CALIFORNIA AGRICULTURAL EDUCATION RECORD BOOK INSTRUCTIONAL MANUAL

Transcription

1 CALIFORNIA AGRICULTURAL EDUCATION RECORD BOOK INSTRUCTIONAL MANUAL OCTOBER 2010

2 TABLE OF CONTENTS Page Introduction This section introduces you to the Record Book 3 Cover and First Page Here you record general information about yourself and list your specific enterprises. 4 Calendar of Events and Operations Here you record enterprise activities and important dates. 10 Business Agreements Here you record details of agreements between parties involved in the enterprise. 13 Budget This is used to estimate the expenses, receipts, and net income for the planned enterprise. 19 Journal Here you record enterprise receipts, expenses, and hours worked. 22 Enterprise Loan Payment Summary Here you keep track of loans (over 60 days). 29 Enterprise Accounts Receivable Used at the beginning and end of the year to record monies owed to you. 34 Enterprise Accounts Payable Used at the beginning and end of the year to record monies that you owe others, excluding loans. 36 Current/Operating Inventory This is where you keep track of the value of all property you own that will be consumed or sold within one year. 38 Non-Current/Capital Non-Depreciable Inventory This is where you keep track of the value of all breeding livestock raised and land. 42

3 Non-Current/Capital Depreciable Inventory This is where you keep track of the value of all property you own that has a usable life of more than one year. 46 Financial Statement This is a summary of your Total Net Worth, including Personal and Enterprise Net Worth. 53 Income Summary Here, at the end of the year, you summarize the expenses, receipts, and net income for the overall enterprise program. 59 Contribution to Support of Family Keeps records of earnings from your enterprise that were spent to support your family, rather than invested. 65 Expenses for Educational Purposes Records enterprise earnings that were spent for educational purposes. 66 FFA Activities Keep records here of your participation in FFA activities. 68 Community Service and School Activities This is a record of other activities in which you are involved in your community and school, other than FFA. 74 Transferring Existing Projects to FFA This is information about how to record the transfer of a exisitng project to an FFA project upon entering Agriculture Education 77 Glossary Definitions of many of the words and concepts used in the Record Book. 78

4 INTRODUCTION As a student of agriculture education you are required to develop a Supervised Agricultural Experience Program. A Supervised Agricultural Experience Program (SAE) is a sequence of practical agricultural activities that occur outside of the classroom. These activities help develop competencies related to the agricultural career selected by you and are supervised by a qualified vocational agriculture teacher. An easier way to think of a SAE is to consider it a four-year program of practical out-of-class learning experiences related to your career goal. It will consist of some sort of enterprise or enterprises. For purposes of this record book the term enterprise will be used when referring to your SAE. The term project is not used in this book. There are two types of enterprises that you may choose: ownership and placement. An ownership enterprise is one that you own and manage; while a placement enterprise is one in which you work for someone else, either for pay or no pay. Placement enterprises are usually considered work experience. One important part of a successful enterprise program is the keeping of accurate records. The California Agricultural Education Record Book has been developed for that purpose. This manual will guide you through the Record Book. Each section of the Record Book will be examined in detail. The chapters of this manual are divided according to the sections of the Record Book. Each chapter contains a purpose, instructions about how to complete the section, and an example. The Record Book will allow you to keep track of all the pertinent information needed for financial planning. The Record Book is a single entry, accrual-based accounting system. In the accrual system, income and expenses are recorded when the transactions occur, not necessarily when the money changes hands. The number of months of enterprise records included in the book is an important consideration. You may use either a calendar year, or a fiscal year. The calendar year begins on January 1 and ends on December 31. A fiscal year begins on the first day of any month and runs for one year. Often it is easier to start your first book in September and run it for sixteen months, ending the book the following December 31. If the book begins earlier in the summer (if you have an enterprise start in the summer before the first year in a agriculture education class), then it is recommended that complete the book for the months of activity during that calendar year and you close out the first book at the end of the year. 3

5 Record Keeping is Easy Here are some tips that will help: 1. Be Neat Neatness gives others their first impression of your Record Book. Most sections will require you to use a pencil. In these cases a hard lead pencil (#2.5) should be used, as softer pencils will smudge. Only use a pen on the cover and business agreements. 2. Keep Your Records Current This is the only way to insure that all the information is included and accurate. If you do not have all the information to make a complete entry, enter the information that you have and correct it later. Do not delay your other entries. Waiting will put you further behind and increase your chances of making errors. 3. Add Pages As You Need Them Pages may be photocopied from a blank Record Book and attached by keeping the whole Record Book bound in a folder or in a loose-leaf binder. 4. Be Thorough You must provide enough detail so that a person who is not familiar with your enterprise could find their way through your Record Book and understand it. REFERENCE GUIDE TO COMPLETING THE RECORD BOOK Record Book Section When to Complete Use Cover Beginning of the year Pen First Page Beginning of the year, and whenever new enterprises are Pencil added. Calendar of Events and Operations Beginning of the year, with updates as events are planned or Pencil occur. Business Agreements Prior to starting new enterprises Pen Budget Prior to starting new enterprises Pencil Journal Update regularly, throughout the year, at least on a weekly basis Pencil Enterprise Loan Payment Summary Update as loans are granted Pencil Enterprise Accounts Receivable Beginning and end of the year Pencil Enterprise Accounts Payable Beginning and end of the year Pencil 4

