Study Guide for Advanced Accounting Entries
1
VI. Livestock
Proper entry for livestock transactions requires taking into consideration whether the
livestock is purchased or raised. Purchased livestock pertains to market livestock that is
bought for resale purposes or breeding stock purchased with the intent of production over
a period of years. Cost is associated with purchased livestock, but it depends on whether
the cost is expensed over a period of years or expensed when the animals are sold.
Consider the following examples:
Livestock purchase example:
a. A producer purchases 100 head of feeders for his feedlot costing $425 head.
Account Name/Number Account type Increase Decrease Debit Credit
Livestock Cost Asset 42,500 42,500
Operating Loan Liability 42,500 42,500
Total Debits and Credits 42,500 42,500
Explanation: Market livestock that will be sold within a given year and shortly
thereafter are expensed when the animals are sold. The current assets of this producer
increase by the purchase cost of the feeders. They will remain as an asset until they are
sold. His liability went up because his loan balance increases.
