I want to know why my balance sheet assets and liabilities do not match?

Southern New Hampshire University ACC309 - Intermediate Accounting III MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) Instructions Milestone 1 1. Adjusting entries Prepare adjusting entries for: Unrealized loss tax issues 1. Calculate capital lease obligations 2 See rubric for written portion of milestone 1 Calculate pension payouts 3 Prepare adjusting entries for: Capital leases Pension payouts See rubric for written portion of milestone 2 FINAL PRO FINAL PROJECT (Due in Module 7) Instructions Milestone 2 1. Capital Leases Prepare adjusting entries for: Patent Pensions Major repair capitalization 2 Adjusting entries Complete adjusted trial balance 3 Prepare revised financial statements Prepare a statement of comprehensive income include on the revised income statement 4 Determine the impact of expansion options on earnings per share See rubric for written portion of the final project Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR MILESTONE 1 (Due Week 3) IMPORTANT NOTE: Make sure to completely review the Rubric for Milestone 1 Use the data from this Milestone and begin working on your final presentation due in Week 7 ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, prepare appropriate adjusting entries and post to the trial balance workbook (r ADJUSTING ENTRIES Prepare adjusting entries for unrealized loss Prepare adjusting entries for tax issues MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 1 A. Identify sources of other comprehensive income not included in net income. B. Explain rationale for the inclusion as comprehensive income (as opposed to net income) of nondisclosure within note C. Evaluate impacts of company goals and finances for their implications on stockholder equity, using financial informati D. Evaluate impacts of company goals and finances for their implications on retained earnings per share, using financial E. Explain the impact of issuing preferred stock or debt for determining changes to equity structures. F. Assess the impact of changes to current tax structure for articulating changes relevant to the company. FINANCIAL INFORMATION FOR THIS MILESTONE Comprehensive income items Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale Market value at the balance sheet date is $5,235,00 Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Tax information and implications $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary a The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes the could impact the company. Peyton Approved has been a C C beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state). Stockholder Equity Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront loc launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 o profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds HOME the trial balance workbook (red tab) e) of nondisclosure within notes. quity, using financial information to support claims. ings per share, using financial information to support claims. structures. o the company. hensive income tax. Prepare the necessary adjusting entry. or the tax return ry for the deferred tax. eyton Approved has been a C Corp since the % Federal, 5% state). y has added two storefront locations and the next 6 months. erate an additional $600,000 of after-tax as is currently outstanding) Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Land Building Baking Equipment PEYTON APPROVED TRIAL BALANCE As of December 31, 2017 Dr Cr 1,488,999.34 5,500,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 250,000.00 1,250,000.00 2,254,140.00 Accumulated Depreciation Patent Accounts Payable Wages Payable Interest Payable Current Portion of Bonds Payable Income Taxes Currently Payable Accrued Pension Liability Accrued Employees Health Insurance Lease Liability Deferred Tax Liability Bonds Payable Preferred Stock Common Stock Beginning Retained earnings Dividends - Preferred Dividends - Common Bakery Sales Merchandise Sales Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Rent Expense Wages Expense Misc. Supplies Expense Repairs and Maintenance Business License Expense 328,282.00 1,555,212.85 250,203.31 21,888.22 1,000,000.00 1,042,118.16 4,000,000.00 500,000.00 1,750,000.00 2,213,122.59 50,000.00 5,250,000.00 33,881,157.15 124,795.80 10,954,907.36 88,994.79 1,576,731.95 2,604,526.23 263,224.56 47,353.05 211,757.65 Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Pension Expense Retired Employees Health Ins. Patent Amortization 141,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 Unrealized Gain/(Loss) on Marketable Securities Held for Sale Income Taxes 4,168,472.62 46,666,780.08 Basic EPS Market value per share P/E Ratio P/B Ratio Dividend payout Ratio Debit/Equity Ratio 7.117 2.991 0.42 0.952 0.424 0.674 46,666,780.08 Adjusting entries Dr Cr 265,000.00 106,589.54 Dr 1,488,999.34 5,235,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 250,000.00 1,250,000.00 2,360,729.54 - 375.00 107,041.70 43,718.91 86,589.54 52,325.25 50,000.00 5,250,000.00 20,000.00 10,954,907.36 88,994.79 1,556,731.95 2,604,526.23 263,224.56 47,353.05 211,757.65 50,000.00 91,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 107,041.70 43,718.91 