Southern New Hampshire University ACC 308 - Intermediate Accounting II MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) For fullInstructions instructions see Instructions Milestone 1 Milestone 1 page For full instructions see Instructions Instructions Mil Milestone 2 page Pro Forma Fin Statemen Trial Balance 1. 1. Using the Peyton Approved financial data, Revised Financial Statements create: Using the given Pro Forma information, create: Adjusting Entries Adjusted Trial Balance Ratio Analysis 2 Pro Forma Income Statement Pro Forma Balance Sheet Pro Forma Statements are "what if" statements. If the company opens the 2nd location, what will the budgeted income statement and budgeted balance sheets be? Notes to the Financial Statements *Refer to Final Project Assignment Guidelines and Rubric document 2. For Examples of Notes to the Financial Statements, see the Startbuck's Corporation Annual Report in Appendix A of the text Using the Trial Balance and Preliminary financial statements, prepare: Revised Balance Sheet Revised Income Statement In a separate Word document A. Create appropriate notes as year-toyear documentation for managing depreciation, supplies, and inventory.* *Peyton Approved uses the following accounting practices: Inventory: Periodic, LIFO for both baking and merchandise Equipment: Straight line method used for equipment Revised Retained Earnings Statement Revised Statement of Cash Flows For a refresher on Statement of Cash Flows, check out https://www.myaccountingcourse.c om/financial-statements/cash-flowstatement-indirect-method 3. 3 Using the financial statements from 2015, 2016, and revised 2017, calculate the following ratios: Current Ratio (Working Capital ) *Refer to Final Project Assignment Guidelines and Rubric document Quick Ratio In the Management Analysis Brief Word document from Milestone 1 A/R Turnover Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable. Inventory Turnover D. Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals. Gross margin E. Describe the implications of inventory costing, contingent liabilities, and revenue recognition. Return on Sales Return on Equity Return on Assets 4 Management Analysis Brief Management Analysis Brief G. Identify potential issues in interpretation of financial information, providing examples to support your ideas. *Refer to Final Project Assignment Guidelines and Rubric document In a separate Word document Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable. A. Assess the company's financial health based on ratio analyses presented in the accounting workbook. B. Compare ratio analysis to trends in financial ratios over time for illustrating their impact, providing examples to support your claims. C. Summarize the effects of different compounding periods and interest rates on future value of money. Module 5) FINAL PROJECT (Due in Module 7) For full instructions see Final Project Assignment Guidelines and Rubric Instructions Milestone 2 document Pro Forma Financial Statements 1 Instructions Final Project Notes to the Financial Statements *Refer to Final Project Assignment Guidelines and Rubric document For Examples of Notes to the Financial Statements, see the Startbuck's Corporation Annual Report in Appendix A of the text In the Notes Word document from Milestone 2 B. Create appropriate notes for longterm debt 2 Management Analysis Brief *Refer to Final Project Assignment Guidelines and Rubric document In the Management Analysis Brief Word document from Milestone 2 F. Explain how alignment to relevant regulations and ethical reporting influenced your accounting practices and notes, providing examples to support your claims. Southern New Hampshire University ACC 308 - Intermediate Accounting II INSTRUCTIONS FOR MILESTONE 1 (Due Module 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 Final Project (Module 7) ITEMS TO COMPLETE FOR THIS MILESTONE (Blue Tabs): GENERAL You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare the compan audit. Additionally, the company is interested in expanding its business within the next year. They would like your support i their goals. TRIAL BALANCE 2017 TAB Using the Peyton Approved financial data (see bottom of page): Create the necessary adjusting journal entries. Use the REF column to reference the entry to each event Complete the adjusted trial balance REVISED FINANCIAL STATEMENTS Using the preliminary financial statements (yellow tabs) and the Trial Balance 2017, prepare the following state Balance Sheet (BS 2017 Revised tab) Income Statement (IS 2017 Revised tab) Retained Earnings Statement (RE 2017 Revised tab) Statement of Cash Flows (CF 2017 Revised tab) For a refresher on