Survey of Accounting Comprehensive Problem - Financial Statements & Flexible Budget As a team, complete the following: 1. Review the completed accounting equation worksheet and correct the five 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. The accounting equations worksheet was provided by your internal accounting department for your review. As part of the executive team of this company, you will correct any errors and use the corrected numbers to construct a full set of financial statements, which will help guide your decision-making process. 2. Your team will use the CORRECTED accounting equation worksheet and templates provided to complete the following financial statements: Income Statement Vertical Balance Sheet Cash Flow Statement Statement on Stockholders' Equity Balance Sheet 3. Use the complete set of financial statements as a basis for your executive team's Board Meeting. 4. Flexible budget (using template provided) to include the following assumptions: Three sales volume levels (additional details below) Sales Revenue at a projected sales price of $3.50 per unit at each volume level Cost of Goods Sold (use FIFO method to record inventory purchases in the accounting equation and weighted average method to calculate break-even point) Operating Expenses Fixed Costs pulled from your accounting equation worksheet. Check Figure/Reflection - Does your calculated Net Income tie out to your accounting equation worksheet for your actual sales column? Why or why not? Calculate the required purchases for a desired ending inventory of $35,000, assuming your ending inventory from the accounting equation worksheet is your beginning inventory for budgeting purposes. A break-even calculation (show your work on the excel file) of how many units you need to sell in order to break-even. . . . . . Year 1 Transaction List: 1. Acquired $550,000 by signing a note payable with a local bank 2. Sold 25,000 shares of $22 Common Stock for $1,500,000 3. Purchased Equipment for $200,000 4. Purchased Inventory on Account - 25,000 Units at $1.15 per unit 5. Sold 15,000 units at $3.50 on Account 6. COGS for Sales on Account 7. Collect $70,000 on Account 8. Paid $17,250 of Accounts Payable 9. Purchased Inventory on Account - 170,000 Units at $1.50 per unit 10. Sold 175,000 units at $3.50 on Account 11. COGS for Sales on Account 12. Collect $472,500 on Account 13. Paid $118,600 of Accounts Payable 14. Purchased Inventory on Account - 275,000 Units at $1.45 per unit 15. Sold 200,000 units at $3.50 on Account 16. COGS for Sales on Account 17. Collect $735,000 on Account 18. Paid $294,150 of Accounts Payable 19. Purchased Inventory on Account - 300,000 Units at $1.15 per unit 20. Paid Sales & Marketing Expenses of $30,000 21. Paid Operating Expenses of $75,708 22. Paid Wage Expenses of $40,000 23. Paid Product Line Research & Development Expenses of $150,000 24. Paid Advertising Expenses of $87,500 25. 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. 26. Record Yc 1 Depreciation on Equipment with Salvage Value of $38,000 & useful life of 7 Yrs 27. Declared a $10,000 cash dividend for stockholders 28. Paid a $10,000 cash dividend for stockholders Goods Available for Sale Cost of Goods Sold Ending Inventory Price/U Price/U Price/U Units nit Total | Units nit Total Units nit Total Beg Bal Purchases: Total NOTE: You will need to calculate your estimated COGS for the budget template tab using the Weighted Avergae method discussed in L05-6 Flexible Budget Master Budget at Actual Units Actual Units Sold Actual Units Sold 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 use ending inventory from Beginning Inventory CORRECTED horizontal balance + 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 weighted average COGS and last year's actual units Breakeven Calcuation BE = FC/ (Contribution Margin per Unit) $ Income Statement Year 1 Sales Revenue Less: Cost of Goods Sold Gross Margin Less: Expenses Sales & Marketing Operating Costs Wages Research & Development Expense Advertising Expense Depreciation Expense Interest Expense Total Operating Expenses Net Income (Loss) $ $ $ $ Balance Sheet Year 1 Assets Cash Total Assets Liabilities Accounts Payable Total Liabilities Stockholders Equity Total Stockholders Equity Total Liabilities and Stockholders Equity $ $ $ $ Statement on Stockholders' Equity Year 1 Beginning Common Stock Plus: common stock issued Plus: additional paid in capital Ending Common Stock Beginning Retained Earnings Plus: Net Income Less: Dividends Ending Retained Earnings $ Total Stockholders' Equity $ $ $ $ Statement of Cash Flows Year 1 Cash flows from operating activities Cash receipts from revenue Cash payments for expenses Net cash flow from operating activities Cash flows from investing activities: Cash payments to purchase equipment Cash flows from financing activities: Cash receipts from borrowing funds Cash receipts from issuing common stock Cash payments to repay borrowed funds Cash payments for dividends Net cash flow from financing activities Net increase/(decrease) in cash Plus: beginning cash balance Ending cash balance $ $ $ Flexible budget (using template provided) to include the following assumptions: Three sales volume levels (additional details below) Sales Revenue at a projected sales price of $3.50 per unit at each volume level Cost of Goods Sold (use FIFO method to record inventory purchases in the accounting equation and weighted average method to calculate break-even point) Operating Expenses Fixed Costs pulled from your accounting equation worksheet. Check Figure/Reflection - Does your calculated Net Income tie out to your accounting equation worksheet for your actual sales column? Why or why not? Calculate the required purchases for a desired ending inventory of $35,000, assuming your ending inventory from the accounting equation worksheet is your beginning inventory for budgeting purposes. A break-even calculation (show your work on the excel file) of how many units you need to O sell in order to break-even