1. Review the list of transactions and record the entries to the accounting equation. - For your inventory tracking tab and the events recorded to the accounting equation, you can assume the following: - The company uses FIFO as the method to record/track inventory - Beginning inventory for Year 2 of operations is made up of 41,000 units originally purchased at $8.00 per unit which equals Beginning Inventory of $328,000. 2. You will use the completed accounting equation and templates provided to complete the following financial statements: - Income Statement - Classified Balance Sheet - Cash Flow Statement - Statement on Stockholder's Equity - Inventory Tracking Sheet (not one of the formal financial statements - available for use in reviewing accounting equation entries. 3. Pro-forma Flexible budget (using template provided) to include the following assumptions: - Actual \& pro-forma sales revenue at a projected sales price of $24.50 per unit at each volume level - Actual \& pro-forma cost of goods sold - use Year 2 actual coGS for actual results column, - use average purchase price of inventory (from inventory tracking sheet) for pro-forma columns at the varying volume levels. - Actual \& pro-forma operating expenses - assume all operating expenses are fixed costs. EX: sales \& marketing; assume all employees are paid a salary. - Hint: There is only one cost in the operating expenses that you'll project for Year 3 (it is still fixed), all other fixed costs will remain the same in all columns. - Calculate pro-forma dollar amount of purchases for a desired ending inventory of $175,200, assuming: your ending inventory from the accounting equation year 2 is your beginning inventory for budgeting purposes - Estimated COGS using actual units sold in Y2 * average inventory purchase price READ CAREFULLY Comprehensive Assignment - Financial Statements \& Flexible Budget Note: Check Figure/Reflection - Does your net income in any of the columns from your budget agree to your accounting equation or your financial statements? Why or why not? All of these items should be clearly identifiable and included in your submitted file (excel document) that is uploaded as an answer to the final Canvas quiz questions. 1. Completed accounting equation 2. Inventory Tracking Sheet (can submit excel or picture of hand written) 3. Complete set of financial statements 4. Y2 Actual Results \& Y3 Flexible budget Note: You can seek help during class time, during office hours, and in ACE (BU 441) live or during virtual meetings to check your ending balances on the accounting equation, inventory tracking, \& and budget tab, but will be expected to construct your financial statements on your own. You can ask questions about the financial statements during class time. This project will not be worked through during or have videos associated with it but questions about your own work can be answered. CAUTION: When seeking help from the TAs or myself, you will be required to present your work for review. You can share screen in Teams or bring your work if in person. We can confirm if you are correct or point you in the right direction if you have errors. We will not complete any part of the assignment for you or answer questions if you cannot provide your own work first. If struggling with a concept or calculation, refer back to your book, practice homework problems \& videos, weekly packets, and Connect homework as a guide. Additional Information for Accounting Equation: Beginning Common \& Preferred stock is made up of the following: - 40,000 shares of common stock were issued at a sales price of $20/ share and with a par value of $5 per share. - 10,000 shares of $40 par, 3% cumulative preferred stock was issued at a sales price of $50/ share. EAD CAREFULLY omprehensive Assignment - Financial Statements \& Flexible Budget anvas Quiz Questions - You will answer the following questions in the form of a Canvas quiz sing your completed excel file for guidance. 1. What is this company's current ratio? 2. What is this company's debt to equity ratio? 3. What is this company's total Cost of Goods Sold for Year 2 ? 4. What is this company's Gross Profit/Margin for Year 2? 5. What amount was closed to Retained Earnings at the end of Year 2 as part of the closing process? Review the closing process as needed. 