6 Current/Operating Inventory Beginning and end of the year Pencil Non Current/Capital Non-Depreciable Inventory Beginning and end of the year, and as items are acquired Pencil Non Current/Capital Depreciable Inventory Beginning and end of the year, and as items are acquired Pencil Financial Statement Beginning and end of the year Pencil Income summary End of the year Pencil Contribution to Support of Family Throughout the year Pencil Educational Expenses Throughout the year Pencil FFA Activities Throughout the year Pencil Community Service and School Activities Throughout the year Pencil 5

7 COVER AND FIRST PAGE Purpose: The cover and first page are important parts of your Record Book for two reasons. First, it gives people their first indication of your records; and secondly, it gives vital information about you. The information on the cover and first page is important and must be accurate. If the cover of your Record Book is neat and attractive, people get a good first impression. If your cover is dirty and messy, people get a poor first impression. Avoid taking the Record Book to places where it will get dirty. The first page lists the specific enterprises included in the Record Book. Throughout the entire record Book you will be referring to these enterprises according to the way they are listed here. 1. Use a pen to complete the cover. How to Complete The Cover: 2. Print all information as neatly as possible. 3. Fill in all the required information, spelling correctly: Your full name The name of your school The name of your FFA Chapter Your year in Agriculture Education (Do not use numerals 1, 2, 3, - Print the word first, second, third, etc.) The name(s) of your agriculture instructor(s) How To Complete The First Page: 1. Use a pencil to complete the first page. 2. Print all information as neatly as possible. 3. Fill in all the required information, spelling correctly. 4. Fill in the names of your enterprises on lines A through D. If you have more than one enterprise, list them separately. Write your second enterprise on Line B. Write your third enterprise on Line C. Write your fourth enterprise on Line D. 6

8 Additional Information As you fill out the cover and first page, take a minute to look at the drawings on them. On the cover the State of California is represented with pictures of many of this state s agricultural products. California is the number one agricultural state in the nation, producing over 200 different agricultural products. It is estimated that one in four jobs in the state are related to agriculture and agricultural industries. 7

9 EXAMPLE CALIFORNIA AGRICULTURAL EDUCATION RECORD BOOK Name _Barbara Rose School Approval High School Chapter Approval FFA Year in Agriculture Second Record Book for Year Beginning Jan. 1 _, 20 _03 Ending _ Dec. 31, 20 _ 03 Instructor(s) _ Mr. Goodperson Ms. Care REVISED August 12, 8

10 EXAMPLE CALIFORNIA AGRICULTURAL EDUCATION RECORD BOOK Contains Information for the Following Enterprises: (A) Market Swine (B) Landscape Maintenance (C) Breeding Swine (D) Jones Nursery 9

11 CALENDAR OF EVENTS AND OPERATIONS Purpose The Calendar of Events and Operations is a tool that helps you keep track of dates and activities that are important to you. The information you include in your calendar may be related to your enterprise, to school, or to your personal life. This is where you may write information that you want to remember that does not fit anywhere else in the Record Book. Examples of entries include such things as meetings, field days, athletic events, concerts, etc. It may be used in a variety of ways and your instructor can give you ideas about what should be recorded. The Calendar of Events and Operations will become a record of your enterprise activities for the future. Information should be clear enough to be understood if someone (such as a Record Book judging official) were to read it. The calendar should be used for recording activities that will help you make management decisions in the future. Activities such as breeding and weaning dates, fertilizer applications, medical treatments, weights and yields are important to include in this calendar. How to Complete the Calendar of Events and Operations 1. Use a pencil to complete the Calendar of Events and Operations. 2. Prepare the calendar for use. Write the name of each month at the top of each calendar, starting with the month you begin your record Book. Write the correct year next to the name of the month (make sure you have a total of twelve months six pages with a month on each side, exception: first book may be different depending on the number of months records are kept). Fill in the correct dates for each month. Refer to a current calendar to make sure you are numbering correctly, beginning and ending each month on the correct days. For certain months you may need to put two days into one square, depending on how long the month is, and on what day of the week it begins. When this happens, draw a diagonal line from the upper right corner to the lower left corner of the square. The upper triangle will be used for the first date, and the lower one for the later date. Draw a small box in the lower right corner and write the later date in it. 3. Enter your own enterprise information on the calendar. 10

12 Keep entries short and concise. You may need to make more than one entry on some dates. Do not clutter the spaces with irrelevant information. Be specific. The calendar is an important record that you will likely refer back to in the future. 11

