Southern New Hampshire University
ACC 308 - Intermediate Accounting II
MILESTONE 1 (Due in Module 3)
For full instructions see Instructions
Milestone 1 page
MILESTONE 2 (Due in Module 5)
For full instructions see Instructions
Milestone 2 page
Instructions Milestone 1
1.
Trial Balance
Using the Peyton Approved financial data,
create:
Adjusting Entries
Adjusted Trial Balance
2.
3.
Revised Financial Statements
Using the Trial Balance and Preliminary
financial statements, prepare:
Revised Balance Sheet
Revised Income Statement
Revised Retained Earnings Statement
Revised Statement of Cash Flows
Ratio Analysis
Using the financial statements from 2015,
2016, and revised 2017, calculate the
Current Ratio (Working Capital )
Quick Ratio
A/R Turnover
Inventory Turnover
Gross margin
Return on Sales
Return on Equity
Return on Assets
Remember the written portion of the
Milestone! See the Milestone 1
Instructions Milestone 2
1.
Pro Forma Financial
Statements
Using the given Pro Forma information,
create:
Pro Forma Income Statement
Pro Forma Balance Sheet
Remember the written portion of the
Milestone! See the Milestone 2
Module 5)
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 company’s financials
for the year-end audit. Additionally, the company is interested in expanding its business within the next year. They would like your
support in assessing their ability to meet 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 statements:
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)
RATIO ANALYSIS
Using the revised 2017 financial statements, 2016 financial statements (orange tabs), and 2015 financial statements (orange tabs),
prepare a ratio 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). Final
adjusting entries have not yet been made. See table for possible adjustments that indicate what will be recorded at 12/31/17
(fiscal year end). Use the following to complete 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 the goods, as well as a bill for freight
for $175, all dated 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 second week
of January.
4. On 12/03/2017, a mixer with cost of $2,000, accumulated depreciation $1,200, was destroyed by a forklift. As of
12/23/17, insurance company has agreed to pay $700 in January, 2018, for accidental destruction.
5. Note about later borrowing financials will show loan from parents repaid and use of bank financing.
HOME
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
494.83
2,000.00
ref
Adjusted trial balance
Dr
Cr
68,520.04
68,519.91
18,506.70
1,038.07
200.00
2,114.55
1,619.72
170.49
12,000.00
1,200.00
406.44
1,000.00
23,437.11
3,383.28
211.46
5,000.00
20,000.00
50,144.84
1,000.00
3,175.00
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
1,585.91
1,549.74
818.31
490.98
175.00
494.83
100.00
6,869.83
6,869.83
431,311.32
432,111.32
structions
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
Liabilities
67,520.04
68,519.91
15,506.70
1,238.07
2,114.55
2,114.55
170.49
Total Current Assets
Long Term/Fixed Assets:
Baking Equipment
Accumulated Depreciation
Net Fixed assets
Total Assets:
157,184.31
14,000.00
-1,606.44
12,393.56
169,577.87
oved
eet
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
23,856.85
Long Term Liabilities:
Notes Payable
Total Long Term Liabilities:
5,000.00
Total Liabilities:
Common Stock
Retained Earnings
5,000.00
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 Receviable
Other Receviable - Insurance
Baking Supplies
Consignment Inventory
Merchandise Inventory
Prepaid Rent
Prepaid Insurance
Misc. Supplies
68,520.04
68,519.91
700.00
18,506.70
200.00
1,038.07
2,114.55
1,619.72
170.49
Total Current Assets
Long Term/Fixed Assets:
Banking Equipment
Accumulated Depreciation
Net Fixed Assets
Liabilities and Owners' Equity
Current Liabilities
Accounts payable
Wages Payable
Interest Payable
Customer Deposit
161,389.48
Total Current Liabilities
Long Term Liabilities
notes payable
Total long Term Liabilities:
12,000.00
-406.44
11,593.56
Total Liabilities
Common Stock
Retained Earnings
Total Equity
Total Assets:
172,983.04
Total liabilities & Equity
Instructions
Milestone 1
ners' Equity
23,437.11
3,383.28
1,000.00
211.46
28,031.85
5,000.00
$5,000
33,031.85
20,000.00
119,951.19
139,951.19
172,983.04
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
$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
Total Operating Expenses :
-$46,532.95
Net Income
$175,301.18
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
$120,446.02
