Baron: Generally Accepted Accounting Principles and Net Cash Flow

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Financial Accounting  RSM 5201
Instructor: Dr. Ramy Elitzur
Assignment prepared by: Gerson Vanzin Moura da Silva
Date: Oct. 14
Baron Coburg Case
 
 
Ivan
Balance Sheet
Beginning
(In bushels of wheat)
 
Assets
Seed​​​​  20
Fertilizer​​​​    2
Ox​​​​  40
Land​​​​100
Total​​​​162
 
Liabilities and SE
Baron Coburg’s Equity​​162
Total​​​​162
 
 
 
 
 
 
 
 
Ivan
Balance Sheet
End
(In bushels of wheat)
 
Assets​
Seed​​​​223
Ox​​​​  36
Land​​​​100
Total​​​​359
Liabilities and SE
Plow​​​​    3
Baron Coburg’s Equity​​162
Retained Earnings​​​214
Dividends​​​(20)
Retained Earnings​​​194
Total Liabilities and SE​​359
 
Ivan
Income Statement
(In bushels of wheat)
 
Wheat​​​​243
Expenses:
Seed​​​​  20
Fertilizer​​​    ​    2
Ox depreciation​​​    4
Plow depreciation​​                    3
Profit​​​​214
 
 
 
 
Ivan
Statement of Cash Flows
(in bushels of wheat)
Indirect Method
 
Operating Activities
Net Income​​​​214
Ox depreciation​​​​    4
Plow depreciation​​​    3
Fertilizer Inventory​​                 1
Liabilities (plow)​​​​   (3)
Net Cash Flow from Operations​​219
 
Investing Activities
Net Cash Flow from Investing Activities ​   0
Financing Activities
Dividends​​​​  (20)
Net Cash Flow from Investing Activities​  (20)
Wheat beginning of period​​​    20
Wheat end of period​​​  219
Increase (decrease) in wheat​​  199
 
 
 
 
 
 
 
Frederick
Balance Sheet
Beginning
(In bushels of wheat)
 
Assets
Seed​​​​10
Fertilizer​​​​  1
Ox​​​​40
Land​​​​50
Total​​​​101
 
Liabilities and SE
Baron Coburg’s Equity​​101
Total​​​​101
 
 
Frederick
Balance Sheet
End
(In bushels of wheat)
 
Assets​
Seed​​​​105
Ox​​​​  36
Plow​​​​    2
Land​​​​  50
Total​​​​193
 
 
 
Liabilities and SE
Baron Coburg’s Equity​​101
Retained Earnings​​​122
Dividends​​​(30)
Retained Earnings​​​  92
Total Liabilities and SE​​193
 
 
Frederick
Income Statement
(In bushels of wheat)
 
Wheat​​​​138
Expenses:
Seed​​​​  10
Fertilizer​​​    ​    1
Ox depreciation​​​    4
Plow depreciation​​    ​    1
Profit​​​​122
 
Frederick
Statement of Cash Flows
(in bushels of wheat)
Indirect Method
 
Operating Activities
Net Income​​​​122
Ox depreciation​​​​    4
Plow depreciation​​​    1
Fertilizer Inventory​​                 1
Net Cash Flow from Operations​​128
 
Investing Activities
Capex (plow)​​​​   (3)
Net Cash Flow from Investing Activities ​   (3)
Financing Activities
Dividends​​​​  (30)
Net Cash Flow from Investing Activities​  (30)
Wheat beginning of period​​​  10
Wheat end of period​​​  95
Increase (decrease) in wheat​​105
 
 
Questions:
 
1. Whose financial statements should we prepare (e.g., the baron, vassals, farms, etc..?) I prepared the financial statements related to the business activities created by the Baron who invested in two firms, one I called Ivan and other one I called Frederick. 2. What financial statements should we prepare?

I prepared the Beginning Balance sheets, the Ending Balance sheets, Income Statement and Statements of Cash Flows. 3. What period do these statements cover and why?
The statements cover the harvest period which is the business cycle of the firms to obtain financing, make investments and conduct the operation.  
4. What currency are these financial statements going to use? Bushels of wheat.
5. Who/ What would be the modern day equivalent of the Baron? Baron may be an investor such as a private equity company or a venture capitalist. 6. Who/ What would be the modern day equivalent of the vassals?  

Entrepreneurs.
 
7. Who/ What would be the modern day equivalent of the ox?
Equipment or machinery that is used to produce goods.
8. Please try, based on your answers to questions 1-4, to prepare the related financial statements. Please do not use journal entries or T accounts as it will not add any new information. Answer above.

9. How should we measure the performance of the...
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