13 EXAMPLE CALENDAR OF EVENTS AND OPERATIONS Month of July, SUNDAY Cheerleading Camp - Lake Tahoe MONDAY 4 March in Parade with Girl Scouts 11 Went to talk about Market steer loan 18 Cheerleading Camp - Lake Tahoe 25 TUESDAY Cheerleading Camp - Lake Tahoe 26 WEDNESDAY 6 Weaned #2's piglets (7 piglets) 13 Started work at Jones Hardware Store in Garden Shop 20 Cheerleading Camp - Lake Tahoe 27 Picked up new gilt from Borba's THURSDAY 7 Finshed farrowing crate at school shop with Mr. Ramos Summer FFA Meeting 7:30 pm Ag Dept at school FRIDAY SATURDAY 2 Bred sow #1 to Duroc boar 9 Visited Hepper Farms with Tom 16 Baled Straw with Tom (10 ton) 23 Mom's Birthday Sprayed hog for lice 30 FFA Summer Ice Cream Social 4:00 pm at Park 12

14 BUSINESS AGREEMENTS Purpose The business agreement is a written record of what each party agrees to give and what they expect to receive in an enterprise. Anytime two or more parties agree to work together to accomplish something, there is a need for a business agreement. A properly drafted business agreement reduces the chance of misunderstandings between you and the people with whom you do business. The business agreement is a legal document. As such, it may have a greater effect on the success of your overall program than any other section of the record book. There are two kinds of SAE business agreements: the Ownership and the Placement Enterprise Agreement. For example, if your ownership enterprise is raising a market hog, you will need to keep the hog somewhere. You might keep it at home, at the school lab, or at a neighbor s. In either case you will need to make an agreement with the party(s) whose property you will be using as the place to raise your hog. In exchange for letting you use their space, you might agree to pay the property owners some money, or perhaps they might want a piglet from a farrowing sow you will raise. Your parents might only want you to agree to keep the barn clean, or they may want a portion of the money you receive when you sell your hog. Whatever terms you agree to, they must be clearly stated in the business agreement. If your enterprise is paid work experience in nature, you will need a business agreement to specify the terms of your agreement. Important information such as duration of employment, pay rate, and job duties must be included in the Placement Enterprise Agreement. An Unpaid Placement enterprise must have an agreement if enterprise will be over 50 hours of self-labor. How To Complete A Business Agreement Business agreements must be typed or written in ink before the enterprise or job begins. There are several important reasons for doing this: 1. Whether you have a job or are starting an enterprise, more than one person is involved. You should therefore consult the other parties involved, including your instructor and parents or guardians, before beginning. 2. Advance planning is required so everyone knows exactly what is expected. 3. All parties to the agreement will have a better understanding of the program and each other s responsibilities. 4. If the agreement involves the production and marketing of crops or livestock, there is a written record of each party s input of land, building, equipment, or money. Also, the business agreement will determine how the parties involved will share any profits. 13

15 5. If you are working for someone else, your job duties can be outlined and all details of your pay understood by all parties. 6. All ownership enterprise agreements must address each of the 6 items written in bold at the top of the agreement form: equipment, land, buildings, capital, management and profit or loss. Ownership Enterprise Agreement This business agreement is to be used anytime you have your own productive enterprise. Usually you will have a separate agreement for each enterprise, unless the agreement is between the same parties and the terms are the same. For example, if your parents are letting you use the barn for raising a steer and a pig, then one business agreement will probably suffice for both enterprises. Any time the agreement is between two different parties, or has different terms, a new agreement is needed. The Ownership Enterprise Agreement is a legal document, as such, it must have no mistakes. To avoid making any mistakes, it is best to make a copy of the blank agreement from your record book and fill it out first. Only after your instructor has approved it should you transfer all the information, in ink, to your record book. When you have a copy of the Ownership Enterprise Agreement, begin completing each portion according to the following instructions: 1. Ownership Agreements must be typed or written in ink before the enterprise begins. 2. Fill in the first part of the agreement: Enter the day, and then the month and year the agreement is written. Enter the date the enterprise is to be terminated. If the ending date is unknown, write until either party terminates this agreement. If the agreement s duration goes beyond your current record books closing date, a copy of the agreement must be made and put in the next record book or a new agreement written. Write in the student s name. Write in the Other party s name. Enter the name of the enterprise. Examples: Market swine, nursery stock, Breeding beef. 3. Fill in the main body of the agreement: Write specifically all the responsibilities you and the other party will have and what they will obtain from the enterprise. Be sure to address each of the six-bolded items: equipment, land, buildings, capital (money), management, and profit or loss. Use complete sentences. And be specific with details. Examples of responsibilities: to feed and care for animals, to do all of the tractor work on my enterprise, to pay all the bills incurred by my enterprise by working for my family, etc If you will receive all of the profits, state that fact. If you are sharing with the other party, explain here, in detail, how you will 14