6. You will receive one of the following questions as a video prompt for Question H6. You will not know which question until you are taking the quiz, so please be prepared to answer any/al of them. Using your Canvas Studio, upload a video that is 1 minute or less in length addressing one of the following questions as indicated in your canvas quiz. With the time constraint in mind, be sure to be concise in your communication of the relevant information, but fully answer the question. You could receive any of the following questions. a. How would an error recording an event related to the sale of inventory impact the financial statements? More specifically, which financial statement(s) would be impacted? And why? b. If Year 1 sales =209,000 units, which budget column do you think is the most informative for decision making purposes? Provide supporting arguments for your conclusion. c. What trends do you see in the sales numbers from year 1 and 2 when compared to the flexible budget? d. What trends do you see in the inventory purchases numbers in year 2 that might impact the flexible budget? e. What types of decisions would an employee with your academic focus and/or experience make using this information? Give examples of both the decision and the information needed to feel confident in that decision. f. Which financial statement would an employee with your academic focus and/or experience find the most informative and why? Give examples of how that information would be useful. 7. Upload your excel file to include your completed version of the following: a. Completed Accounting Equation - use the blank accounting equation to correctly record the events of year 2. b. Inventory Tracking Tab - use this tab to record the purchase and sale of inventory c. Financial Statements d. Budget Template 8. 15 Point Bonus - How do you plan to study for the final exam? Year 2 Transaction List: 1. Paid a $42,000 cash dividend previously declared for stockholders 2. Paid wages payable accrued in previous month 3. Acquired $150,000 by signing a note payable with a local bank 4. Sold 5,000 shares of $5 par Common Stock for $110,000 5. Sold 2,000 shares of $40 par, 3\% cumulative preferred stock for $120,000 6. Purchased a Truck and piece of Equipment for $128,000. The truck has a market value of 88,000 and the equipment has a market value of 72,000 . 7. Purchased 25,000 Units of Inventory on Account for $8.15 per unit 8. Sold 45,000 units at $24.50 on Account 9. Record COGS for Sale of 45,000 units on Account (from previous event) 10. Collect $570,000 on Account 11. Paid $540,250 of Accounts Payable 12. Purchased 70,000 Units of Inventory on Account for $8.50 per unit 13. Sold 75,000 units at $24.50 on Account 14. Record COGS for Sales of 75,000 units on Account 15. Collect $1,472,500 on Account 16. Paid $438,500 of Accounts Payable 17. Purchased 115,000 Units of Inventory on Account for $9.35 per unit 18. Sold 102,000 units at $24.50 19. Record COGS for Sale of 102,000 units 20. Collect $735,000 on Account 21. Paid $883,150 of Accounts Payable 22. Purchased 175,000 Units of Inventory on Account for $8.75 per unit 23. Paid Sales \& Marketing Expenses of $130,000 24. Paid Fixed Operating Expenses of $275,708 25. Paid Wages of $1,235,000 26. Record Wages Payable of $215,000 27. Paid Product Line Research \& Development Expenses of $450,000 28. Made the yearly required payment on the note payable. The note carries a 6% interest rate and requires payments of $15,000 plus interest each December 31. (Record Principle \& Interest as one entry) 29. Record first year of depreciation expense on truck purchased in Year 2 with salvage value of $12,000& useful life of 5 Years 30. Record first year of depreciation expense on equipment purchased in Year 2 with salvage value of $36,600& useful life of 7 Years 31. Record 2 nd year of depreciation expense on building purchased in Year 1 with salvage value of $58,000& useful life of 30 Years 32. Declared a $2.00 per share cash dividend for common stockholders 33. Declared a dividend on preferred shares outstanding \begin{tabular}{|l|l|l|l|l|l|l|} \hline Retained Earmings & Revenue & Expense & Net income & Type & Amount \\ \hline 419.167.00 & & & & & & \\ \hline & & & & & & \\ \hline & & & & & & \\ \hline & & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline & & & & & \\ \hline \end{tabular} Income Statement Year 2 Sales Revenue Less: Cost of Goods Sold Gross Margin Less: Operating Expenses Sales \& Marketing Operating Costs Wages Research \& Development Expense Interest Expense Depreciation Expense Total Operating Expenses $ Net Income (Loss) $ 18 19 20 21 Total Cument Assets Long Term Assets Total Long Tem Assets S Statement on Stockholders' Equity Year 2 Beginning Common Stock \& APIC Plus: common stock issued Plus: additional paid in capital - CS Plus: preferred stock issued Plus: additional paid in capital - PS Ending Common Stock Beginning Retained Earnings Plus: Net Income Less: Dividends Ending Retained Earnings $ Total Stockholders' Equity $ 20 Statement of Cash Flows Year 2 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 4 Cash flows from financing activities: -5. Cash receipts from borrowing funds 16 Cash receipts from issuing stock 17 Cash payments to repay borrowed funds 18 Cash payments for dividends 19 Net cash flow from financing activities 21 Net increase/(decrease) in cash Plus: beginning cash balance Ending cash balance $ 24