Case Study - Financial Accounting: Excel file - Module 01 Page 1, Page 2 and Page 3
Case Study - Financial Statement Analysis: Excel file - Module 02 Page 1, Page 2 and Page 3
Case Study - Full Disclosure in Financial Reporting and Management Responsibility: Excel file - Module 03 Page 1 and Page 2
Case Study - Management Decision: Excel file - Module 04 Page 1 and Page 2
Case Study - Professional Business Ethics and Internal Control: Excel file - Module 05 Page 1, Page 2 and Page 3
Case Study - Presentation and Final Exam
Your final deliverable is a Case Study presentation addressed to your instructor which outlines the financial situation of the company. In this proposal,
you will comment on each of the business areas or challenges outlined in the timeline above (e.g. Financial Accounting, Financial Statement Analysis,
and so on). The proposal should include adequate and credible research to support your decision about these areas or challenges. In addition, when
outside sources are used, you must include APA-style in-text citations and a reference list. For more information on APA, visit the APA Guide:
Your final project is due in Module 6. The Case Study project is the main project for this course and will be due along the way. The assignments and
modules that are due are noted in bold in the timeline below. As you can see, your first assignment "Case Study - Financial Reporting" is due in Module
Each assignment leading up to the final project is evaluated and graded independently. Your instructor will provide specific grading criteria for each step
of the project prior to its due date.
Case Study Introduction
Transferable Skills are a set of essential abilities that will position students for success as they develop and build their
careers. College faculty and staff believe it is important that all Rasmussen graduates develop these skill sets, as having
expertise in these areas will be beneficial throughout one's life. Employers have also identified these skills as being
essential in well-rounded employees.
In this course, you will have the opportunity to learn and demonstrate each of these skills. These skills will be measured as
a portion of our course project that has been designed to replicate an authentic workplace project. These skills are the
following: Communication, Critical Thinking, Digital Fluency, Diversity and Teamwork, Ethics and Professional
Responsibility, and Information Literacy.
How can I learn more about the Transferrable Skills? Rasmussen College faculty and staff have worked together to create
a visual guide to each of the Transferable Skills. You are able to view the entire set of six guides at the following location:
This Case Study is the major lesson material for this course and incorporates the use of transferable skills.
Company Name: GolfPro Center
Millions of people every day must make informed decisions about organizations. To make the decisions these people need
information. Accountants measure the activities of an organization and communicate those measurements to others.
Accounting information provided for internal users, such as managers, is referred to as managerial accounting; accounting
information provided to external users is referred to as financial accounting. The two functions of financial accounting are to
measure business activities of a company and then to communicate those measurements to external parties for decisionmaking purposes.
Let’s say you are ready to begin your new venture of working as the Accounting Manager for a new start-up golf center
called GolfPro Center. The purpose of the golf center is to provide PGA-certified golf instruction and essentials to
customers, such as junior players to develop their opportunity for top university programs. By using the base network of
customers, the company intends to expand to sell nationwide as an integrated multi-channel retailer. The target market of
junior league will be to individual golf pro shops, golf teams and eventually lead to selling through an online store. In
additional to future new store openings, a significant part of the company's strategy is to continue to enhance the internet
aspects of the direct to customer channel. The plan also entails the ongoing development of their own brand portfolio as
they continue to grow.
The golf retail industry is highly fragmented among mass merchants, off course specialty retailers, Internet merchants,
warehouse type merchants and on course pro shops. The off course specialty golf retail industry has become extremely
competitive as general sporting goods or their golf specialty retails have expanded their markets. The company will face
competition as competitors enter the marketplace in the existing markets.
Steve Smith is the owner and Chief Executive Officer of the company. He has appointed a close family member, Mike
Smith as the Chief Financial Officer. You were recently hired by Mike Smith as the Accounting Manager. Your first main
function is to set up the accounting department structure and financial statements. The corporate office is located in
Chandler, Arizona. Let’s look at some initial activities of functions within the new company. The company opened business
on December 1, 2016. You also started employment on this same date. You have been tasked with setting up the
accounting department and internal control process. The financial statements, which you will prepare, will be the first set of
financials for the company. You will also be tasked with setting up the financial notes and management's discussion and
analysis portion of the financial statements. This will include company information, accounting policies, revenue recognition
and inventory components. You will also encounter a few ethical situations along the way which will define your accounting
Let’s talk about how the company developed the investment for opening the business. The company needed about
$35,000 to get the business up and going. Since the company did not have that amount of money to start the business,
they began looking for investors. With their money, investors buy ownership in the company and have the right to share in
the organizations profits. Each share of ownership is typically referred to as a share of common stock. For GolfPro Center
they sell 1,000 shares of common stock for $25 each, receiving cash of $25,000 from investors. The 1,000 shares include
300 sold to family for $7,500, giving them 30% (= 300/1,000) ownership in the company. The company also offered you
100 shares for $2,500, giving you 10% ownership. The remaining 600 shares include 300 to extended partners, 200 to a
friend, and 100 to the owners childhood golf coach. The company now has $25,000 from investors.
