFORMANCE  A farmer may need to prepare a Statement of Financial Performance at certain times e.g. when applying for a bank loan

 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Applications for Financial Accounting by David Willis, slides prepared by Kaye Watson 18 STATEMENT OF FINANCIAL POSITION  Required by accounting standards AASB 1040  Assets and liabilities are to be differentiated between current and non-current