16 do this. List what the other party agrees to provide. This may be a place to keep your animal or to raise a garden. Explain what it includes, such as tools, irrigation supplies, financing, etc If you are paying rent to the other party, state how much it will be per month. If they are going to share in the produce from your garden, state what portion of your harvest they will get. If you agree to share the profits from your enterprise with the other party, state what amount they will receive, or what percentage of the profit they will get. 4. Signatures of Parties Involved Get your instructor s approval. Until now you should have been working on a copy of the Ownership Enterprise Agreement. Copy the correct information, in ink, onto the original Ownership Enterprise Agreement. Get the signatures, in ink, of all parties involved. You, the other party, and your instructor (when applicable), all must sign the business agreement. 5. If the conditions of the agreement change during the duration of the agreement, then it should be terminated and a new agreement written. You have now completed the Ownership Enterprise Agreement. If you have further questions, refer to the example. 15

17 EXAMPLE 16

18 Placement Enterprise Agreement This business agreement is to be used any time you work for someone else for pay or have Unpaid Placement enterprises that will be over 50 hours of self-labor. Placement enterprises are often referred to as work experience. The Placement Enterprise Agreement is a legal document. As such, it must have no mistakes. To avoid making any mistakes, it is best to make a copy of the blank agreement from your record book and fill it out first. Only after your instructor has approved it should you transfer all the information, in ink, to your record book. Once you have a copy of the Placement Enterprise Agreement, begin completing each portion according to the following instructions: 1. Placement Agreements must be typed or written in ink before the enterprise begins. 2. Unpaid Placement enterprises that will be over 50 hours of self-labor must have a placement agreement. 3. Fill in Part 1: Enter the actual day, and then the month and year the agreement is written. Enter the date the work/training is to start. Enter the date the enterprise is to be completed. If the ending date is unknown, write until wither party terminates this agreement. If the agreement s duration goes beyond your current record book s closing date, a copy of the agreement must be made and put in the next record book or a new agreement written. 4. Fill in Part 2: List the name of the business, the type of business. 5. Fill in Part 3 List the name of the person directly responsible for supervising and/or training the student. This will be the person who also signs the agreement. 6. Fill in Part 4 List how much the students wages will be and what will the basis of pay. (i.e. hourly, by the day, by the job, by the month) List how often they will be paid. (i.e. weekly, biweekly, monthly) 7. Fill in Part 5 List the agricultural skills the student will be expected to perform. 8. Fill in Part 6 Write specifically all the responsibilities the employer will have and what they will obtain from the enterprise. Use complete sentences. And be specific with details. 9. Fill in Part 7 Write specifically all the responsibilities the student will have and what they will obtain from the enterprise. Use complete sentences. And be specific with details. 10. Part 8 Obtain the signatures Both parties must sign in ink. Include the employer s phone number so the student or teacher may contact the employer as needed. 17

19 PLACEMENT ENTERPRISE AGREEMENT (Paid and Unpaid Work Experience) 1 To provide a basis of understanding and to promote sound business relationships, this written agreement is established on January 2, 2007 This work/training will start on January 5, 2007 and will end on or about December 31, 2007 unless the arrangement becomes unsatisfactory to either party. 2 3 Business name and type Jones Nursery, Retail Nursery Person (employer/trainer) responsible for training: Larry Jones 4 Wages: $8.00/hour Frequency of Payment Weekly 5. Describe your placement experience to include your ag. skills performed While working at Jones Nursery, I will be able to sort plants, identify shrubs and tree stock, fertilize the plants as needed, irrigate the plant materials, and work the register. In addition to working at the Nursery, I will also install irrigation lines as well as plants as part of the landscaping program. 6. IT IS UNDERSTOOD THAT THE EMPLOYER WILL (Use complete sentences): The employer will provide a list of tasks to be completed as well as a timeline to be followed. The employer will provide oversight as the assigned tasks are completed. The employer will also provide on-site training in identifying plants, weeds, and in working with chemicals. Prior to operating any equipment or administering any chemicals, the employer will provide access to training classes and certificate programs. Finally, the employer will provide weekly evaluations regarding my job performance. 7. THE STUDENT AGREES TO (Use complete sentences): I agree to show up at the prescribed times ready to work. I agree to have a cooperating attitude with an eagerness to learn. I agree to report any injuries immediately to my supervisor. I agree to maintain a ledger of work accomplished and time taken to complete the tasks. I also agree to work with my fellow employees in an effort to ensure that the customers receive the best service they can. 8 STUDENT'S SIGNATURE: EMPLOYER/TRAINER'S SIGNATURE: Business Telephone