Statement of Cash Flows, check out - https://www.myaccountingcourse.com/financial-statem RATIO ANALYSIS Using the revised 2017 financial statements, 2016 financial statements (orange tabs), and 2015 financial statem analysis with the following ratios: Current Ratio (Working Capital ) Quick Ratio A/R Turnover Inventory Turnover Gross margin Return on Sales Return on Equity Return on Assets PEYTON APPROVED FINANCIAL DATA Preliminary Financial Statements have already been prepared (2017 statements in the Final Project Workbook). yet been made. See table for possible adjustments that indicate what will be recorded at 12/31/17 (fiscal year e year-to-year documentation and notes for managing depreciation, inventory, and long-term debt. 1. A supplier shipped $3,000 of ingredients on 12/29/17. Peyton receives an invoice for $3,175 for the goods an 12/29/17. Goods were shipped FOB supplier's warehouse. 2. At 12/31/17, Peyton has $200 worth of merchandise on consignment at Bruno's House of Bacon. 3. On 12/23/17, Peyton received a $1,000 deposit from Pet Globe for product to be shipped by Peyton in the se 4. On 12/03/2017, a mixer with cost of $2,000, accumulated depreciation $1,200, was destroyed by a forklift. As has agreed to pay $700 in January, 2018, for accidental destruction. In a separate Word document Management Analysis Brief *Refer to Final Project Assignment Guidelines and Rubric document Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable. A. Assess the company's financial health based on ratio analyses presented in the accounting workbook. B. Compare ratio analysis to trends in financial ratios over time for illustrating their impact, providing examples to support your claims. C. Summarize the effects of different compounding periods and interest rates on future value of money. dule 3) Project (Module 7) is to prepare the company's financials for the year-end would like your support in assessing their ability to meet ntry to each event epare the following statements: rse.com/financial-statements/cash-flow-statement-indirect-method and 2015 financial statements (orange tabs), prepare a ratio HOME Final Project Workbook). Final adjusting entries have not at 12/31/17 (fiscal year end). Use the following to complete term debt. r $3,175 for the goods and freight of $175, all dated use of Bacon. pped by Peyton in the second week of January. destroyed by a forklift. As of 12/23/17, insurance company PEYTON APPROVED TRIAL BALANCE As of December 31, 2017 Cash Accounts Receivable Other Receivable - Insurance Baking Supplies Merchandise Inventory Consignment Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Baking Equipment Accumulated Depreciation Customer Deposit Accounts Payable Wages Payable Interest Payable Notes Payable Common Stock Beginning Retained earnings Dividends Bakery Sales Merchandise Sales Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Rent Expense Wages Expense Misc. Supplies Expense Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Gain/Loss on disposal of equipment Unadjusted trial balance Dr Cr 67,520.04 68,519.91 15,506.70 1,238.07 2,114.55 2,114.55 170.49 14,000.00 1,606.44 20,262.11 3,383.28 211.46 5,000.00 20,000.00 50,144.84 105,000.00 327,322.55 1,205.64 105,834.29 859.77 24,549.19 10,670.72 3,000.46 2,045.77 1,363.84 677.86 1,091.08 1,549.74 818.31 490.98 429,136.32 429,136.32 ref N APPROVED L BALANCE cember 31, 2017 Instructions Milestone 1 Adjusting entries Dr Cr 1,000.00 700.00 3,000.00 200.00 200.00 2,000.00 1,200.00 1,000.00 3,175.00 175.00 100.00 6,375.00 6,375.00 ref Adjusted trial balance Dr Cr 68,520.04 68,519.91 700.00 18,506.70 1,038.07 200.00 2,114.55 2,114.55 170.49 12,000.00 406.44 1,000.00 23,437.11 3,383.28 211.46 5,000.00 20,000.00 50,144.84 105,000.00 327,322.55 1,205.64 105,834.29 859.77 24,549.19 10,670.72 3,000.46 2,045.77 1,538.84 677.86 1,091.08 1,549.74 818.31 490.98 100.00 432,111.32 432,111.32 structions lestone 1 Preliminary Peyton Approved Balance Sheet As of December 31, 2017 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Liabilitie 67,520.04 68,519.91 15,506.70 1,038.07 2,114.55 2,114.55 170.49 Total Current Assets Long Term/Fixed Assets: Baking Equipment Accumulated Depreciation Net Fixed assets Total Assets: 156,984.31 14,000.00 -1,606.44 12,393.56 169,377.87 proved Sheet er 31, 2017 Liabilities and Owners' Equity Current Liabilities: Accounts Payable 20,262.11 Wages Payable 3,383.28 Interest Payable 211.46 Total Current Liabilities Long Term Liabilities: Notes Payable Total Long Term Liabilities: 23,856.85 5,000.00 5,000.00 Total Liabilities: Common Stock Retained Earnings 28,856.85 20,000.00 120,721.02 Total Equity 140,721.02 Total Liabilities & Equity 169,577.87 Peyton Approved Balance Sheet As of December 31, 2017 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Other Receivable - Insuran Consignment Inventory Liabilities and 68,520.04 68,519.91 18,506.70 1,238.07 2,114.55 2,114.55 170.49 700.00 200.00 Total Current Assets Long Term/Fixed Assets: Baking Equipment Accumulated Depreciati Net Fixed assets Total Assets: 161,884.31 12,000.00 -406.44 11,593.56 173,477.87 d Instructions Milestone 1 2017 Liabilities and Owners' Equity Current Liabilities: Accounts Payabl 23,437.11 Wages Payable 3,383.28 Interest Payable 211.46 custmer deposit 1000 Total Current Liabilities Long Term Liabilities: Notes Payable 5,000.00 Total Long Term Liabilities: Total Liabilities: Common Stock Retained Earnin 28,031.85 5,000.00 33,031.85 20,000.00 120,446.02 Total Equity 140,446.02 Total Liabilities & Equity 173,477.87 Preliminary Peyton Approved Income Statement For Year Ended 12/31/2017 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit $ 327,322.55 1,205.64 328,528.19 105,834.29 859.77 106,694.06 221,834.13 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: Net Income 24,549.19 10,670.72 3,000.46 2,045.77 1,363.84 677.86 1,091.08 1,549.74 818.31 490.98 46,257.95 175,576.18 Peyton Approved Income Statement For Year Ended 12/31/2017 Bakery Sales $ Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit 327,322.55 1,205.64 328,528.19 105,834.29 859.77 106,694.06 221,834.13 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Gain/Loss on disposal of equipment Total Operating Expenses: Net Income 24,549.19 10,670.72 3,000.46 2,045.77 1,538.40 677.86 1,091.08 1,549.74 818.31 490.98 100.00 46,532.51 175,301.62 Instructions Milestone 1 Preliminary Peyton Approved Statement of Retained Earnings For Year Ended 12/31/2017 Beginning Balance: plus Net Income $ 50,144.84 175,576.18 less Dividends: Ending Balance 105,000.00 $ 120,721.02 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/2017 Beginning Balance: plus Net Income $ 50,144.84 175,301.18 less Dividends: Ending Balance 105,000.00 $ 120,446.02 Instructions Milestone 1 Instructions Milestone 1 Preliminary Peyton Approved Statement of cash Flow For Year Ended 12/31/2017 Net Income Depreciation Expense $ 175,576.18 677.86 176,254.04 Increase in Accounts Receivable Increase in Baking Supplies Increase in Merchandise inventory Increase in Prepaid Rent Increase in Prepaid Insurance Increase in Misc. Supplies Increase in Accounts Payable Increase in Wages Payable Increase in Interest Payable (25,886.91) (8,187.84) (243.10) (449.55) (1,004.55) (114.99) 3,292.11 1,850.48 44.96 Operating Cash Flow Cash Flow from Investments Equipment Purchases (6,000.00) Cash Flow from Investments Cash Flow from Financing Repayment of Note Payable Dividends Paid Cash Flow from Financing Net Cash Flow Beginning Cash Ending Cash (10,000.00) (105,000.00) 145,554.65 (6,000.00) (115,000.00) 24,554.65 43,165.39 67,520.04 Peyton Approved Statement of cash Flow For Year Ended 12/31/2017 Net Income Depreciation Expense Increase in Accounts Receivable Increase in Baking Supplies Increase in Merchandise inventory Increase in Prepaid Rent Increase in Prepaid Insurance Increase in Misc. Supplies Increase in Accounts Payable Increase in Wages Payable Increase in Interest Payable Operating Cash Flow Cash Flow from Investments Equipment Purchases Cash Flow from Investments Cash Flow from Financing Repayment of Note Payable Dividends Paid Cash Flow from Financing Net Cash Flow Beginning Cash Ending Cash $ 175,301.62 677.86 0 Instructions Milestone 1 175,979.48 24,126.30 6,080.79 (1,319.58) (449.55) 939.51 (644.50) (13,586.72) (1,321.34) 833.50 190,637.89 8,406.44 8,406.44 (15,000.00) (105,000.00) (120,000.00) 79,044.33 43,165.39 68,520.04 Peyton Approved Balance Sheet As of December 31, 2015 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 31507.58 35118.97 8042.23 580.27 1215.32 810.21 40.51 Total Current Assets Long Term/Fixed Assets: Baking Equipment Accumulated Depreci Net Fixed assets Liabilities and Owners' E Current Liabilities: Accounts Payable Wages Payable Interest Payable 77,315.09 Total Current Liabilities Long Term Liabilities: Notes Payable Total Long Term Liabilities: 6000 -677.79 5,322.21 Total Liabilities: Common Stock Retained Earnings Total Equity Total Assets: 82,637.30 Total Liabilities & Equity Liabilities and Owners' Equity iabilities: 15086.84 1118.83 121.53 rent Liabilities 16,327.20 m Liabilities: 10,000.00 g Term Liabilities: bilities & Equity 10,000.00 26,327.20 20,000.00 36,310.10 56,310.10 82,637.30 Peyton Approved Balance Sheet As of December 31, 2016 Assets Current Assets: Cash Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Liabilities