Beginning inventory Wheat production Shipped to grain elevators Grain stored at farm at end of 2005

0 bushels 210,000 bushels 180,000 bushels 0,000 bushels

Production costs per bushel Seed #ertili$ers and chemicals &achinery costs, fuel, and repairs (art)time labor and other costs *otal production cost per bushel Annual costs not related to the volume of production Salaries and +ages ,nsurance *a.es /epreciation 0ther e.penses *otal costs not related to production volume

!0"05 !0"2%5 !0"10' !0"058 $0.513 !'2,500 !-,500 ! 2,500 !28,500 !-5,000 $183,000

Sales 2ost of goods sold Beginning inventory (roduction 3ess4 5nding inventory 2ost of goods sold Gross margin 6Sales ) cost of goods sold 0ther e.penses 7et ,ncome

GR !! "" #AR$ %ncome &tatements Recognition Methods Sales Collection Production !522,000 !-12,-00 !11-,100 0 10',' 0 15, %0 %2, -0 -2%,110 18 ,000 !2-1,110 0 10',' 0 25,150 82,080 80, 20 18 ,000 !1%', 20 0 10',' 0 0 10',' 0 501, '0 18 ,000 ! 2 , '0

!-12-00 8 96180000 bushels : !2"%0; ) 620,000 bushels : !2"%8;< 8 110000 bushels : !2"8% !11-100 8 0,000 bushels : ! "0' = 180000 bushels : !2"%0 !11-100 8 6210000 bushels :2"80;=6180000 bushels : 0"10;=6 0,000 bushels : !0"2'; !10'' 0 8 210,000 bushels : !5"1 !25150 8 0,000 bushels physically in inventory = 20,000 bushels at elevators> end 0 8 although there are 0,000 bushels pyhsically in inventory, all +heat is counted as sold, hence no inventory in accounting sense

2ash ?ccounts receivable ,nventory 3and Buildings and machinery 6net; (otal assets

GR !! "" #AR$ 'alance &heet Recognition Methods Sales Collection Production ! 0,%00 ! 0,%00 ! 0,%00 5%,100 0 151'00 15, %0 25,150 0 '5,000 '5,000 '5,000 112,500 112,500 112,500 5)3,3)0 5**,050 +,0,100 ,000 -5',500 !2-1,110 '0-,110 $,3,,1+0 !0 !2-1,110 ,000 -5',500 !10',' 0 515,2 0 $5)8,130 !0 !1%', 20 ,000 -5',500 !10',' 0 515,2 0 $5)8,130 !0 ! 2 , '0

3iabilities 6current; 0+ners@ eAuity 2ommon stocB and ?(,2 Cetained earnings *otal o+ners@ eAuity (otal liabilities and o-ners. e/uit0 /etails of /ra+ings Beginning retained earnings ?dd4 7et income

3ess4 5nding retained earnings /ra+ings

!2-1,110 !0

!10',' 0 !8%,5%0

!10',' 0 !215,1-0

0 8 7o ?DC since sales revenues are not recogni$ed until the collection is made 151'00 8 real receivable = reocrded as revenue on 0,000 bushels produced and not sold 8 !5%100 = !%2100 8 0000E "0' 20000E2"%8

5%100 8 20000E2"%8

210,000 bushels : !0"51

151'00

Revenue Recognition Services Advertising (Media/production) commisions Insurance agnecy commissions Installation fees

Financial service commissions Others

Interest Royalties Dividends

Revenue Recognition Recognition Completion of service On effective commencement of renewal dates of t e related policies ! en e"uipment is installed and accepted #y t e customers Driven #y&&$ (a) 'ature of service (#) Incidence of costs related to service ( ! en t e payment of t e service will #e received )ime proportion #asis$ ta*ing into account&&$ (a) Amount outstanding (#) Rate applica#le Accrual #asis$ in accordance wit terms of agreement ! en owner%s rig t to receive payment is esta#lis ed

Sales 2ost of goods sold Beginning inventory (roduction 3ess4 5nding inventory 2ost of goods sold Gross margin 0ther e.penses 7et ,ncome

GR !! "" #AR$ %ncome &tatements Recognition Methods Sales Collection Production !522,000 !-12,-00 !11-,100 0 10',' 0 15, %0 %2, -0 -2%,110 18 ,000 !2-1,110 0 10',' 0 25,150 82,080 80, 20 18 ,000 !1%', 20 0 10',' 0 0 10',' 0 501, '0 18 ,000 ! 2 , '0

2ash ?ccounts receivable ,nventory 3and Buildings and machinery 6net; (otal assets

GR !! "" #AR$ 'alance &heet Recognition Methods Sales Collection Production ! 0,%00 ! 0,%00 ! 0,%00 5%,100 0 151'00 15, %0 25,150 0 '5,000 '5,000 '5,000 112,500 112,500 112,500 5)3,3)0 5**,050 +,0,100 ,000 -5',500 !2-1,110 '0-,110 $,3,,1+0 !1- ,''0 ,000 -5',500 !1%', 20 15-,820 $+8,,810 !1- ,''0 ,000 -5',500 ! 2 , '0 '80,8'0 $813,8,0 !1- ,''0

3iabilities 6current; 0+ners@ eAuity 2ommon stocB and ?(,2 Cetained earnings *otal o+ners@ eAuity (otal liabilities and o-ners. e/uit0

Prices ?verage price per bushel agreed to be paid by elevator operator (rice per bushel at the time of +heat harvest 2losing price per bushel /ec 1, 2005 Accounts receivable *o be received4 proceeds for 20,000 bushels frome elevators ?verage sales price of receivable bushels 7o uncollected proceeds on /ec 1, 2002ash 2hecBing account balance &oney marBet account balance "and 0riginal cost of land 2ost appraised for estate ta. purposes 'uildin3 and machiner0 0riginal cost of building and machinery ?ccumulated depreciation 5Aipment appariased at net booB value 2urrent "iabilities 7otes payable = ?ccounts payable 4-ner5s e/uit0 2ommon stocB>s par value ?dditional paid)in capital 7o record of retained earnings

!2"%0 !2"80 ! "0'

!2"%8

!','00 !2 ,200 ! 0,%00 ! '5,000 !1,050 -12,500 ! 00,000

,000

!',500 !-50,000