20 Purpose BUDGET The purpose of the Budget is to anticipate the cost factors of an enterprise, compare them to the potential receipts, and determine which enterprises have the best possible chance for financial success. Budgets are essential when going to the bank to borrow money. Simply, the Budget is your best estimate of how much it will cost you to operate your enterprise. It is important to consider all cost factors and to be as realistic as possible. You will need to use many resources in order to have an accurate budget. For example, a telephone call to a feed store or a nursery can give you an accurate estimate of certain expenses. Similarly, you may refer to newspapers and newsletters when estimating selling prices. Just because someone in your chapter once sold a lamb for $9 per pound doesn t mean you will be able to secure such a good price. Be as realistic as possible when estimating. Also, it is wise to always estimate your expenses slightly higher and your receipts slightly lower than you think they will actually be. Budgets are most commonly used with ownership enterprises, but they should also be used with placement enterprises. Your instructor and other experienced people will be important resources as you estimate your budget. After you complete a production cycle or a year of work experience, it is interesting to check back and see how close your Budget estimates actually were. Do this to see how close you were in your estimating, but never change your budget retroactively, no matter how far off from reality it may be. Use the actual costs instead to help you better plan your next enterprise. The Budget, along with the Business Agreements, must be completed before starting an enterprise. General Considerations How To Complete The Budget When making a budget, round off all entries to the nearest whole dollar. Take actual amounts and round the value either up or down. If the cents value is greater than.50, then round up to the next dollar. If the cents value is.49 or less, then round down. For example, write 100 dollars instead of ; becomes 42 dollars, but becomes 43 dollars. Budget items that are not applicable to your enterprise, or for which the answer is 0, must be left blank. Do not write 0 in these places. Also, do not write in dollar signs ($). 19

21 The following steps will lead you through the budgeting process: 1. Enter the name of the enterprise to the right of the corresponding letter and column at the top of the budget. 2. Complete the Estimated Expenses: On lines 1 14, list the major categories of expenses required for the operation of the enterprise. Examples include rent, purchase of materials, supplies, entry fees, livestock, plant material; depreciation expense, interest on loans. Do not include the purchase of Non-current/Capital Depreciable items. Record the estimated cost for each of the items listed under the appropriate enterprise column. Remember to record in whole dollars only. Do not use cents. 3. Determine the Estimated Expenses: Add lines 1 14 and enter the total on line 15 and line Complete the Estimated Income: On lines list all products the student will be selling or jobs they will be receiving income from. The description of the product should indicate how the amount of income was determined. Examples: Market hog 225 $3.00/lb, Ranch worker $6.50/hr, 500 $.50 ea, 5 lawns $75/lawn, etc. In the appropriate enterprise column, record the estimated income for each item listed on lines Remember to record in whole dollars only. Do not use cents. 5. Determine Estimated Income: For each enterprise add lines and record the amount on line Determine Estimated Net income: Subtract line 22 from line 21 and enter the result on line 23. For further information on the Budget, see the example. 20

22 EXAMPLE BUDGET The budget is your best estimate of income and expenses to determine net income. The budget is to be completed before the start of the enterprise. All numerical entries should be rounded to the nearest whole dollar. Do not record decimal or cents. ESTIMATED EXPENSES ENTERPRISES (A) Market Swine (B) Landscape Mainte (C) Breeding Swine (D) Jones Nursery 1 Pen Rent Equipment Rent 44 3 Interest on loans 6 4 Depreciation on shears and loppers 7 5 Depreciation on hedge shears 8 6 Misc. to maintain mower 40 7 Market pig purchase Grooming and show supplies Medical Supplies Fair entry Feed Rubber boots and gloves TOTAL ESTIMATED EXPENSES (add 1 through 14) ESTIMATED INCOME ENTERPRISES (A) (B) (C) (D) 16 2 Pigs (ave $1.20/lb 240 lbs Sale of 10 $50 each Work 18 $7.00/hr for 10 months 5, lawns $100/lawn TOTAL ESTIMATED INCOME (add 16 through 20) ,040 TOTAL ESTIMATED EXPENSES (from line 15 above) 23 ESTIMATED NET INCOME (Line 21 minus line 22) ,015 21

23 JOURNAL Purpose The Journal is used to record actual income, expenses, and hours that you work on your enterprise. It should be kept up-to-date on a weekly basis, at the very least. The Journal is where you will record the majority of activities related to your enterprise program. Keep in mind, only agriculturally related activities may be recorded in your Journal. Do not put income, expenses, or hours for anything other than your enterprise into the Journal. In addition to the hours you work on your own enterprise, you may also record in the Journal any hours you work, whether paid or unpaid, that are agriculturally related. For instance, you might help plant the chapter crop. On the other hand, activities such as judging teams and working on the banquet are not part of an SAE and therefore are not to be listed in the Journal. The information recorded in the Journal will be used at the end of the year in completing your Income Summary. In addition, your Journal will be reviewed by many people, including your instructor and judges when you apply for degrees or awards. Even you will be referring back to your Journal in the years to come, as you plan other enterprise activities. Therefore, it is extremely important that the information you record in the Journal be accurate and concise. Record Keeping Tips For the Journal HOW TO COMPLETE THE JOURNAL 1. The Journal is to be completed in pencil. 2. Make Journal entries as frequently as possible. Small bits of information are easy to forget. Write transactions down as soon as they occur. 3. Keep your Journal neat. Because others will be reading it, you must write legibly and consistently. 4. Use a separate page for each month. If you need more pages than are provided, additional pages can be duplicated and added as needed. 5. Every entry of income, expenses, or hours must appear in your Journal twice on the same line first on page 5a and then on page 5b. Each month you will balance your Journal entries by adding the numbers on each page. The totals must be equal. Example: Add the income columns on page 5B and that number must equal the income column on page 5a. This system provides for enterprise cost analysis and is method for checking accuracy as each month is completed. 6. Add more columns if you have more than four enterprises in the following way: 22