50,000.00 265,000.00 4,168,847.62 52,325.25 625,050.40 46,956,830.48 107,041.70 43,718.91 50,000.00 265,000.00 375.00 52,325.25 625,050.40 (1) (2) (3) (4) (5) Recorded the difference in marketable securtited as $265000, which is $5500000-5235000 Deferred tax expense was debited for $52,325.25 and deferred tax liability was credited for the same amount to account for the MACRS difference in depreciation. $1500 permanent difference for meals and entertainment x.25%= $375.00 Debit equipment for the 6 ovens that are a lease to own. $106589.54 Credit rent expense for $20,000 for the first payment made immediately upon signing the lease. Credit lease liability for $86,589.54 for the remaining balance due on the ovens. Pension expense was debited and pension liability was credited for $107041.70 for 60 employees that the company owes pension expenses. (6) Retired employees health insurance was debited and accured employees health expense was credited for $43,718.91 for the amount outstanding in health insurance. (7) (8) Debit Income taxes currently payable $375.00 Credit Income taxes $375.00 HOME Cr 328,282.00 1,555,212.85 250,203.31 21,888.22 1,000,000.00 1,042,493.16 107,041.70 43,718.91 86,589.54 52,325.25 4,000,000.00 500,000.00 1,750,000.00 2,213,122.59 33,881,157.15 124,795.80 = $375.00 46,956,830.48 milestone 1 milestone 1 milestone 1 milestone 2 ediately upon signing the lease. e on the ovens. milestone 2 expenses. mployees health g in health insurance. milestone 2 xes $375.00 final final Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR MILESTONE 2 (Due Week 5) IMPORTANT NOTE: Make sure to completely review the Rubric for Milestone 2 Use the data from this Milestone and begin working on your final presentation due in Week 7 ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, make calculations (green tab) and prepare appropriate adjusting entries and post t balance workbook (red tab) CAPITAL LEASES Calculate capital lease obligations Prepare appropriate adjusting entries PENSION PAYOUTS Calculate pension liability Calculate health insurance liability ADJUSTING ENTRIES Prepare adjusting entries for capital lease obligations Prepare adjusting entries for pension payouts MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 2 A. Explain the implications of capital lease based on how it relates to the company's equipment usage. B. Explain how postretirement plans will impact the company financially in the short and long term, using examples accounting workbook to support claims. FINANCIAL INFORMATION FOR THIS MILESTONE Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Manage requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of The estimated cost of retired employees' health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability Leases Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years w interest rate of 5%. At the end of the 6 years, Peyton will own them. Make any necessary adjusting entries. HOME djusting entries and post to the trial ment usage. ong term, using examples from the etired employees. Management has y has a pension liability of $107,041.70. he lease runs for 6 years with an implicit ssary adjusting entries. Capital Leases Pension payouts HOME Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR FINAL (Due Week 7) IMPORTANT NOTE: Make sure to completely review the Rubric for Final Project This page contains new information the must be included in the final project but has not been in milestone 1 or mile ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, prepare appropriate adjusting entries and post to the trial balance workbook (red adjusted trial balance and the preliminary 2017 statements (yellow tabs) to prepare revised financial statements that are a Calculate the impact on earnings per share that the expansion options will cause. (Orange tabs) ADJUSTING ENTRIES Prepare appropriate adjusting entries for patent Prepare appropriate adjusting entries for capitalization of machine repair ADJUSTED TRIAL BALANCE Prepare the adjusted trial balance REVISED FINANCIAL STATEMENTS Prepare a revised income statement - include comprehensive income Prepare a revised retained earnings statement Prepare a revised balance sheet EARNINGS PER SHARE Determine the impact on earnings per share caused by each expansion plan option NOTES TO THE FINANCIAL STATEMENTS - Prepare in a Word document - see the rubric for final project A. Compose appropriate footnotes within a statement of comprehensive income in accordance with applicable standards, such as GAAP, International Financial Reporting Standards, and SEC, as applicable. MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for final project I. Evaluate the company's current performance based on the outcomes of relevant ratio analysis. J. Discuss types of accounting changes encountered and when retrospective and prospective approaches should be K. Predict the impact of new credit policies or a change in product or markets based on relevant ratio analysis. L. Discuss relevant accounting standards for informing the company's financial reporting strategies. M. Explain how the four-step process was used for effectively correcting and reporting errors in the revision process. FINANCIAL INFORMATION FOR THIS