The Forest Landowners Guide to the Federal Income Tax

Figure 15-1 - Evergreen Tree Farm Journal

Date Accounts and Explanation Ref. Debits Credits
06/01/06 Temporary Capital Account 1 2,500
Cash 2,500
E.Z. Cruiser, Consultant for forest land appraisal report
06/01/06 Temporary Capital Account 2 275,000
Cash 75,000
Mortgage Payable 200,000
Purchase Evergreen tree farm
06/15/06 Temporary capital account 3 4,000
Cash 4,000
L. Lawyer, attorney for title search, filing, and closing
06/21/06 Evergreen tract (Figure 15-2) 5 59,537
Merchantable sawtimber (Figures 15-3 and 15-6) 6a 161,834
Merchantable pulpwood (not shown) 7 24,407
Young growth (Figure 15-4) 8 22,323
Equipment-Bridge (Figure 15-5) 9 13,399
Temporary capital account 4 281,500
Allocation of tree farm purchase to permanent capital accounts
12/31/06 Depreciation expense 10 521
Accumulated depreciation 521
First year depreciation of bridge
12/31/06 Interest expense 11 9,285
Mortgage payable 2,425
Cash 11,710
Interest expense and mortgage
Principal reduction for 2006 (see Interest Expense and Mortgage Payable Accounts, Table 15-1)
01/15/07 Operating expense 12 421
Cash 421
Forest Suppliers for purchase of axes, posted signs, flagging
06/01/06 Bridge maintenance 13 582
Truck maintenance 217
Road maintenance 897
Cash 1,696
Forestry expenses for servicing truck, grading, pulling ditches, and repairing bridge
12/31/06 Property tax expense 14 820
Cash 820
Treasurer, Local County
02/15/08 Expenses of sale (Table 15-1) 15 10,950
Cash 10,950
E.Z. Cruiser, consultant for sale preparation (also see Table 15-2)
04/10/08 Cash 16 21,900
Timber sale revenue 21,900
Deposit (10 percent) on timber sale from Sawyer Lumber Co.
05/07/08 Cash 17 197,100
Timber sale revenue 197,900
Balance of sale revenue from Sawyer Lumber Co. (also see Table 15-1)
12/31/08 Cost of timber sold* 18a 97,100
Merchantable sawtimber subaccount (value) 97,100
Allowable as basis of sale
Merchantable sawtimber subaccount (also see chapter 5)
06/15/08 Reforestation expense account (not shown) 19 12,500
Cash 12,500
B. Dozer, contractor for site preparation on 60 acres of cutover land, QTP#1
08/26/09 Bridge maintenance 20 352
Road maintenance 578
Cash 930
M. Truck, contractor for road grading, bridge repair
09/01/09 Cash 21 5,000
Reforestation account (not shown) 5,000
Receipt of cost-sharing payments for site preparation (also see Table 15-2)
02/10/10 Reforestation account (not shown) 22 3,600
Cash 3,600
E.Z. Cruiser, contractor for planting pine on QTP#1 (Table 15-4)
08/06/11 Timber stand improvement 23 1,800
Cash 1,800
Tom Cleary, contractor for timber stand improvement in 60-acre natural pine stand
09/01/11 Temporary capital account 24 384,900
Cash 384,900
Mountain Realty Co., acquire Lonesome Pine - 120 acres total
09/02/11 Temporary capital account 25 6,400
Cash 6,400
Mountain Realty Co., appraisal, title search, and legal fees to acquire Lonesome Pine tract
09/15/11 Total cost of property (6,400 + 384,300) 26 391,300
Land 27 60,998
Merchantable sawtimber (Figures 15-3 and 15-5) 28a 314,036
Young growth 29 16,256
Allocation of Lonesome Pine purchases to permanent capital accounts
09/31/11 Pulpwood timber subaccount (not shown) 30 22,323
Young growth 22,323
Young growth transferred to pulpwood timber subaccount (value not shown)
11/01/11 Travel expense 31 276
Cash 276
Routine inspection of boundaries, roads, and fire lines from travel diary (not shown)
12/31/11 Property tax expense 32 1,280
Cash 1,280
To Local County Treasurer for property tax expenses
12/31/11 Interest expense 33 13,992
Mortgage payable 6,092
Cash 20,084
Interest expense and mortgage principal reduction for 2006
12/31/11 Temporary capital account 34 15,548
Travel expense 276
Property tax expense 1,280
Interest expense 13,992
Election to capitalize carrying charges for 2006
12/31/11 Temporary capital account 35 15,584
Merchantable sawtimber subaccount 14,041
Pulpwood subaccount (not shown) 905
Young growth subaccount 602
Allocation of carrying charges to timber accounts
12/31/11 Cash 36 1,200
Hunting lease 1,200
Receipt of hunting lease payment from Laid Back Hunt Club

* Volume removed in sale of 438 thousand board feet (MBF) is adjusted in Merchantable Sawtimber Subaccount (fig. 15.3).