24 Duplicate page 5b and cut off the top of the page, change column name (A) to (E), column (B) to (F), column (C) to (G) and column (D) to (H). Tape this page in your book so that column D on the new page covers column D on the original page 5B, so when it is folded out you will have six enterprise columns. Repeat the process if you have more than eight ownership enterprises. 7. Add more lines, if you need more than the twenty provided, by doing either of the following (ask for your instructor s preference): Combine entries. Instead of entering labor feeding lamb everyday, make this an entry once a week, or once a month. Duplicate page 5a and 5b. Cut off the top of each page above line 1. Tape these pages under line 20 so when folded downward, you have 20 additional lines. Making Entries 1. Fill in the month and year at the top of page 5a. 2. Date (column 1) Indicate the date(s) the Activity took place. Write only the days of the month, not the month itself, nor year, as these are already indicated at the top of the page. 3. Description (column 2) Describe what occurred. Be specific. If you worked, list what kind of work. If you sold plants, list what kinds of plants. If you bought feed, list type and what species it was intended for. If you bought medicine, list what type. All entries must include a verb and a noun (object) in the description. 4. Units No. (column 3) List the quantity (number) for which you made or received payment. Perhaps you worked 6 hours, bought 50 pounds of feed, sold 100 plants, etc. These entries must have units. Example abbreviations for units include: hrs. (hours), lbs. (pounds), cwt. (hundred weight), ea. (each). If you receive payment for a whole job and there are no quantities, you may leave this column blank. Price (column 4) How much you received or expended for each unit. If you made a quantity entry in column 3, then list in column 4 how much you paid or received per unit. Examples include $10.00/hr., 25 /lb., or $1.20/ea. If you make an entry in either column 3 or 4, an entry must appear in both columns. The units in each column must be the same. Do not use $ in one column, and in the other. 5. Income (column 5) Indicate the amount you have received. Be certain to include the complete selling price (then enter selling expenses such as commission, yardage, trucking, etc. in the EXPENSES part of your Journal). Exact sales dates are necessary in order to calculate efficiency factors such as gain per day. In case of paid work experience, you must record your gross wages, not your net pay (deductions are not listed as an expense). This corresponds to the method used in calculating income tax. The income information generated during the year will be used at the end of the year to evaluate how well you have done with your enterprises. You will also be using this information to determine how efficient your enterprises have been and to compare your progress over the years. Every amount you enter in column 5 on page 5a must also be entered on the same line on page 5b under the appropriate enterprise column (8). Keep your entries from page 5a to 5b on the same line. 23

25 6. Expenses (column 6) Indicate the total amount you paid. Keep expense entries current at all times. In the case of paid labor, either paid out or received, record gross wages, not net pay. This corresponds to the method used in calculating income tax. Also, record any expense you have incurred as a result of a job. Items that are needed for your work experience, but not provided, such as tools and special clothing should be recorded. Vehicle expenses such as gas, oil, and maintenance, that are incurred in getting either to or from your work place are not legal expenses and cannot be recorded as such in the Journal. However, normal operating vehicle expenses incurred while conducting the enterprise are considered legal expenses and therefore can be listed in the journal. Example 1: You drive to work each day and your car is parked while you are there. The expenses incurred here may not be recorded. Example 2: While at work, you use your car to check a field for mites. The expenses incurred while working would be listed in the Journal. Keep your entries from page 5a to 5b on the same line! 7. Hours Self-Labor (column 7) Enter all the hours you worked on any of your enterprises. Record whole hours only, not partial hours or minutes. Round up to the nearest whole hour. First, enter the total hours you worked in column 7 on page 5a. Then, on page 5b, enter the hours as they apply to each specific enterprise in column 10 under that enterprise or under unpaid hours in column 11. In some cases entries on page 5a may be separated when entered on page 5b. For example, if you worked a total of 8 hours on a given day, in which 2 hours was spent on your market swine enterprise and 6 hours on your breeding swine project, those hours may be entered on one line in the journal, with the 8 hours entered on page 5a and the 2 hours entered under the market swine enterprise and 6 hours under breeding swine enterprise on page 5b on the same line. Only enter hours that are RELATED TO YOUR ENTERPRISE and agricultural in nature. You may group regular duties and enter them once a week or every two weeks. If you do this, time yourself occasionally to get an accurate estimate of the actual time you spend. Include routine chores that you do every day, such as feeding and watering. At the End of Each Month At the end of each month complete the bottom of each Journal page by following these steps: 1. Total For Month (line 21) Add values in each column. Add values in columns for income, expenses, and hours on page 5a (columns 5, 6, and 7). Add values in columns for each enterprise on page 5b (columns 8-11). 2. Total Brought Forward (line 22) Transfer values from Total to Date (line 23) from previous month. Keep information in the correct columns when transferring from last month to the current month. 24