To raise the remaining cash needed, the company will borrow $10,000 from a local bank, which is agreed to repay within
three years. Thus, the bank is the creditor. Now, with the $35,000 of cash obtained from investors and creditors, the
company buys equipment. This equipment costs $24,000, leaving $11,000 cash for future use. At this point, the company
has the following resources that can be used for operations.
The investors and creditors has the claims to the company’s resources. Creditors have claims equal to the amount loaned
to the company, $10,000. In other words, $10,000 of the company’s resources are promised to the local bank. Investors
have claims to all remaining resources, $25,000.
You manage the resources of the company on behalf of the owners (stockholders, in this case), while the owner is also an
investor this will help in aligning the interests with the other investors in the company. This is common in many start-up
Formally defined, a corporation is a company
separate is that the stockholders have limited
responsible for the financial obligations of the
$25,000 if the company fails, but they cannot
that is legally separate from its owners. The advantage of being legally
liability. Limited liability prevents stockholders from being held personally
corporation. Stockholders of GolfPro Center can lose their investment of
lose any of their personal assets (such as homes, cars, computers, and
Other common business forms include sole proprietorships and partnerships. A sole proprietorship is a business owned by
one person; a partnership is a business owned by two or more persons. If the owner had decided to start GolfPro Center
without outside investors, he would have formed a sole proprietorship. However, because he did not have the necessary
resources to start the business, being a sole proprietorship (or even one member of a partnership) was not a viable option.
Thus, a disadvantage of selecting the sole proprietorship or partnership form of business is that owners must have
sufficient personal funds to finance the business in addition to the ability to borrow money. Another disadvantage of being a
sole proprietorship or partnership is that neither offers limited liability. Owners (and partners) are held personally
responsible for the activities of the business.
Sole proprietorships and partnerships do offer the advantage of lower taxes compared to corporations. Sole proprietorships
and partnerships are taxed at the owner’s personal income tax rate, which is typically lower than the corporate income tax
rate. In addition, a corporation’s income is taxed twice (known as double taxation): (1) the company first pays corporate
income taxes on income it earns and (2) stockholders then pay personal income taxes when the company distributes that
income as dividends to them.
What information would GolfPro Center’s investors and creditors be interested in knowing to determine whether their
investment in the company was a good decision? Ultimately, investors and creditors want to know about the company’s
resources and their claims to those resources. Accounting uses some conventional names to describe such resources and
GolfPro Center has a liability of $10,000 to the local bank. Other examples of liabilities would be amounts owed to
suppliers, employees, utility companies, and the government (in the form of taxes). Liabilities are claims that must be paid
by a specified date.
Investors, or owners, have claims to any resources of the company not owed to creditors. Therefore GolfPro Center, this
amount is $25,000. We refer to owners’ claims to resources as stockholders’ equity, because stockholders are the owners.
The relationship among the three measurement categories is called the accounting equation. GolfPo Center has assets of
$35,000 and liabilities of $10,000. The stockholder equity is $25,000.
Of course, all owners hope their claims to the company’s resources increase over time. This increase occurs when the
company makes a profit. Stockholders claim all resources in excess of amounts owed to creditors; thus, profits of the
company are claimed solely by stockholders.
You will calculate the company’s profits by comparing its revenues and expenses. Revenues are the amounts recorded
when the company sells products or provides services to customers. For example, when you or one of your employees
provides golf training to a customer, the company records revenue. However, as you’ve probably heard, “It takes money to
make money.” To operate the academy, you’ll encounter many costs. For example, you’ll have costs related to salaries,
rent, supplies, and utilities.
You’ll notice the use of the term net to describe a company’s profitability. In business, the term net is used often to describe
the difference between two amounts. Here, we measure revenues net of (or minus) expenses, to calculate the net income
or net loss. If we assume that by the end of the first month of operations GolfPro Center has total revenues of $7,200 and
total expenses of $6,000, then we would say that the company has net income of $1,200 for the month. This amount of
profit increases stockholders’ claims to resources but has no effect on creditors’ claims.
