Senior ACCOUNTANT ANALYSIS, assignment help

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timer Asked: Nov 15th, 2016
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Question Description

Complete the steps in the attached template.

Step 1: Financing

The junior accounting team has assembled a Financing Report that (a) offers three options for securing the additional funds required to meet the new order; and (b) details the criteria Shaun, the owner of SunsTruck, would like you to consider when choosing one of the options. Based on this report:

  • Identify which financing option you think is the best option for SunsTruck to pursue given Shaun’s constraints. Explain the rationale for your decision.


Step 2: Accounting Cycle

A junior accountant is working to get everything in order for the new financing and has come to you with a question about what do next in the accounting cycle.

  • Read the email the junior accountant sent you and identify the best next step to take in the accounting cycle. Explain your reasoning.

Step 3: Financial Statements

A potential investor has been identified, but before it is willing to commit, it has requested information about SunsTruck’s current debt from the junior accountants.

  • Identify the correct financial statement for your junior accountants that will provide the investor with the information it has requested. Explain to your junior accountants why you are giving them this financial statement and where the debt information is located.

Step 4: Financial Analysis

If you were the type of financier selected in Step 1, would you invest in SunsTruck? Explain the rationale for your decision.

Note: While representative of possible situations faced by SunsTruck Sunglasses, all scenarios in this assignment are fictional. Real Business Large discount retailers like Target and Walmart employ large teams of Finance and Accounting professionals to help measure and understand the financial health of the business. Financial and accounting information helps these businesses make educated financial decisions, such as whether or not to continue partnering with a retail supplier. While often smaller businesses, it is equally important for these retail suppliers to use financial and accounting data to make educated decisions, such as the best approach to gaining additional funding. Your Role This week, you’ll assume the role of Senior Accountant with SunsTruck Sunglasses. What is a Senior Accountant? Senior accountants take ownership of reporting costs, profitability, margins and expenditures for a given business. They use the principles of accounting to analyze sales information, create financial reports, make recommendations about the financial health of the company, and more. They are also responsible for training junior accounting staff. For the last six months, SunsTruck has partnered with the discount retail store to run a pop-up sunglasses stand in their stores for a big summer promotion. Due to the high customer purchase rate, the store has requested stock for five additional stores. SunsTruck needs to increase its capacity to meet the additional demand. In order to do so, SunsTruck needs additional money. In this assignment, you will need to help determine which type of financing option is best for your company and train your junior accountants on the accounting cycle and financial statements. 1 Instructions STE P 1: FINANCING The junior accounting team has assembled a Financing Report that (a) offers three options for securing the additional funds required to meet the new order; and (b) details the criteria Shaun, the owner of SunsTruck, would like you to consider when choosing one of the three options. Based on this report: • Identify which financing option you think is the best option for SunsTruck to pursue given Shaun’s constraints. Option 1: Equity Option 3: Debt + Self-Financing Option 2: Debt Explain the rationale for your decision. 2 STE P 2: ACCOUNTING CYCLE A junior accountant is working to get everything in order for the new financing and has come to you with a question about what do next in the accounting cycle. • Read the email the junior accountant sent you and identify the best next step to take in the accounting cycle. Explain your reasoning. 3 STE P 3: FINANCIAL STATE ME NTS A potential investor has been identified, but before it is willing to commit, it has requested information about SunsTruck’s current debt from the junior accountants. • Identify the correct financial statement for your junior accountants that will provide the investor with the information it has requested. Balance Sheet Income Statement Cash Flow Statement Explain to your junior accountants why you are giving them this financial statement and where the debt information is located. 4 STE P 4: FINANCIAL ANALYSIS If you were the type of financier selected in Step 1, would you invest in SunsTruck? Explain the rationale for your decision. 5
SHAUN’S CRITERIA: Hi Team, I wanted to provide you some guidelines as you determine how we’ll finance our expansion. Please give this careful consideration, as we need to get this right. 1. I estimate we’ll need $150,000 to increase capacity in order to stock the five additional pop-up stands 2. We’ll need to make sure we have additional funds available to increase our marketing efforts to stimulate demand 3. Cash flow is going to be tight, so I’d like to minimize interest payments 4. I’d like to maintain or increase our profit margins 5. Since I don’t have a lot of experience with big discount retailers, I’d like to add a thought partner with experience in this channel 6. If we’re successful over the next two years, we’ll likely seek additional capital to expand into more stores, so I’d like to do all we can now to enhance our credibility We need to move on this quickly, so I’d like an answer by the end of the week. -Shaun 1 FINANCING OPTIONS Option 1: Equity Raise $150,000 from a venture capital firm in exchange for 30% of the company Option 2: Debt Secure a loan of $150,000 at a 10% annual interest rate, to be repaid over 7 years Option 3: Debt + Self-Financing Secure a loan of $100,000 at a 7% annual interest rate, to be repaid over 7 years, and selffinance the remaining $50,000 JUNIOR ACCOUNTANT EMAIL: Hi, I’m working on expenses from the last quarter for the revised income statement, but I’m unsure of what to do next. I grouped similar transactions to compile the following list: • inventory purchases • automotive maintenance cost • marketing expenses • travel expenses • payroll expenses • training and development costs • interest expenses • office rent • technology purchases • raw material purchases • office supplies expenses How would you like me to proceed given where we are in the process? Thanks in advance for your guidance. Best, Jenna S. 2 SUNSTRUCK SUNGLASSES INCOME STATEMENT For Year Ended September 30, 2016 REVENUES Sales revenues $778,590 Other revenue $11,000 Total revenue $789,590 COST OF GOODS SOLD (COGS) GROSS PROFIT ($428,225) $361,366 EXPENSES Depreciation and amortization ($18,820) Selling, general and administrative expenses ($78,959) Marketing and advertising expenses ($55,271) Total expenses INCOME FROM OPERATIONS ($153,050) $208,315 OTHER EXPENSES Interest expense PRETAX INCOME Income tax expense NET INCOME ($51,000) $157,315 ($55,060) $102,255 $22,500 3 SUNSTRUCK SUNGLASSES BALANCE SHEET At September 30, 2016 ASSETS CURRENT ASSETS Cash $28,000 Accounts receivable $55,220 Merchandise inventories $62,280 Total current assets $145,500 LONG-TERM ASSETS $468,000 Property, truck and equipment TOTAL ASSETS $613,500 LIABILITIES CURRENT LIABILITIES Accounts Payable $37,500 LONG-TERM LIABILITIES Truck loan $40,000 B+M loan $360,000 Operating loan $42,000 Total long-term liabilities $442,000 TOTAL LIABILITIES $479,000 SHAREHOLDERS’ EQUITY CONTRIBUTED CAPITAL RETAINED EARNINGS $12,000 $122,000 TOTAL SHAREHOLDERS’ EQUITY $134,000 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $613,500 4 SUNSTRUCK SUNGLASSES STATEMENT OF CASH FLOWS For Year Ended September 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Cash collected from customers Cash paid to suppliers and employees $733,780 ($524,520) Cash paid for interest ($55,060) Cash paid for taxes ($55,060) Net cash provided by operating activities $99,139 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid on truck loans ($20,000) Cash paid on B+M loans ($40,000) Net cash used for investing activities ($60,000) CASH FLOWS FROM FINANCING ACTIVITIES Cash received from operating cash loan $12,000 Net cash provided by financing activities $12,000 NET INCREASE IN CASH DURING YEAR CASH AT BEGINNING OF YEAR $75,000 CASH AT THE END OF YEAR TO DATE $51,139 ($23,255) $28,000 5

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Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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