Fishy Farm
Fishy Farm is a small business located in the mountains of southwestern Virginia. The business is actually a commercial fish hatchery dedicated to raising the finest freshwater sport fish in the area including trout, bass and perch. The area has an abundance of fresh water clear mountain streams, which provide the natural resource for fish breading and raising.
JB Nathan is the founder and owner of Fishy Farm. An avid fisherman himself, JB has always had an interest in this type of business. He was able to purchase land and convert it into a fish hatchery by building breeding and holding fish tanks near several mountain streams which flowed through his property. Formally, JB worked for a state fish hatchery about 50 miles to the north in Possum Creek, and used this hands on experience to start his own business.
JB hired an independent accountant to keep his records for the last few years, but felt, just like raising fish, he could learn how to do the bookkeeping activities on his own. Before taking on this additional duty, he wanted to practice recording several accounting activities related to the company and determine if he could develop the appropriate financial statements. He decided to begin with the balance sheet that was prepared for him as of the close of business on December 31, 20×0. He was going to review all of the activities which took place during the month of January 20×1 and see if he could develop a correct income statement for the month and a new balance sheet as of January 31, 20×1. This was probably a good month to experiment with the accounting process, because business was slow during the colder winter months. He wanted to be sure he was comfortable with the accounting process before things began to get real busy with fish breeding in the spring.
During January he purchased a new water filtration system which will clean and aerate the water in the holding tanks and make it suitable for recycling. The fresher water…