When the company has positive net income, it will either distribute those profits back to its stockholders or retain those
profits to pay for future operations. For example, suppose you decide that because GolfPro Center has net income of
$1,200, a cash payment of $200 should be returned to stockholders at the end of the month. These cash payments to
stockholders are called dividends.
The other $1,000 of net income adds to stockholders’ equity of the company. Thus, when GolfPro Center has net income of
$1,200, stockholders receive a total benefit of $1,200, equal to $200 of dividends received plus $1,000 increase in
stockholders’ equity in the company they own.
Let's now proceed to the your new journey in accounting with GolfPro Center.
Module 01: Financial Accounting
Preparing the Financial Statements
Your function as accounting manager is to prepare the financial statements for the first operating period of December 2016.
The December 31, 2016 adjusted trial balance for GolfPro Center is presented below. Using the Trial Balance, complete the following:
1. Prepare an income statement for the year ended December 31, 2016
2. Prepare a statement of stockholder's equity for the year ended December 31, 2016 assuming no common stock was issued during 2016.
3. Prepare a classified balance sheet as of December 31, 2016.
Keep in mind, the beginning balances are zero only because this is the first month of operations for GolfPro Center.
Trial Balance December 31, 2016
For the period ending December 31, 2016
For the period ended December 31, 2016
Statement of Stockholder's Equity
For the period ended December 31, 2016
Beginning Balance (Dec 1)
Issuance of common stock
Add: Net Income for the period
Ending balance (Dec 31)
Total Stockholders Equity
For the period ended December 31, 2016
Total Current Assets
Long Term Assets:
Less: Accumulated Depreciation
Total Long term assets
Total Current Liabilities
Long Term Liabilities:
Total Stockholders Equity
Total Liabilities & Stockholders Equity
Critical Thinking: Clarity and Precision
Communication with CFO: In the complexity of preparing the financial statements, the CFO tells you that he prefers the single step income statement
because the multiple step format seems to overstate the income. Express in a short declarative manner, how would you respond to this question?
We should be using a multiple-step income statement since we company that is just starting out. We want to be able to attract more investors and using
a multiple-step income statement will do that. Using this method makes it easier for investors to digest our performance and evaluate the financial health of
our company. A multiple-step income statement does offer more detailed information about our gross profit and operating profit. It itemizes the sources of
revenue and expense and presents it as different lined items, Investors and shareholder’s will be able to better read and understand statement.
Communication: Language Usage
Explain how financial accounting information is communicated through financial statements to internal and external users. Construct widely varied sentence
types and advance grammatical concepts to explain insight.
Financial statements are communicated through periodic reports that are published by our company for the purpose of providing information. This
information is beneficial to our shareholders, investors, lenders, and potential new investors. It gives them insight on how well our company handles its
assets and operations. It allows them to make informed decisions on if they would like to invest more or pull their shares in the company.
Critical Thinking: Creativity and Innovation
Describe the role that financial accounting plays in the decision making process. In your response, use human and/or professional in field knowledge
through the creation of the response.
Financial accounting serves an important role by providing information that is useful in investments and lending decisions. No single piece of a
company’s information better explains companies’ stock price performance than the financial accounting net income. A company’s debt level is an important
indicator of management’s ability to respond to business situation and the possibility of bankruptcy.
Module 01: Financial Accounting
Cash Flow Statement
The below information are transactions which analyze the cash effects on GolfPro Center.
Use the information provided to complete the Statement of Cash Flow.
External Transactions of GolfPro Center
Receive cash in advance for 12 golf training
sessions to be given in the future $600
Pay salaries to employees $2800
Pay cash dividends of $200 to
External Transactions in December
Sell shares of common stock for $25,000 to
obtain funds necessary to start the
Borrow $10,000 from the local bank and
sign a note promising to repay the full
amount of the debt in three years.
Purchase equipment necessary for giving
golf training, $24,000 cash
Pay one year of rent in advance, $6000
($500 per month).
Purchase supplies on account, $2,300.
Provide golf training to customers for cash,
Provide golf training to customers on
Statement of Cash Flow
For the period ended December 31, 2016
Cash Flows from Operating Activities
Net cash flows from operating activities
Cash Flows from investing Activities
Net Cash Flows from Investing Activities
Cash Flows from Financing Activities
Issue common stock
Borrow from bank
Net cash flows from financing activities
Net increase in cash
Cash at the beginning of the period
Cash at the end of the period
Communication: Audience and Delivery
In the space provided below, explain to ...
Purchase answer to see full