FINAL PROJECT WORKBOOK.xlsx - Southern New Hampshire University ACC309 Intermediate Accounting III MILESTONE 1(Due in Module 3 MILESTONE 2(Due in Module

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Unformatted text preview: Southern New Hampshire University ACC309 - Intermediate Accounting III MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) Instructions Milestone 1 1. Adjusting entries Prepare adjusting entries for: Unrealized loss tax issues 1. Calculate capital lease obligations 2 See rubric for written portion of milestone 1 Calculate pension payouts 3 Prepare adjusting entries for: Capital leases Pension payouts See rubric for written portion of milestone 2 FINAL PRO FINAL PROJECT (Due in Module 7) 1. Prepare adjusting entries for: Patent Major repair capitalization 2 Complete adjusted trial balance 3 Prepare revised financial statements Prepare a statement of comprehensive income include on the revised income statement 4 Determine the impact of expansion options on earnings per share See rubric for written portion of the final project Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR MILESTONE 1 (Due Week 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 Week 7 ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, prepare appropriate adjusting entries and post to the trial balance workbook (r ADJUSTING ENTRIES Prepare adjusting entries for unrealized loss Prepare adjusting entries for tax issues MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 1 A. Identify sources of other comprehensive income not included in net income. B. Explain rationale for the inclusion as comprehensive income (as opposed to net income) of nondisclosure within note C. Evaluate impacts of company goals and finances for their implications on stockholder equity, using financial informati D. Evaluate impacts of company goals and finances for their implications on retained earnings per share, using financial E. Explain the impact of issuing preferred stock or debt for determining changes to equity structures. F. Assess the impact of changes to current tax structure for articulating changes relevant to the company. FINANCIAL INFORMATION FOR THIS MILESTONE Comprehensive income items · Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale · Market value at the balance sheet date is $5,235,00 · Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Tax information and implications · $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary a · The company uses straight line depreciation for book and MACRS depreciation for the tax return · MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. · There have been recent tax structure changes the could impact the company. Peyton Approved has been a C C beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state). Stockholder Equity Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront loc launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 o profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding) 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds HOME he trial balance workbook (red tab) of nondisclosure within notes. uity, using financial information to support claims. gs per share, using financial information to support claims. the company. ensive income x. Prepare the necessary adjusting entry. the tax return for the deferred tax. ton Approved has been a C Corp since the ederal, 5% state). has added two storefront locations and e next 6 months. ate an additional $600,000 of after-tax s is currently outstanding) Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies Land Building Baking Equipment PEYTON APPROVED TRIAL BALANCE As of December 31, 2017 Dr Cr 1,488,999.34 5,500,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 250,000.00 1,250,000.00 2,254,140.00 Accumulated Depreciation Patent Accounts Payable Wages Payable Interest Payable Current Portion of Bonds Payable Income Taxes Currently Payable Accrued Pension Liability Accrued Employees Health Insurance Lease Liability Deferred Tax Liability Bonds Payable Preferred Stock Common Stock Beginning Retained earnings Dividends - Preferred 50,000.00 Dividends - Common 5,250,000.00 Bakery Sales Merchandise Sales Cost of Goods Sold - Baked 10,954,907.36 Cost of Goods Sold - Mercha 88,994.79 Rent Expense 1,576,731.95 Wages Expense 2,604,526.23 Misc. Supplies Expense 263,224.56 Repairs and Maintenance 47,353.05 328,282.00 1,555,212.85 250,203.31 21,888.22 1,000,000.00 1,042,118.16 4,000,000.00 500,000.00 1,750,000.00 2,213,122.59 33,881,157.15 124,795.80 Business License Expense 211,757.65 Misc. Expense 141,171.08 Depreciation Expense 634,520.00 