MILESTONE Stockholder Equity / Earnings per share Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,00 profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstandi 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Other Items On December 31, 20XX, the company repaired a packaging machine at cost of $27,000.00. It is expected th extend the life of the machine by four years. No depreciation is necessary this year. The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took e 1/1/20XX and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense HOME een in milestone 1 or milestone 2 al balance workbook (red tab). Use the ncial statements that are audit ready. accordance with applicable accounting plicable. tive approaches should be used. levant ratio analysis. ors in the revision process. has added two storefront locations and the next 6 months. rate an additional $600,000 of after-tax ss as is currently outstanding) 7,000.00. It is expected that the repair will g treats. The patent took effect on charged to Misc. Expense Assets Current Assets: Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 1,488,999.34 5,500,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 Total Current Assets Long Term/Fixed Assets: Land Building Baking Equipment Accumulated Depreciation Net Fixed assets Liabilities and Owners' Equity Current Liabilities: Accounts Payable 1,555,212.85 Wages Payable 250,203.31 Interest Payable 21,888.22 Current Portion of Bonds Payable 1,000,000.00 Income taxes currently payable 1,042,118.16 16,112,105.00 Total Current Liabilities Long Term Liabilities: Bonds Payable 10%, 20 year 250,000.00 1,250,000.00 2,254,140.00 -328,282.00 3,425,858.00 19,537,963.00 4,000,000.00 Total Long Term Liabilities: 4,000,000.00 Total Liabilities: 7,869,422.54 Preferred Stock - (10,000 authorized, 5,000 issued, 10%, $100 par value) Common Stock - (2,000,000 shares authorized, 1,750,000 issued, $1 par) Retained Earnings Total Assets: 3,869,422.54 500,000.00 1,750,000.00 9,418,540.46 Total Equity 11,668,540.46 Total Liabilities & Equity 19,537,963.00 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit $ 33,881,157.15 124,795.80 34,005,952.95 10,954,907.36 88,994.79 11,043,902.15 22,962,050.80 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Repairs and Maintenance Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: Earnings before Income Tax Income Taxes Net Income 1,576,731.95 2,604,526.23 263,224.56 47,353.05 211,757.65 141,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 6,288,160.31 16,673,890.49 4,168,472.62 12,505,417.87 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/20XX Beginning Balance: plus Net Income $ 2,213,122.59 12,505,417.87 less Dividends: Preferred Common Ending Balance $ 50,000.00 5,250,000.00 9,418,540.46 $ 9,418,540.46 HOME HOME Peyton Approved Income Statement For Year Ended 12/31/20XX Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit $ 33,881,175.15 124,795.80 34,005,970.95 10,954,907.36 88,994.79 11,043,902.15 22,962,068.80 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Repairs and Maintenance Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Pension Expense Retired Employees Health Ins. Patent Amortization 1,556,731.95 2,604,526.23 263,224.56 47,353.05 211,757.65 91,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 107,041.70 43,718.91 50,000.00 Total Operating Expenses: 6,418,920.92 Operating Income 16,543,147.88 Income Taxes Deferred tax Expense Total Tax Expense 4,168,847.62 52,325.25 4,221,172.87 Net Income 12,321,975.01 Unrealized Gain/(Loss) on Marketable Securities Held for Sale Comprehensive Income $ 9,671,975.01 2,650,000.00 HOME Peyton Approved Statement of Retained Earnings For Year Ended 12/31/20XX Beginning Balance: plus Comprehensive Income less Dividends: Preferred Common Ending Balance 0 HOME $ 2,213,122.59 9,671,975.01 (50,000.00) (5,250,000.00) $ 6,585,097.60 Peyton Approved Balance Sheet As of December 31, 20XX Assets Current Assets: Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Total Current Assets 1,488,999.34 5,235,000.00 7,092,495.48 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.07 15,847,104.25 Long Term/Fixed Assets: Land Building Baking Equipment Accumulated Depreciati Net Fixed assets 250,000.00 1,250,000.00 2,360,729.54 -328,282.00 3,532,447.54 Patent Net of Amortization 50,000.00 Total Assets: Accounts Payable Wages Payable Interest Payable Current Portion of B Income taxes curren Accrued Pension Lia Accrued Employees Lease Liability Contingent Liability Deferred Tax Liabilit Bonds Payable 10% 19,429,551.79 Preferred Stock - (1 5,000 issued, 10 Common Stock - (2, authorized, 1,750 Retained Earnings roved heet r 31, 20XX HOME Liabilities and Owners' Equity Current Liabilities: Accounts Payable 1,555,212.85 Wages Payable 250,203.31 Interest Payable 21,888.22 Current Portion of Bonds Payable 1,000,000.00 Income taxes currently payable 1,042,118.16 Accrued Pension Liability 107,041.70 Accrued Employees Health Insurance 43,718.91 Lease Liability 86,589.40 Contingent Liability - Lawsuit 0.00 Deferred Tax Liability 52,325.25 Total Current Liabilities Long Term Liabilities: Bonds Payable 10%, 20 year 4,159,097.80 4,000,000.00 Total Long Term Liabilities: 4,000,000.00 Total Liabilities: 