26 If this is the first month you are recording activities, then nothing will appear on line 22 (remember, do not write in 0). This will always be true regardless if this is your first, second, third, fourth, or fifth book. If an enterprise is completed before the end of the year, the Total to Date from the previous month is still brought forward until the end of the year. 3. Total to Date (line 23 add Total for Month (line 21) to Total Brought Forward (line 22). Add totals for each column on both page 5a and 5b. 4. Balance your Books. Compare totals on page 5a to totals on page 5b. Gifts Your income total on line 23, column 5, should equal the sum of values on line 23 in income of all column 8s. Your expenses total on line 23, column 6, should equal the sum of values on line 23 in expenses of all column 9s. Your hours total on line 23, column 7, should equal the sum of values on line 23 in hours of all column 10s and column 11. Do not move to the next month without balancing your Journal. Additional Information In business, nothing is free! A gift that you receive is listed as an expense while a gift that you give is listed as income. For example, a gift of a feeder pig for your market swine enterprise, from your grandparents, is recorded as an expense. You must determine a value for it the actual amount paid if purchased, or if raised, what they are selling for at a local sales yard or from the market report in the newspaper. If the gift is a depreciable Asset, be sure to include it in your inventory, and do not include it in the Journal. On the Depreciable property Inventory indicate that it was a gift when you record it at year s end. A gift from you to your brother, of bedding plants he might use in his enterprise, is recorded as income. The value of the flats might be what you would charge customers, what a local nursery would pay you for them, or what a local nursery would charge your brother. Another example would be the vegetables given to your parents from your garden. These should be listed as income to your vegetable enterprise. Exchanges Anything you exchange must be given a dollar value in your Journal, even if a payment in money is never made. For example, if you are trading your labor for feed, you must include the 25

27 value of the feed and the value of the labor you traded. This is very important so that you can get a true indication of how your enterprise did. Otherwise, your Journal would indicate that you produced pigs without any expense. This not true, as the labor you traded had a value, and that is what you paid for the feed. Any exchange should be handled the same as gifts from and to each party. EXAMPLE: You work at the school farm in exchange for feed for your market animal. You would place a value for your labor at the school farm (usually an hourly rate). This exchange can be recorded in one of two ways. You would either use one line and show both the income and expense on the same line and then on page 5b show the income to a Placement enterprise and the expense of the feed to your market animal enterprise. Or you would use two entries, showing you produced income by working at the school farm on one line and on another line you would record the expense of your feed for your market animal. The same is true when you raise a crop and use it as food for your market hogs. It is income for your corn enterprise and it is an expense for your hog enterprise. There are different ways to indicate exchanges in your Journal. Check with your instructor. EXAMPLE: You use two yards of manure, from your pig enterprise, in your landscape maintenance enterprise. You place a value on the manure of $5/yard. This exchange can be recorded in one of two ways. You would either use one line and show both the income and expense on the same line and then on page 5b show the income to your market hogs and the expense to your landscape maintenance enterprise. Or you would use two entries, showing you sold manure and produced income for your market hog on one line and on another line you would record the expense of buying the manure from your market hog project for your landscape maintenance enterprise. 26

28 EXAMPLE JOURNAL December Record for the month of, (1) Date (2) Description (3) No. Units (4) Price (5) Income (6) Expenses (7) Hours Self Labor Purchased Grow Mix 1 ton $280/ton Pruned shrub's at Camp's 4 hrs 6.25/hr Water, weeded at Jones Nursery 36 hrs $7.00/hr Transferred feeders to market project 10 hd $35/hd Sold pig at fair 1 hd $140/hd Feed and care of animals for month Potted plants, assisted customers at Nursery 36hrs $7.00/hr Total for month 22 Total Brought forward from previous month, line Total to date 1, , , ,389 5, , ,527 Column 5 must equal the sum of columns A8, B8, C8, D8 Column 6 must equal the sum of columns A9, B9, C9. D9 Column 7 must equal the sum of columns A10, B10, C10, D10, 11 27

29 EXAMPLE JOURNAL (continued) Record for the month of December, Enterprise Enterprise Enterprise Enterprise (A) Market Swine (B) Landscape Maintenance (C) Breeding Swine (D) (8) Income (9) Expense (10) Hours (8) Income (9) Expense (10) Hours (8) Income (9) Expense (10) Hours (8) Income Jones Nursery (9) Expense (10) Hours (11) Unpd. Hours , , ,008 1, , , , (Optional - expenses breakdown) Total Feed Total Other Cash Inventory Purchased for Resale

