I need help with this assignment/project. i have parts of it done but the parts i dont have im stuck on

ACCT 201-02F Class Project - Spring 2015 Chapter 1 Accounting in Action: CM Corporation (CMC) CM Corporation (CMC) was founded in 2000 by Eric Conner and Phil Martin. The company designs, installs, and services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. In January 2012, CMC hired you as an accounting intern. Lately Conner and Martin have been working with \"radio frequency identification\" (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory applications in multiple industries. One of the most basic applications is tracking manufacturing components; if tagged components "go walking" (if employees attempt to take them), companies can easily track and find them. Conner and Martin have sold their system to several high-tech companies in the area. These companies have a number of government contracts that require extensive security systems to protect sensitive data from infiltration by terrorists and others. To date, CMC's cash flow from sales and services has adequately funded its operations. CMC anticipates growth potential for its products. As a result, it is planning to go to the market with a new common stock issue at the end of 2013. Many of the issues you will address in this continuing problem involve choices that are affected by preparing for this anticipated stock issue. Instructions 1 ACCT 201-02F Class Project - Spring 2015 Conner and Martin have asked you to explain to them the importance of SEC regulations and FASB standards to a non-public company like CMC. Using worksheet one titled \"CH_1 Responses\" in the template provided by your instructor, prepare brief but meaningful responses to the following questions. (a) As a non-public company, with no securities traded on a stock exchange, is CMC subject to SEC regulations? Explain. (b) Since CMC's stock is privately held and not traded on any stock exchange, must a CPA audit the company's books? Must these audited statements be prepared in accordance with GAAP? Support your answer. 2 ACCT 201-02F Class Project - Spring 2015 Chapter 2 Accounting in Action: CM Corporation (CMC) As indicated in Chapter 1, CMC intends to issue stock to the public. Potential investors will be concerned about the company's operating results, cash flows, and financial position. Conner and Martin have heard words such as \"relevant,\" \"faithful representation,\" \"comparability,\" and \"consistency\" used in discussions about financial statements. They have no clue as to what these words mean. They ask you to explain. Instructions Using worksheet two titled \"Ch2_Responses\" in the template provided by your instructor, prepare brief but meaningful responses to Conner and Martin describing the elements of the FASB conceptual framework. Specifically address the following: (a) What is the basic objective of financial reporting? How do general purpose financial statements help achieve this objective? (b) Exactly what do \"relevant\" and \"faithful representation\" mean when applied to financial statements? If they are both important, can information always have both of these characteristics? Why or why not? (c) What other characteristics of financial accounting information might contribute to its usefulness? 3 ACCT 201-02F Class Project - Spring 2015 Chapter 3 Accounting in Action: CM Corporation (CMC) In anticipation of growing demand for their products and services, Conner and Martin hired two new directors, Suzanne Lopez and Allison Knepp, giving them stock in the company as part of their hiring bonus. The founders, Conner and Martin, along with the two new directors, will be the management \"team.\" Conner and Martin consider themselves "upper management" and the two new directors "middle management." Conner and Martin have little accounting or business training so they are relying on Lopez and Knepp, both of whom have MBAs, to provide the business background. With the additions to the management team, CMC changed the company name to CM2. Given the lack of any trained accountant on board, an accounting intern can be of great value to CM2. To familiarize you with the company's operations, Conner and Martin have provided an unadjusted trial balance from the end of last year (2012) on an Excel spreadsheet. When you look at it, you find that the accounts are not in any particular order, which surprises you. Instructions (a) Using worksheet three titled \"CH3_trialbal12\" in the template provided by your instructor, prepare a trial balance in good form. Once you have completed the unadjusted trial balance with the accounts in proper order, you should proceed to item (b). (b) This file also contains an accounting \"system\" comprised of a series of linked spreadsheets. The linkages enable the effects of all accounting entries (journal, 4 ACCT 201-02F Class Project - Spring 2015 adjusting, and closing) to flow through to spreadsheets for the income statement, balance sheet, and statement of cash flows (the final four worksheets with grey tabs). You notice that for the fiscal year ended December 31, 2012, someone has made all the journal entries but none of the adjusting or closing entries. The following information is provided for adjustments prior to closing the books. Lopez and Knepp ask you to enter the adjustments into the spreadsheet, in the two columns to the right of the unadjusted trial balance. (CM2 uses a perpetual inventory system.) 1. Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710. 2. On July 1, a client paid CM2 $205,720 in advance for a year of consulting services. 3. You discover that a product sale was made and recorded in December for $128,600; the product had not yet been shipped. The cost of the product was $68,742. 4. Bad debt expense has been calculated to be $17,508 but has not yet been recorded. 5. The Prepaid Expense account has a balance of $22,774. This balance includes $11,200 for a two-year insurance policy purchased on January 1, 2012. 6. Depreciation expense for the year is $82,620. 7. Interest expense accrued on its long-term liabilities is $7,765. 5 ACCT 201-02F Class Project - Spring 2015 8. On December 15, CM2 declared a dividend of $110,000, to be paid on January 15, 2013. 9. (c) Income tax expense is $201,109. After making the adjusting entries in (b), make the appropriate closing entries on the spreadsheet provided. (d) Using the fourth worksheet titled Ch3_Responses in the template provided by your instructor, prepare a memo to management explaining the importance of the adjusting entries made in part (b). As part of this discussion, explain how accrual accounting improves the usefulness of the company's financial statements. Additional Activity: Extend your accounting knowledge You know that CM2 is going to the market with a stock offering at the end of 2013. You have heard that investors look at certain relationships (or ratios) on the financial statements to understand the financial health of a company in which they plan to invest. You decide to examine several of these ratios to get a feel for how this company is doing. You know the following: (1) The relationship of current assets to current liabilities is important to assess the liquidity of the company and its ability to pay its current bills. (2) The total debt to total assets relationship describes where the money came from to acquire the assets. (3) The net income to sales relationship tells how much of each sales dollar ends up as profit. Instructions 6 ACCT 201-02F Class Project - Spring 2015 Using the fifth worksheet titled \"Ch3_Ratios\" in the template provided by your instructor, calculate these three relationships for CM2 for 2012 and the prior year, and write a short assessment of CM2's financial position and performance. 7 ACCT 201 Continuing Case Project File Chapter 1 Ch 1a As a non-public company, with no securities traded on a stock exchange, is CMC subject t SEC regulations? Explain. As a non-public company, CMC is not subject to SEC regulations. The SEC has jurisdiction only over public companies whose stock is traded on the U.S. national exchange. Ch 1b Since CMC's stock is privately held and not traded on any stock exchange, must a CPA au the company's books? Must these audited statements be prepared in accordance with GAAP? Support your answer. An audit is a valuable service. But non-public companies are not required to prepare their financia in accordance with GAAP but financial statements prepared in accordance with GAAP provide external users the ability to more confidently interpret and compare the financial position of company. exchange, is CMC subject to he SEC has jurisdiction only xchange. k exchange, must a CPA audit red in accordance with uired to prepare their financials dance with GAAP provide he financial position of ACCT 201 Continuing Case Project File Chapter 2 Ch 2a What is the basic objective of financial reporting? How do general purpose financial statements help achieve this objective? the basis of fianacial reporting is to provide financial information that is useful to the reporting entitys therer and potential investors, lendors, and other creditors in making decisions about providing resources to the entity. General purpose financial statements provide financial info to users who cannot demand such information from the entity. these users rely on the informatio financial statements when making decisions about aollocating resources. Ch 2b Exactly what do "relevant" and "faithful representation" mean when applied to financial statements? If they are both important, can information always have both of these characteristics? Why or why not? Faithful representation is the concept that financial statements be produced that accurately re the condition of a business. It should extend to all parts of the financial statement, including th results of operations, financial position, and cash flows of the reporting entity. information shou relevant to the decision making needs of the user. information is relevant if rit helps users of th financial statements in predicting future trends of the business. Ch 2c What other characteristics of financial accounting information might contribute to its usefulness? Reliability shows