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)
(443.10)
(449.55)
(1,004.55)
(114.99)
3,292.11
1,850.48
44.96
Operating Cash Flow
Cash Flow from Investments
Equipment Purchases
145,354.65
(6,000.00)
Cash Flow from Investments
Cash Flow from Financing
Repayment of Note Payable
Dividends Paid
Cash Flow from Financing
Net Cash Flow
(6,000.00)
(10,000.00)
(105,000.00)
(115,000.00)
24,354.65
Beginning Cash
43,165.39
Ending Cash
67,520.04
Peyton Approved
Statement of cash Flow
For Year Ended 12/31/2017
0
Instructions
Milestone 1
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
Liabilities and Owners
Current Liabilities:
Accounts Payable
Wages Payable
Interest Payable
31507.58
35118.97
8042.23
580.27
1215.32
810.21
40.51
Total Current Assets
Long Term/Fixed Assets:
Baking Equipment
6000
Accumulated Depreciation -677.79
Net Fixed assets
77,315.09
Total Current Liabilities
Long Term Liabilities:
Notes Payable
Total Long Term Liabilities:
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
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
Current Ratio (Working Capital )
Quick Ratio
A/R Turnover
Inventory Turnover
Gross margin
Return on Sales
Return on Equity
Return on Assets
2016
Instructions
Milestone 1
structions
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) :
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
Prepare the following Pro Forma Financial Statements for the proposed new location (pro forma statements in this case
are budgeted statements for 2018 based on the new location scenario at the bottom of the page)
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 loca
the following information:
1. Cost of leasing commercial space: $1,500 per month.
2. Cost of new equipment: $15,000. Use straight line depreciation assuming a seven-year life. Use full year’s depre
the first year.
3. Cost of hiring and training new employees: three at $25,000 each for the first year.
4. Except as noted in 5, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing
(from 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 amo
show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income
Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable.
HOME
(Module 7)
or your statements
tatements in this case
ls for 2018 for the new location using
ear life. Use full year’s depreciation for
ed to be 80% of the existing store
r will be 4.0); inventory amount to
ngs are to equal net income.
ance into accounts payable.
Peyton Approved Second Location
Pro Forma Income Statement
For Year Ending 12/31/2018
Instructions
Milestone 2
Peyton Approved Second Location
Pro Forma Balance Sheet
As of December 31, 2018
d Location
Sheet
2018
Instructions
Milestone 2
ACC 308 Final Project Scenario
Overview: You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to
prepare the company’s financials for the year-end audit. Additionally, the company is interested in expanding its
business within the next year. They would like your support in assessing their ability to meet their goals.
Refer to the data below and use the Final Project Workbook that includes the income statement, balance sheet, retained
earnings statement and cash flow statement to complete the final project and associated milestones.
Peyton Approved Financial Data: Preliminary Financial Statements have already been prepared (2017 statements in the
Final Project Workbook). Final adjusting entries have not yet been made. See table for possible adjustments that
indicate what will be recorded at 12/31/17 (fiscal year end). Use the following to complete 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 the goods, as
well as a bill for freight for $175, all dated 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 $1,000 deposit from Pet Globe for product to be shipped by Peyton in
the second week of January.
4. On 12/03/2017, a mixer with a cost of $2,000, accumulated depreciation $1,200, was destroyed by a
forklift. As of 12/23/17, insurance company has agreed to pay $700 in January, 2018, for accidental
destruction.
5. Note about later borrowing - financials will show loan from parents repaid and use of bank financing.
The company is planning to open another location in 2018. Prepare pro forma financials for 2018 for the new location
using the following information:
Cost of leasing commercial space: $1,500 per month.
Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a
seven-year life, no residual value. Use full year’s depreciation for the first year.