8,159,097.80 Preferred Stock - (10,000 authorized, 500,000.00 5,000 issued, 10%, $100 par value) Common Stock - (2,000,000 shares 1,750,000.00 authorized, 1,750,000 issued, $1 par) Retained Earnings 12,749,079.47 Total Equity 14,999,079.47 Total Liabilities & Equity 23,158,177.27 HOME Peyton Approved Earnings per Share For Year Ended 12/31/20XX Net Income Less: Preferred Dividends Earnings Available to Common Shareholders Common Shares Outstanding Basic EPS If all preferred shares are converted: Net Income Additional Common Shares Common Shares Outstanding after conversion EPS if preferred shares converted Preferred shares are antidilutive If all bonds are converted: Net Income Less: Preferred Dividends Add back interest on bonds, net of income tax Earnings Available to Common Shareholders Additional Common Shares Common Shares Outstanding after conversion Fully diluted EPS Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate that it will enable them to earn an additional $600,000 after tax. What would be the impact on earnings per share if the raise the $1,000,000 by: a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share can be coverted into 10 shares of Peyton common stock? b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into? 5 shares of Peyton common stock? c) $500,000 of each of the above? Net Income Less: Preferred Dividends Earnings Available to Common Shareholders Common Shares Outstanding Basic EPS a If all preferred shares are converted: Net Income Additional Common Shares Common Shares Outstanding after conversion EPS if preferred shares converted Preferred shares are antidilutive b If all bonds are converted: Net Income Less: Preferred Dividends Add back interest on bonds, net of income tax Earnings Available to Common Shareholders Additional Common Shares Common Shares Outstanding after conversion EPS if bonds converted c If convert $500,000 of each preferred stock and bonds Net Income Less: Preferred Dividends Add back interest on bonds, net of income tax Earnings Available to Common Shareholders Additional Common Shares Common Shares Outstanding after Conversions EPS if 50% of preferred stock and 50% of bonds convert HOME $ $ $ $ $ 1,505,417.87 (50,000.00) 1,455,417.87 1,750,000.00 0.83 $ $ $ $ 12,505,417.87 100,000.00 1,850,000.00 6.76 $ $ $ $ $ $ $ 12,505,417.87 (50,000.00) 56,000.00 12,511,417.87 5,000.00 1,755,000.00 7.13 for the coming year. They anticipate ax. What would be the impact on vertible preferred stock, where share $1,000 bond can be converted into? $ $ $ $ $ 12,505,417.87 (50,000.00) 12,455,417.87 1,750,000.00 7.12 $ $ $ $ 12,505,417.87 100,000.00 1,850,000.00 6.76 $ $ $ $ $ $ $ 12,505,417.87 (50,000.00) 56,000.00 12,511,417.87 5,000.00 1,755,000.00 7.13 $ $ $ $ $ $ $ 12,505,417.87 (25,000.00) 28,000.00 12,508,417.87 52,500.00 1,802,500.00 6.94 ACC 309 Final Project Scenario Peyton Approved Overview Imagine that you are working as a financial accountant for Peyton Approved, and you have been charged with revising its financial information. The company has experienced tremendous growth in the past three years, and it is now a well-known bakery chain for pet products. They have become a publicly traded company and have several locations that they deliver to regionally. You will find the company's financial information in the Peyton Approved Balance Sheet and Income Statement. This document will need revisions and appropriate notes added in order to prepare for the year-end audit accordingly. In addition to ensuring that the balance sheet is ready for the year-end audit, you will address other major areas of need, including: Assessing tax implications Evaluating and explaining stockholder equity Accounting for postretirement benefits (The amounts would be determined by actuaries.) Assessing impacts of leases Peyton Approved Financial Information Comprehensive income items Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale Market value at the balance sheet date is $5,235,000 Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Tax information and implications $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary adjusting entry. The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes that could impact the company. Peyton Approved has been a C Corp since the beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state). Stockholder Equity Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront locations and launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Determine the impact on earnings per share for each option. Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees' health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability Leases Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years with an implicit interest rate of 5%. At the end of the 6 years, Peyton will own them. Make any necessary adjusting entries. Other Items On December 31, 20XX, the company repaired a packaging machine at cost of $27,000.00. It is expected that the repair will extend the life of the machine by four years. No depreciation is necessary this year. The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took effect on 1/1/20XX and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense Make any necessary adjusting entries