that information is verifiable, faithful, and netral. Timeliness is also an importa component of relevane. The need for timely information requires that companies provide information to external users on a periodic basis. ral purpose financial is useful to the reporting making decisions about nts provide financial info to ers rely on the information in rces. when applied to financial have both of these oduced that accurately reflect ial statement, including the ng entity. information should be vant if rit helps users of the might contribute to its meliness is also an important t companies provide ACCT 201 Continuing Case Project File Chapter 3 Exercise: General Ledger Account Name Balance Sheet Accounts Cash and cash equivalents --------------------------------------- 3a --------------------------------------Incorrect Correct Unadj. Balance 12/31/12 Unadj. Balance 12/31/12 Debit Credit Debit Credit 72,337 72,337 Accounts Receivable Allowance for doubtful accounts Inventory 910,680 ----------------------------------------------------------3b/3c ----------------------------------------------------------12/31/12 Adjusting J/Es Debit JE# Credit 910,680 84,962 Adjusted Balance 12/31/12 Debit Credit 72,337 12/31/12 Closing J/Es Debit JE# Credit 72,337 910,680 84,962 17,508 910,680.00 Post-Closing T/B 12/31/12 Debit Credit 144,674 1,821,360 102,470 102,470 204,940 1,272,160 1,272,160 (68,742) 1,203,418 1,272,160 2,475,578 Prepaid expenses 22,774 22,774 (5,600) 17,174 22,774 39,948 Other Current Assets 16,063 16,063 16,063 16,063 32,126 Building 874,418 874,418 874,418 874,418 1,748,836 Equipment and furniture 336,983 336,983 336,983 336,983 673,966 Land 348,791 348,791 348,791 348,791 Accum Depr 656,465 Investments 140,186 140,186 140,186 140,186 280,372 Goodwill 397,740 397,740 397,740 397,740 795,480 Other intangible assets 253,900 253,900 253,900 253,900 Accounts Payable 1,169,343 Dividends payable Interest payable Unearned revenue Wages payable 1,478,170 507,800 1,169,343 1,169,343 2,338,686 220,000 110,000 110,000 5,100 5,100 7,765 12,865 12,865 25,730 205,720 102,860 308,580 102,860 411,440 81,350 31,165 112,515 112,515 225,030 8,850 2,710 11,560 11,560 23,120 0 201,109 201,109 201,109 402,218 588,500 588,500 588,500 1,177,000 920,000 920,000 920,000 1,840,000 105,000 105,000 105,000 0 588,500 Common Stock 920,000 Paid-in capital common stock 105,000 400,000 ### 400,000 539,069 400,000 539,069 Dividends (110,000) 0 (13,727,067) 6,333,192 739,085 110,000 8,850 Net Income (Loss) 697,582 739,085 0 81,350 Retained Earnings 82,620 0 Long term liabilities Treasury Stock 656,465 1,169,343 205,720 Payroll taxes payable Income tax payable ### (10,649,868) 681,673 5,046,032 5,046,032 400,000 429,069 0 (314,359) 10,066,133 110,000 210,000 800,000 1,2 3 3 10,439,621 110,000 692,557 (110,000) 0 4,971,690 4,810,096 (373,488) 9,907,722 8,875,403 802,557 Check figures 5,036,032 5,090,574 4,980,574 Income Statement Accounts Gross product sales revenue 9,293,346 0 9,164,746 1 Service revenue 1,158,785 0 1,261,645 1 Product sales returns 162,400 Product sales discounts Product cost of goods sold (9,164,746) (1,261,645) 0 2 162,400 (162,400) 269,662 0 2 269,662 (269,662) 5,384,590 0 2 5,315,848 (5,315,848) . Service cost of goods sold 570,811 0 2 570,811 (570,811) Advertising 163,870 0 2 163,870 (163,870) 0 0 2 17,508 (17,508) 64,500 0 2 147,120 (147,120) Bad debt expense Depreciation and amortization Dues and subscriptions 0 2 21,470 (21,470) 150,781 0 2 150,781 (150,781) Gain/loss on disposal 0 0 Income tax expense 0 0 2 201,109 (201,109) Insurance 80,144 0 2 85,744.00 (85,744) Interest expense 45,200 0 2 52,965 (52,965) 106,650 (106,650) Equipment expense 21,470 Investment income Legal and accounting fees Miscellaneous Office expense 13,230 0 0 13,230 1 (13,230) 106,650 0 2 9,048 0 2 9,048 (9,048) 220,114 0 2 220,114 (220,114) Payroll taxes 0 2 139,685 (139,685) 104,570 0 2 104,570 (104,570) 42,028 0 2 42,028 (42,028) 470,680 0 2 470,680 (470,680) Telephone 20,085 0 2 20,085 (20,085) Travel and entertainment 38,391 0 2 38,391 (38,391) Utilities 47,049 0 2 47,049 (47,049) Wages 964,670 0 2 998,545 (998,545) 2 710,000 (710,000) 24,791,061 (10,066,133) Property taxes Repair and maintenance Research and development 136,975 Wages - Officers 710,000 Net (Income) Loss 3,260,991 Check figures 0 (13,727,067) 3,260,991 0 0 0 0 (74,342) 761,389 131,378 0 0 373,488 25,661,786 0 (10,066,133) ACCT 201 Continuing Case Project File Chapter 3 Ch 3d Prepare a memo to mangement explaining the importance of the adjusting entries ma part (b). As part of this discussion, explain how accrual accounting improves the usef of the company's financial statements. Without passing the adjusting entries, a company cannot ascertain the true income as well correct balances of various accounts which form the balance sheet of the company. The err in posting, commission, the logical errors, and prior period adjustments and ommission of r the journal of the transactions are all adjusted at the end of the year by passing the adju entries. e adjusting entries made in ting improves the usefulness the true income