Cost of hiring and training new employees: three at $25,000 each for the first year.
Except as noted below, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the
existing store (from preliminary statements) except no stock. Retained earnings = net income.
Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory
amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to
equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance
into accounts payable.
For notes to the financial statements and Management Analysis Memo, consider the following:
Peyton Approved uses the following accounting practices:
•
•
Inventory: Periodic, LIFO for both baking and merchandise
Equipment: Straight line method used for equipment
Business Financing Information: Use this information to calculate interest rates and insurance information, and to
assess their impact on the company’s financial obligations:
•
•
•
6% interest note payable was made on Jan 31, 2017, and is due Feb 1, 2019.
5-year loan was made on June 1, 2016. Terms are 7.5% annual rate, interest only until due date.
Insurance: Annual policy covers 12 months, purchased in February, covering March 2017 to February 2018. No
monthly adjustments have been made.
ACC 308 Milestone One Guidelines and Rubric
Overview: For Milestone One, which is due in Module Three, you will create adjusting entries for various situations, prepare annual financial reports, calculate
ratios, and develop a brief report for management explaining accounting ratios and the effects of interest rates on the future value of money. You will build on
this milestone in subsequent modules leading up to the final project.
Prompt: First, review the Final Project Scenario document and the accompanying workbook. Using your review of the scenario, develop a management analysis
brief that addresses the critical elements indicated below. Use information from your accounting workbook to support your claims in the management analysis
brief.
Note: Milestone One is a draft of some critical elements of the final project. Note that the management analysis brief corresponds to the management analysis
memo in the final project.
Specifically, the following critical elements must be addressed:
I.
Accounting Workbook: Your accounting workbook must include appropriate calculations, ratios, and notes:
A. Create adjusting entries for financial statement preparation.
B. Create an adjusted trial balance for financial statement preparation.
C. Prepare financial statements for determining the company’s financial position.
D. Calculate ratios for determining the company’s financial health.
II.
Management Analysis Brief: Your management analysis brief should explain financial information to management. Provide evidence from your
accounting workbook to support your ideas when 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.
Rubric
Guidelines for Submission: Your accounting workbook must be submitted as a Microsoft Excel document, and your management analysis brief should be a 1- to
2-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins.
Critical Elements
Proficient (100%)
Needs Improvement (75%)
Accounting Workbook: Creates adjusting entries for
Creates adjusting entries but
Adjusting Entries
financial statements preparation entries are inaccurate
Not Evident (0%)
Does not create adjusting entries
Value
13.5
Accounting Workbook: Creates an adjusted trial balance Creates an adjusted trial balance Does not create an adjusted trial
Adjusted Trial Balance for financial statement
but balances are inaccurate
balance
preparation
13.5
Accounting Workbook: Prepares financial statements for Prepares financial statements
Financial Statements determining the company’s
but calculations are inaccurate
financial position
13.5
Does not prepare financial
statements
Accounting Workbook: Calculates ratios for determining Calculates ratios but calculations Does not calculate ratios
Ratios
the company’s financial health
are inaccurate
13.5
Management Analysis Assesses the company’s financial Assesses the company’s financial Does not assess the company’s
Brief: Company’s
health based on ratio analyses
health but assessment is cursory financial health
Financial Health
presented in the accounting
or contains inaccuracies
workbook
14
Management Analysis Compares ratio analysis to trends
Brief: Ratio Analysis in financial ratios over time for
and Ratios Over Time illustrating their impact,
providing examples to support
claims
Compares ratio analysis to
trends over time for illustrating
their impact, but examples are
cursory, or response contains
inaccuracies
Does not compare ratio analysis to
trends in financial ratios over time
14
Management Analysis
Brief: Compounding
Periods and Interest
Rates
Summarizes the effects of
different compounding periods
and interest rates on future
value of money
Summarizes the effects of
different compounding periods
and interest rates on future
value of money, but summary is
cursory or contains inaccuracies
Does not summarize the effects of
different compounding periods
and interest rates on future value
of money
14
Articulation of
Response
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
4
Total
100%
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