 Welcome to this Farm Accounting 101 presentation on Sample Accounting Entry Number 6 – Purchasing Farm Supplies with a Farm Credit Card. I'm Robert Page, Regional Extension Agent and member of the Farm and Agribusiness Management Team with the Alabama Cooperative Extension System at Auburn University. As we have said in earlier presentations, the Farm Accounting 101 series is intended to help Alabama producers to improve their farm financial literacy. Farmers, like any other small business, have the same basic financial transactions every year, so we study typical checks and deposits. We also learn the accounting principles behind these checks and deposits. However, today we will be doing something different. So far we have shown examples using farm cash, such as checks or debit card transactions for purchases. Today we enter a credit card transaction for farm supplies. In this particular transaction, let's first be clear by saying that a designated farm credit card should be used for farm operational expenses. It is a better way to have personal expenses that they should be charged on a separate personal use card, not the farm charge card. In this example, the farmer has purchased cattle feed for $227.80 and paid with a farm credit card. Before we show this transaction on the Excel spreadsheet, you should understand some of the limitations of the Excel spreadsheet. It does not track or calculate the credit card account balance going up or down. This spreadsheet was simply built to record farm purchases on the expense sheet. Now let's change our view to the Excel spreadsheet. So here we are looking at our spreadsheet again, and this one is our first transaction for the month of March. In column B, we enter the fact that this transaction was a credit card transaction. We also record the fact that it was made to Valley Farm Supply and the purchase was cattle feed. The dollar amount of the purchase was $227.80. So to properly allocate this expense, we go over to the column for feed, which is under column K on our Excel spreadsheet under line 16 for feed. And though we have $227.80 on both column K and in column D, so we are in balance. Now the question is, does this $227.80 impact our profit and loss summary on page 3? Yes it does. So we click on the third sheet and there is our $227.80 listed under feed in our profit and loss summary. Now let's switch back to our PowerPoint presentation. If you would like to download this Schedule F farm income and expense spreadsheet for your own use, please visit the ACES website at www.aces.edu and select the topic tab entitled Farming and then Farm Management to find the article entitled Using an Excel spreadsheet for farm financial records. There is a link to this spreadsheet embedded in that article. Now let's take a look at the accounting entry for this particular transaction. This one is a simple transaction. Line 1 feed a farm operational expense increased by $227.80 with a debit entry. Line 2 is farm credit card payable, which is a current liability and also increased for $227.80. The debits and credits are in balance for $227.80. However, be aware due to the limitations of the Excel spreadsheet we are using, we are unable to record that the farm credit card payable balance has increased by $227.80. The Excel spreadsheet is not a double entry accounting system. It simply lists farm and non-farm transactions to calculate a basic profit and loss, which we just reviewed on sheet 3 in our sample farm spreadsheet. We close by saying thank you for watching today's farm accounting 101 presentation on sample accounting entry number 6, purchasing farm supplies with a farm credit card as posted on the Excel spreadsheet. This segment of the farm accounting 101 series has been produced by the Alabama Cooperative Extension System, farm and agribusiness management team at Auburn University in Auburn, Alabama. For additional information on the farm and agribusiness management team and other ACES programs, please visit our website at www.aces.edu.