Survey of Accounting Comprehensive Assignment - Financial Statements & Flexible Budget As a team for the comprehensive problem, complete the following: 1. Review the completed horizontal balance sheet and correct the entries that contain errors. Background - You are a member of the company's executive team. As a team, you'll need to designate a role for each team member based on your declared major and relevant work and course experience. For example, an accounting major may be designated as the CFO, while a marketing major may be designated as the VP of marketing for the firm. Click here for a great article about who makes up an executive team. Remember - you have some flexibility here depending on your team's makeup. This document was provided by your accounting team for your review. As part of the executive team of this company, you will correct any errors and use the corrected version to construct a full set of financial statements, which will help guide your decision-making process. 2. Your team will use the CORRECTED horizontal balance sheet and templates provided to complete the following financial statements: Income Statement Vertical Balance Sheet Cash Flow Statement Statement on Stockholder's Equity 3. Use the complete set of financial statements as a basis for your management team's Advisory Board Meeting 4. Flexible budget (using template provided) to include the following assumptions: Three sales volume levels Sales Revenue at a projected sales price of $3.50 per unit at each volume level Cost of Goods Sold using weighted average method for the budget (Use inventory tracking sheet in template to calculate COGS using FIFO for the financial statements. Weighted average method is for the budget ONLY) Operating Expenses - Fixed Costs pulled from your Horizontal Balance Sheet Calculate purchases for desired ending inventory of $35,000, assuming your ending inventory from the horizontal balance sheet is your beginning inventory for budgeting purposes. A breakeven calculation (show your work on the excel file) of how many bars you need to sell in order to break even. These items should be clearly identifiable in your submitted file: 1. Corrected horizontal balance sheet, 2. Complete set of financial statements, & 3. Flexible budget.Survey of Accounting Comprehensive Assignment - Financial Statements & Flexible Budget Year 1 Transaction List: 1. Acquired $550,000 by signing a note payable with a local bank on Jan 1. 2. Sold 25,000 shares of $22 par value Common Stock for $1,500,000 3. Purchased Equipment for $300,000 cash 4. Purchased 25,000 Units of Inventory on Account at $1.15 per unit 5. Sold 15,000 units at $3.50 on Account 6. Collected $70,000 of accounts receivable 7. Paid $17,250 of Accounts Payable 8. Purchased 170,000 Units of Inventory on Account at $1.50 per unit 9. Sold 175,000 units at $3.50 on Account 10. Collected $472,500 of accounts receivable 11. Paid $118,600 of Accounts Payable 12. Purchased 275,000 Units of Inventory on Account at $1.35 per unit 13. Sold 200,000 units at $3.50 on Account 14. Collected $735,000 of accounts receivable 15. Paid $294,150 of Accounts Payable 16. Purchased 300,000 Units of Inventory on Account at $1.15 per unit 17. Record Sales & Marketing Expenses of $30,000 (paid in cash) 18. Record Operating Expenses of $75,708 (paid in cash) 19. Record Wage Expenses of $40,000 (paid in cash) 20. Record Product Line Research & Development Expenses of $150,000 (paid in cash) 21. Record Advertising Expenses of $87,500 (paid in cash) 22. Made the yearly required payment on the note payable. The note carries a 7%% interest rate and requires payments of $50,000 plus interest each December 31. 23. Record Year 1 Depreciation on Equipment with Salvage Value of $38,000 and useful life of 7 Years (straight-line depreciation) 24. Declared a $10,000 cash dividend for stockholders 25. Paid a $10,000 cash dividend for stockholdersEvents Balance Sheet d:550.030 by signing a note payable with a loool bank Cash es of $22 Common Stock for $1,500,000 500.000 Acct Rec Inventory Acct Payable | Div Payable Notes Payable | Wages Payable Equity 1.500.000 500.000 Common Stock APIC Retained Earnings Account Titles for Retained Earnings sed Inventory on Account - 25,000 Units at $1.15 per unit 300.0p0 550.000 a. Sold 15,000 units of $3.50 on Account 52.500 28.750 300.000 950.000 5b. COGS for Sales on Account 28.750 act $70.030 on Account 7. Pod $17.250 of Accounts Payable 70,000 70.000 52.500 (17.2501 Sales Revenue Cost of Goods Sold sed inventory on Account - 170,000 Units at $1.50 per unit [17 2901 90. Sold 175,030 units of $3.50 on Account 178.500 (17.2901 $12.500 178.500 7b. COGs for sales on Account 10. Collect $472.500 on Account (184.7501 11. Paid $118.800 of Accounts Payable 472.500 $ [472.500 612.500 Sales Revenue [184.7501 Costs of Goods Sold 12. Purchased Inventory on Account - 275,000 Units at $1.35 per unit [118.607 130. Sold 200.030 units of $3.50 on Account 371.250 (118.600.001 371.250 13b. COGS for Sales on Account 70.007 14. Collect $735,030 on Account (270.7501 700.000 15. Paid $294,150 of Accounts Payable 735.000$ [294.1501 1735,0071 (270.750 Sales Revenue Costs of Goods Sold 16. Purchased Inventory on Account - 300.000 Units at $1.15 per unit (294.150.001 17. Record Sales & Marketing Expenses of $30,000 345.000 18. Record Operating Expenses of $75,708 [30.DDO 345,000.00 19. Record Wage Expenses of $40,000 [75.708 [30.0001 [150.0001 40.000 [75.708) Marketing Expense 20. Record Product Line Research & Development Expenses of $150,000 Operating Expense 21. Record Advertising Expenses of $87,500 87 5001 40.000) Wage Expense (150.000 Research & Development Expense 22. Made the yearly required payment on the note payable. The note comes a 7% Interest [87 500) Advertising Expense rate and requires payments of $50,000 plus Interest each December 31. I s [88.500/ (50,000) 23. Record Yr1 Depreciation on Equipment with salvage Value of $38,000 & useful life of 7 $ [38.500] Interest Expense Yrs 24. Declared a $10.000 cash dividend for stockholders 37 428.57 (37 429 25. Paid a $10.000 cash dividend for stockholders Balance at end of Yr 3 10.000 10.000.00 Depreciation Expense 2.105.792 87.500 450.790 300.000 [10.000) DMdends 37 427 493.500 10.000.00 450.000 40.000 550.000 950,000 423.113 So Total Ants Total Liabilities & Forty 2 9016 613 2 906 613A B C D E F G H K L M Goods Available for Sale Cost of Goods Sold Ending Inventory Price/ Price/ Price/ Units Unit Total Units Unit Total Units Beg Bal Unit Total 4 Purchases: 5 6 7 8 9 10 11 12 13 Total 14 15 NOTE: You will need to calculate your estimated COGS for the budget template tab using the 16 Weighted Avergae method discussed in LO5-6Flexible Budget Master Budget at Actual Units Sold Actual Units Sold Actual Units in Year 1 + 25,000 Sold + 50,000 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Sales & Marketing Operating Costs Wages Research & Development Expense Advertising Expense Depreciation Exp Interest Expense Net Income Inventory Production Beginning Inventory *use ending inventory from CORRECTED horizontal balance sheet for beginning inventory for the + Purchases - Estimated COGS *actual units at weighted average COGS/unit = Desired Ending Purchases = Note: Calculate next year's estimated purchases for desired ending inventory of $35,000, assuming your ending inventory from the horizontal balance sheet is your beginning inventory for the next year. For Estimated COGS, use the previously calculated weighted average COGS and last years actual units Breakeven Calcuation BE = FC/(CM/Unit)