 Welcome to this Farm Accounting 101 presentation on Sample Accounting Entry Number 5, using the Farm Checking Debit Card to pay for Sunday lunch with the family. 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've 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. Today's presentation shows a typical farm transaction of using farm funds for non-farm family living expenses. Let's review Sample Accounting Entry Number 5, using the Farm Checking Debit Card to pay for a family lunch. Let's first understand that not all expenses posted in the Farm Checking Account have anything to do with farming. Many farmers use their Farm Checking Account for both farming and non-farming reasons. In this example, the farmer used the Farm Debit Card to pay for the family's Sunday lunch. Sunday lunch at Bud's Catfish and Barbecue with the family is not a farm operational expense. It is a personal expense not related to farming. So if we look at a farm income statement, it has four sections. One is farm income, which is operational income. One is farm expense, which is farm operational expense. And then you have non-farm income, such as non-farm income, such as off-farm wages. And lastly, you have non-farm expense, which is non-operational expense, such as family living and other non-farm expenses posted in the Farm Checking Account. Now let's switch over to the Excel screen. In this example, the transaction was dated February the 27th, 2019, and in column B we note the fact that it is a debit card transaction. Then we noted it is made out to Bud's Catfish and Barbecue, and the reason for the transaction is family lunch. We have $42.40 worth of expenses that came out of the checking account, but the question is where to allocate this $42.40 if it is a non-farm expense? And the answer is we go all the way over to the right-hand column of our spreadsheet and we enter it into column AB under Other Cash Uses. Are we in balance? Yes, we are. We go to the profit summary or the third sheet on the Excel spreadsheet, and this $42.00 is included in the increasing total for other cash uses. It does not appear anywhere here under the profit and loss totals. Now let's switch back to the PowerPoint presentation. If you've not used this Farm Excel spreadsheet before, understand that it is available for producers to download. To find the spreadsheet, visit the ACES website at www.aces.edu and find 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 the article. Now let's briefly look at the accounting entry for this debit card transaction that we entered into Excel. This is a simple entry. Line 1 is our new expense account that we've not used before called Family Living, and rather than being a farm expense account in column 2 under the type of account, it's listed as an other expense, recognizing that it is a non-farm expense. It's an expense, so it is debited for $42.40. The offsetting entry is to Cash and Bank Farm Checking, which is a current asset. In this example, the $42.40 is credited, decreasing current assets, and the total debits and credits are balanced at $42.40. We close by saying thank you for watching today's Farm Accounting 101 presentation on sample accounting entry No. 5 using the Farm Checking Debit Card to pay for Sunday lunch with the family using an 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.