Insurance Expense 112,937.69 Advertising Expense 160,413.49 Interest Expense 484,703.27 Telephone Expense 50,821.34 Pension Expense Retired Employees Health Ins. Patent Amortization Unrealized Gain/(Loss) on Marketable Securities Held for Sale Income Taxes Deferred tax Expense 4,168,472.62 46,666,780.08 46,666,780.08 (1) (2) (3) (4) (5) (6) (6b) (7) (8) HOME Adjusting entries Dr Cr 265,000.00 106,589.40 27,000.00 Dr 1,488,999.34 5,235,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 250,000.00 1,250,000.00 2,387,729.40 Cr 328,282.00 50,000.00 20,000.00 2,500.00 47,500.00 1,555,212.85 250,203.31 21,888.22 1,000,000.00 1,042,493.16 107,041.70 43,718.91 86,589.40 - 52,325.25 4,000,000.00 500,000.00 1,750,000.00 2,213,122.59 375.00 107,041.70 43,718.91 106,589.40 52,325.25 50,000.00 5,250,000.00 33,881,157.15 124,795.80 20,000.00 27,000.00 10,954,907.36 88,994.79 1,556,731.95 2,604,526.23 263,224.56 20,353.05 50,000.00 107,041.70 43,718.91 2,500.00 265,000.00 375.00 52,325.25 674,550.26 674,550.26 211,757.65 91,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 107,041.70 43,718.91 2,500.00 - 265,000.00 - 4,168,847.62 52,325.25 46,956,830.34 To record unrealize loss on Marketable Securities To adjust income taxes for correct effective rate $1500 meals permanent difference x 25% To record Deffered taxes for timing difference on book vs MACRS depreciation To record pension liability To record Health insurance expense and Liability To record leased asstet and Liabilty: (20000- 106589.40) To credit amount back to rent/ease exense 46,956,830.34 milestone 1 milestone 1 milestone 1 milestone 2 milestone 2 milestone 2 final final HOME Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR MILESTONE 2 (Due Week 5) IMPORTANT NOTE: Make sure to completely review the Rubric for Milestone 2 Use the data from this Milestone and begin working on your final presentation due in Week 7 ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, make calculations (green tab) and prepare appropriate adjusting entries and post t workbook (red tab) CAPITAL LEASES Calculate capital lease obligations Prepare appropriate adjusting entries PENSION PAYOUTS Calculate pension liability Calculate health insurance liability ADJUSTING ENTRIES Prepare adjusting entries for capital lease obligations Prepare adjusting entries for pension payouts MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 2 A. Explain the implications of capital lease based on how it relates to the company’s equipment usage. B. Explain how postretirement plans will impact the company financially in the short and long term, using examples accounting workbook to support claims. FINANCIAL INFORMATION FOR THIS MILESTONE Postretirement Benefits Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Manage requested that you report the short- and long-term financial implications of this. · The company is currently employing 60, and actuaries estimate that the company has a pension liability of · The estimated cost of retired employees’ health insurance is $43,718.91. · Prepare adjusting entries for the pension liability and the health insurance liability Leases · Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years w interest rate of 5%. At the end of the 6 years, Peyton will own them. Make any necessary adjusting entries. HOME usting entries and post to the trial balance ng term, using examples from the tired employees. Management has has a pension liability of $107,041.70. e lease runs for 6 years with an implicit ary adjusting entries. Capital Leases Years 1 2 3 4 5 6 Lease Payment $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00 Payment 1 2 3 4 5 PVF @ 5% Present Value 1 20,000.00 0.952380952381 19,047.62 0.9070294784581 18,140.59 0.8638375985315 17,276.75 0.8227024747919 16,454.05 0.7835261664685 15,670.52 Lease Obligation 106,589.53 Lease Obligation Interest Expense Reduced by Discounted Amt $ - $ 952.38 $ 1,859.41 $ 2,723.25 $ 3,545.95 $ 4,329.48 Total $ 13,410.47 Lease Obligation $ 20,000.00 $ 20,000.00 $ 86,589.53 (Balance After payment): $ 20,000.00 $ 4,329.50 $ 19,047.62 $ 67,541.91 1 $ 20,000.00 $ 3,545.98 $ 18,140.59 $ 49,401.32 2 $ 20,000.00 $ 2,723.27 $ 17,276.75 $ 32,124.57 3 $ 20,000.00 $ 1,859.44 $ 16,454.05 $ 15,670.52 4 6 $ 20,000.00 $ 952.41 $ 15,670.52 $ - 5 $ 120,000.00 $ 13,410.60 $ (106,589.40) Ovens were leased on 12/31/17 and a $20,000 payment was made. Since the payment was mde, they ha The PVF is 5.3295 and the asset can be capitalized at $106,590 (20,000 x 5.3295) wich will credit the le Since a payment was made on the day of the lease, there is neither an interest or a depreciation. Howeve Adjustment for capital lease obligation: 31-Dec Equipment $106,589.40 Lease Equipment 31-Dec Lease Equipment Rent Expense $106,589.40 $20,000.00 $20,000.00 Pension Payout · The company is currently employing 60, and actuaries estimate that the company has a pension lia · The estimated cost of retired employees’ health insurance is $43,718.91. 