as well as the of the company. The errors are ents and ommission of recordig ear by passing the adjusting ACCT 201 Continuing Case Project File Chapter 3 (1) Current ratio: 2011 2012 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Current assets Current liabilities Ratio (2) Debt to assets ratio: Total debt Total assets Ratio (3) Profit margin ratio: Net income Sales Ratio Brief analysis: Brief analysis: CM Corporation Balance Sheet December 31, 2012 Assets Current assets Cash and cash equivalents Accounts receivable Allowance for doubtful accounts Inventory Prepaid expenses Other current assets Total current assets Property, plant and equipment Accumulated depreciation Net fixed assets Other Assets Investments Goodwill Other intangible assets December 31, 2011 % $72,337 910,680 (102,470) 1,203,418 17,174 16,063 $120,670 576,454 (84,975) 847,460 18,841 4,612 2,117,202 0.57 1,560,192 (739,085) 1,483,062 0.65 508,140 0.22 1,100,105 (591,965) 821,107 0.22 140,186 397,740 253,900 Total assets % 100,150 87,740 108,700 791,826 0.21 296,590 0.13 $3,730,135 1.00 $2,287,792 1.00 0.52 845,198 0.37 0.16 278,525 0.12 Liabilities and Stockholders' Equity Current liabilities Accounts payable $1,169,343 Dividends payable 110,000 Unearned revenue 308,580 Interest payable 12,865 * Wages payable 112,515 * Payroll taxes payable 11,560 * Income taxes payable 201,109 * Total current liabilities 1,925,972 *these accounts could be combined as one line called accrued liabilities Long-term liabilities 588,500 $315,395 48,000 73,500 6,500 112,920 9,033 279,850 Stockholders' equity Contributed capital Common stock, $2 par value (4,000,000 shares authorized),460,000 shares issued of which 440,000 shares are outstanding 920,000 Paid-in capital common stock 105,000 Total contributed capital 1,025,000 Accumulated other comprehensive income Retained earnings Less common stock in treasury, at cost Total stockholders' equity 920,000 105,000 1,025,000 0 539,069 0 539,069 (400,000) Total liabilities and stockholders' equity (400,000) 1,164,069 0.31 1,164,069 0.51 $3,678,541 0.99 $2,287,792 1.00 CM Corporation Income Statement For the Years Ended December 31, 2012 Revenue Net product sales revenue Service revenue Total revenue Cost of goods sold Products Services Total cost of goods sold Gross profit Operating expenses Advertising Bad debt expense Depreciation and amortization Dues and subscriptions Equipment expenses Insurance Legal and accounting fees Miscellaneous Office expense Payroll taxes Property taxes Repair and maintenance Research and development Telephone Travel and entertainment Utilities Wages - Employees Wages - Officers Total operating expenses $0 0 Income (loss) before income taxes Income tax (expense) benefit Net income (loss) December 31, 2011 % $8,984,852 975,860 $0 0 0 $9,960,712 5,356,018 445,637 0 0 #DIV/0! 5,801,655 4,159,057 0.42 0 #DIV/0! 3,030,626 0.30 0 #DIV/0! 1,128,431 0.11 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Income (loss) from operations Other income and (expense) Interest expense Gain (loss) on disposal of assets Investment income Total other income (expense) % 123,869 28,640 125,500 19,730 64,781 90,144 87,650 12,010 214,138 131,170 93,400 37,543 278,000 21,085 60,402 37,876 954,688 650,000 0 0 0 (27,800) (26,950) 9,230 0 (45,520) 0 0 1,082,911 (379,019) $0 #DIV/0! $703,892 0.07 CM Corporation Statement of Retained Earnings For the Years Ended December 31, 2012 Beginning balance December 31, 2011 $539,069 ($116,823) Net income (loss) 0 703,892 Dividends 0 (48,000) $539,069 $539,069 Ending balance CM Corporation Statement of Cash Flows ( Indirect Method ) For the Years Ended December 31, 2012 Cash flows from operating activities Net income (loss) Adjustments to reconcile net income to Net cash provided from operating activities Depreciation and amortization Net (gain) loss on assets (Increase) decrease in accounts receivable Increase (decrease) in allowance for doubtful accounts (Increase) decrease in inventory (Increase) decrease in prepaid expenses (Increase) decrease in other current assets Increase (decrease) in accounts payable Increase (decrease) in unearned revenue Increase (decrease) in interest payable Increase (decrease) in wages and payroll taxes payable Increase (decrease) in income taxes payable December 31, 2011 $0 $703,892 0 0 (334,226) 17,495 (355,958) 1,667 (11,451) 853,948 235,080 6,365 2,122 (78,741) 125,500 26,950 (188,643) (7,564) (125,360) (14,650) 4,612 263,400 46,820 3,456 (5,478) (278,950) Total adjustments 336,301 (149,907) Net cash (used) provided by operating activities 336,301 553,985 Cash flows from investing activities (Purchase) of fixed assets (Purchase) of intangibles (Purchase) of investments Net cash (used) provided by investing activities (460,087) (455,200) (40,036) (955,323) (274,300) 0 (12,650) (286,950) Cash flows from financing activities Proceeds from long-term liabilities Dividends paid Net cash (used) provided by financing activities 309,975 (48,000) 261,975 0 (32,000) (32,000) (357,047) 235,035 120,670 (114,365) ($236,377) $120,670 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period