Organizations use debt and equity to be able to fund their operations and purchase necessary property, plant, and equipment for the business. As an organization grows it will become essential for it to gain more capital either from financing or equity arrangements. Professional accountants may encounter varying degrees of debt depending on the companies they work for. Regardless of how much debt a company has, it is important to be able to manage long-term liabilities and equity to avoid insolvency.

As with any financial records, accuracy is key. It is imperative to keep accurate and complete records. You now have the opportunity to correct any errors from the previous Project One Milestone Journal Entries and Ledger Accounts tabs in the Corrected Journal Entries and Corrected Ledger Accounts tabs.

Scenario

You are a professional accountant who is working with an established office supply manufacturer, Sharper! Enterprises Inc., to prepare their financial statements for the current fiscal year. You have been given the accounts and information you need to prepare their financial statements. For this, you will need to use your understanding of the balance sheet accounts for long-term liabilities and equity to report accurate information to the finance department.

For a large company, they would more than likely use a software program to manage their finances. For purposes of this assignment, the information has been provided in Microsoft Excel.

Directions

Using the scenario provided, complete the following in the same Project One Workbook Template you used for Project One Milestone. Use the Chart of Accounts tab in the workbook for account names.

Note: You may choose to complete an assignment using a desktop program instead of SNHU's virtual desktop (VDI); however, technical support will not be provided by SNHU if you select this option.

Project One Workbook

1. Correct all milestone journal entries and milestone ledger accounts from Project One Milestone using the Corrected Journal Entries and Corrected Ledger Accounts tabs.
2. Highlight the corrected errors in green.
3. Complete the Income Statement, Balance Sheet, Statement of Retained Earnings, Cash Flow Worksheet, Statement of Cash Flows, and Ratios tabs in the same workbook based on the Corrected Journal Entries and Corrected Ledger Accounts tabs.
4. Upload the completed Project One Workbook Template for submission.

Note: If you received a perfect score on the Project One Milestone and do not need to correct any errors, simply note it in the designated section within the Corrected Journal Entries tab. You will receive full points for that specific criterion for this assignment.

Project One Analysis Paper

1. Complete an analysis of the information contained in the completed Project One Workbook Template including your revisions.
2. It will need to be formatted in APA style; specific formatting can be found in the What to Submit section.
3. It will need to address all of the rubric criteria listed below for the Project One analysis paper.

Specifically, you must address the following rubric criteria:

Project One Workbook

1. Correct all errors from the Milestone Journal Entries and Milestone Ledger Accounts tabs and enter the correct information on the Corrected Journal Entries and Corrected Ledger Accounts tab of the workbook. Highlight corrections in green.
2. Prepare the Income Statement, Balance Sheet, and Statement of Retained Earningstabs accurately and completely in the workbook.
3. Prepare the Cash Flow Worksheet tab accurately and completely in the workbook.
4. Prepare the Statement of Cash Flows tab accurately and completely in the workbook.
5. Identify data variances in long term liabilities, equity, and cash flows on the Ratios tab.

Project One Analysis Paper

1. Explain the importance of the company having long-term debt on its balance sheet. Include the following details in your response:
   1. Explain the characteristics of notes payable and bonds payable.
   2. Explain how long-term debt impacts the financial statements?
2. Explain the alternative accounting methods for situations relating to long-term liabilities and equity. Include the following details in your response:
   1. Why would a bond sell at a different price than the face amount?
   2. What are the two methods of amortizing premium and discount?
3. Explain the importance of the company having equity on its balance sheet. Consider the following questions to guide your response:
   1. How do companies obtain common stock?
   2. Describe the purpose and structure of additional paid-in capital.
   3. How do dividends paid or dividends payable impact the equity and income statement?
4. Explain the importance of cash flow in the overall financial health of the organization.
5. Explain how cash flow data connects to the income statement and balance sheet components.

ACC 318 Project One Appendix

The following events occurred during the first half of the year.Book the entries necessary for the corresponding transactions that have occurred.

January 22: Issued $75,000 of 6% term bonds due on January 1, 2025 (10 periods) with interest payable each June 30 and December 31. Investors require an effective interest rate of 8%. Record the entries for issuance of the bond.

February 28: A new long-term lease is entered into for extra storage space for the new product line of ink cartridges. The net present value of the future lease payments is $120,400. The lease is for two years at $5,000 per month beginning March 1.

March 6: A long-term note for $60,000 was taken out from the bank. The loan is for two years with an interest rate of 6% repayable at maturity.

April 22: New equipment was purchased to make printers for $55,000. Use straight line depreciation assuming a 4-year life, with no residual value. Use full years depreciation for the first year.

April 17: 200 shares of common stock with a $1 par value were sold for $20 per share.

May 5: Paid cash dividends to stockholders of $22,500.

June 22: Purchased 50 shares of the companys stock at $25 per share.

June 30: Book the depreciation for the first half of the year on the printer equipment purchased April 22.

June 30: Book the interest for the first half of the year on the loan you took out on March 6.

June 30: Book the interest payment and amortization on discount for bond.

June 30: Paid the rent expense for the first half of the year in cash.

June 30: Book the service revenue of $100,000 for the first half of the year paid in cash.