and O 43,165.39 42,633.00 7,318.86 794.97 1,665.00 1,110.00 55.50 Total Current Assets Long Term/Fixed Assets: Baking Equipment Accumulated Depreciation Net Fixed assets Total Assets: 96,742.72 8,000.00 -928.58 7,071.42 103,814.14 proved Sheet er 31, 2016 Liabilities and Owners' Equity Current Liabilities: Accounts Payable 16,970.00 Wages Payable 1,532.80 Interest Payable 166.50 Total Current Liabilities Long Term Liabilities: Notes Payable Total Long Term Liabilities: 18,669.30 15,000.00 15,000.00 Total Liabilities: Common Stock Retained Earnings Total Equity Total Liabilities & Equity 33,669.30 20,000.00 50,144.84 70,144.84 103,814.14 Peyton Approved Income Statement For Year Ended 12/31/2016 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit 214,256.48 770.76 215,027.24 73,159.59 549.64 73,709.23 141,818.01 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: Net Income 15,694.23 6,821.76 1,668.18 1,307.85 871.9 433.36 697.52 740.74 523.14 313.88 29,072.56 112,745.45 2017 2016 Current Ratio (Working Capital ) 5.78 5.18 Quick Ratio 4.89 4.60 A/R Turnover 1.48 1.38 Inventory Turnover 1.90 2.23 Gross margin 0.68 0.66 Return on Sales 0.53 0.52 Return on Equity 1.25 1.61 Return on Assets 1.08 1.17 Instructions Milestone 1 Southern New Hampshire University ACC 308 - Intermediate Accounting II INSTRUCTIONS FOR MILESTONE 2 (Due Module 5) IMPORTANT NOTE: Make sure to completely review the Rubric for Milestone 2 Use the data from Milestone 1 and this Milestone to finalize your final project due in Final Project (Module 7) ITEMS TO COMPLETE FOR THIS MILESTONE (Green Tabs): 1 Accounting Workbook GENERAL Use information from Milestone 1 and the plan to open a new location (see bottom of page) for your statements PRO FORMA FINANCIAL STATEMENTS Using the Preliminary Statements as a base, prepare the following Pro Forma Financial Statements for the propose forma statements in this case are budgeted statements for 2018 based on the new location scenario at the bottom Pro Forma Income Statement Pro Forma Balance Sheet PEYTON APPROVED PRO FORMA INFORMATION The company is planning to open another location in 2018 . Prepare pro forma financials for 2018 for the new locati 1. Cost of leasing commercial space: $1,500 per month. 2. Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a sev full year's depreciation for the first year. Equipment purchase was financed with a long-term note. 3. Cost of hiring and training new employees: three at $25,000 each for the first year. 4. Except as noted below in 1, 2, 3, and 5, assets, current liabilities, sales, costs, and expenses are expected to be 80 preliminary statements) except no stock. Retained earnings = net income 5. Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amou turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5, amount needed to balance into accounts payable. 2 Notes to the Financial Statements *Refer to Final Project Assignment Guidelines and Rubric document For Examples of Notes to the Financial Statements, see the Startbuck's Corporation Annual Report in Appendix A of the text In a separate Word document A. Create appropriate notes as yearto-year documentation for managing depreciation, supplies, and inventory.* *Peyton Approved uses the following accounting practices: Inventory: Periodic, LIFO for both baking and merchandise Equipment: Straight line method used for equipment 3 Management Analysis Brief *Refer to Final Project Assignment Guidelines and Rubric document In the Management Analysis Brief Word document from Milestone 1 Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable. D. Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals. E. Describe the implications of inventory costing, contingent liabilities, and revenue recognition. G. Identify potential issues in interpretation of financial information, providing examples to support your ideas. (Due Module 5) nal Project (Module 7) ge) for your statements ancial Statements for the proposed new location (pro w location scenario at the bottom of the page) ancials for 2018 for the new location using the following information: t line depreciation assuming a seven-year life, no residual value. Use long-term note. HOME ear. d expenses are expected to be 80% of the existing store (from nover will be 4.0); inventory amount to show 3.0 turns (inventory come. Additional financing of $5,000 will be long-term. Add remaining Peyton Approved Second Location Pro Forma Income Statement For Year Ending 12/31/2018 d Location atement 1/2018 Instructions Milestone 2 Peyton Approved Second Location Pro Forma Balance Sheet As of December 31, 2018 d Location Sheet 2018 Instructions Milestone 2