30 ENTERPRISE LOAN PAYMENT SUMMARY Purpose The purpose of the Enterprise Loan Payment Summary is to record the information on any loans you take out related to your enterprise(s). Many people do not have money available to pay the on-going expenses on an enterprise, so they borrow money from a bank or another person to pay these expenses. The lender, the one who loans the money, is paid interest for this service. The interest is calculated as a percentage of the principal, or the total amount borrowed. Interest is usually paid while the loan is being paid off. Even if the money is from a family member, it still must be recorded as a loan. It is important to record all loans in your Enterprise Loan Payment Summary, even if they are no interest loans. For example, your business agreement might state: my parents will provide all the capital and I will pay them back when I sell my enterprise. In this case, the money is yours to use and you will be recording expense entries in your Journal. Therefore, you must list the money as a loan. Additional Information Loans are an extremely important part of all agricultural businesses. Agriculture is a capitalintensive industry, which means the typical farm or agricultural business usually borrows a high amount of money. Farmers frequently carry a large debt and a large number of loans. Because loans are such an integral part of agriculture, it is important to practice accurate loan record keeping. The basic formulas for figuring interest follow: SINGLE PAYMENT LOAN Principal X Interest Rate X Time = Interest Where Interest Rate is expressed in decimal form and Time is expressed as years or fractions thereof. MULTIPLE PAYMENT LOAN Balance Owed X Interest Rate X Time = Interest Where Balance Owed is the amount you still have to pay back on the principal, Interest Rate is expressed in decimal form, and Time represents the time between payments, or the fraction of year. The principal payments of a loan are not recorded in your Journal, but the interest payments are recorded there. The reason for this is that the principal is normally used to buy items that are recorded in the Journal, but the interest payments will only show up as an expense when you 29

31 make a separate entry. If the principal is used to buy a depreciable property item, the expense shows up as depreciation. From the standpoint of income tax, only interest is tax deductible, while principal for loans is not deductible. When a financial institution such as a bank makes a loan, they are required by law to have the borrower sign a statement that shows exactly what the interest rate will be. This statement must indicate the annual percentage rate (APR). Normally this statement will also show how much total interest you will pay and what the total amount of each payment will be. How To Complete The Loan Payment Summary The Enterprise Loan Payment Summary page is divided into two identical parts. Each part is designed for one loan of up to 12 payments. Use this form even if you make less than 12 payments. If you have more than two loans, you will need to get another copy of page 6 for your Record Book. If you borrow money from an individual, whether it is a family member (including Mom or Dad) or not, you must include in your Enterprise Loan Payment Summary the principal, interest rate, repayment schedule, and how much the payments are to be (indicating both interest and principal for each payment). There are several important things to remember when keeping track of loans: Receipt of a loan is not recorded in the Journal. Payments of interest are recorded in the Journal. Payments on the principal of your loan are only recorded in your Enterprise Loan Payment Summary, and never in your Journal as an expense. Fill out the Enterprise Loan Payment Summary in pencil. Fill out the Enterprise Loan Payment Summary as soon as possible after you first receive your loan. There are two kinds of loans that will be described here, the single and multiple payment loans. An example of a single payment loan would be when your parents loan you $300 for the purchase of a market hog and supplies. When you repay the entire loan at once, such as immediately after you sell your hog at the fair, this is a single payment loan. Single Payment Loan The instructions for filling out the Enterprise Loan Payment Summary for a single payment loan follow: 30

32 1. Fill out the top portion of the Enterprise Loan Payment Summary as soon as you receive the loan. Date Borrowed. Enter the date that you secured the loan. If it was January 3, 2003, then write 1/3/03. Name and Address of Person or Firm. List the name and address of the person or business from whom you are borrowing. Purpose of Loan. Indicate what use you will make of the money, such as to purchase animals or to buy feed. Total Amount due (Principal). List the amount borrowed, for example $ Interest (Int.) Rate. Write the interest rate. If it is 12%, write.12. Final Payment Date. List when the last payment will be made. 2. Enter the single payment you make on Payment line #1. Date Enter the date the single payment is made. Amount Paid: Interest Calculate the interest paid by utilizing the formula: Principal X Interest Rate X Time In this case, the principal is $800.00, the Interest Rate is.12, and the time is 9 months, represented as 9/12ths of a year. ($800.00) X (.12) X (9/12) = $72.00 Principal This is the total amount of money you originally borrowed. In this example, $ would be recorded as the principal. 3. Balance of Principal Owed This is the amount of the principal that you still owe. In this case, as this is a single payment loan, the amount is The amount of interest paid must be recorded in the Journal on the date it is made. The payment on the principal is not a business expense, and therefore not recorded in the Journal. In this example, $72.00 would be recorded as the interest paid. 5. Total for the Year. Enter the total amounts you paid in both interest and principal. Again, since this is a single payment loan, these numbers will be found on the Payment line #1. 31

33 Multiple Payment Loan The instructions for filling out the Enterprise Loan Payment Summary for a multiple payment loan follow: 1. Fill out the top portion of the Enterprise Loan Payment Summary as soon as you receive the loan. The instructions for filling in this information are the same as for a single payment loan. 2. Enter the payments you make beginning with Payment line #1. The financial institution that made the loan to you will have provided you with a repayment schedule. It will indicate the Date, Interest, Principal, and Balance of Principal Owed for each payment you make. Enter payments as they are made. 3. Total for Year. Add up the totals for all payments made, both in interest and principal. You have completed the Enterprise Loan Payment Summary. For further information on how to complete this section, see listed examples. 32