31-Dec Pension Expense Accrued Pension Expense 31-Dec Retired Employees Health Insurance Accrued E,ployees Health Insurance $107,041.70 $107,041.70 $43,718.91 $43,718.91 HOME After payment): Straight Line Depreciation Purchase price $106,589.40 Salvage value Depreciable value $106,589.40 Life (in years) 6 Deprecition Expense $17,764.90 ment was mde, they had a 6 year 5% annuity remaining. wich will credit the lease obligation depreciation. However, the payment for that day reduces lease obligation by the $20,000 payment mpany has a pension liability of $107,041.70. Southern New Hampshire University ACC309 - Intermediate Accounting III INSTRUCTIONS FOR FINAL (Due Week 7) IMPORTANT NOTE: Make sure to completely review the Rubric for Final Project This page contains new information the must be included in the final project but has not been in milestone 1 or mile ITEMS TO COMPLETE FOR THIS MILESTONE: GENERAL In preparation of the annual audit, prepare appropriate adjusting entries and post to the trial balance workbook (red adjusted trial balance and the preliminary 2017 statements (yellow tabs) to prepare revised financial statements that are a Calculate the impact on earnings per share that the expansion options will cause. (Orange tabs) ADJUSTING ENTRIES Prepare appropriate adjusting entries for patent Prepare appropriate adjusting entries for capitalization of machine repair ADJUSTED TRIAL BALANCE Prepare the adjusted trial balance REVISED FINANCIAL STATEMENTS Prepare a revised income statement - include comprehensive income Prepare a revised retained earnings statement Prepare a revised balance sheet EARNINGS PER SHARE Determine the impact on earnings per share caused by each expansion plan option NOTES TO THE FINANCIAL STATEMENTS - Prepare in a Word document - see the rubric for final project A. Compose appropriate footnotes within a statement of comprehensive income in accordance with applicable standards, such as GAAP, International Financial Reporting Standards, and SEC, as applicable. MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for final project I. Evaluate the company’s current performance based on the outcomes of relevant ratio analysis. J. Discuss types of accounting changes encountered and when retrospective and prospective approaches should be K. Predict the impact of new credit policies or a change in product or markets based on relevant ratio analysis. L. Discuss relevant accounting standards for informing the company’s financial reporting strategies. M. Explain how the four-step process was used for effectively correcting and reporting errors in the revision process. FINANCIAL INFORMATION FOR THIS MILESTONE Stockholder Equity / Earnings per share Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months. The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,00 profit. The options are: 1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstandi 2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue) 3) $500,000 each of preferred stock and bonds Other Items · On December 31, 20XX, the company repaired a packaging machine at cost of $27,000.00. It is expected th extend the life of the machine by four years. No depreciation is necessary this year. · The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took e and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense HOME en in milestone 1 or milestone 2 balance workbook (red tab). Use the ial statements that are audit ready. cordance with applicable accounting cable. e approaches should be used. vant ratio analysis. s in the revision process. as added two storefront locations and e next 6 months. te an additional $600,000 of after-tax as is currently outstanding) 000.00. It is expected that the repair will reats. The patent took effect on 1/1/20XX Misc. Expense Assets Current Assets: Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 1,488,999.34 5,500,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 Total Current Assets Long Term/Fixed Assets: Land Building Baking Equipment Accumulated Depreciation Net Fixed assets Liabilities and Owners' Equity Current Liabilities: Accounts Payable 1,555,212.85 Wages Payable 250,203.31 Interest Payable 21,888.22 Current Portion of Bonds Payable 1,000,000.00 Income taxes currently payable 1,042,118.16 16,112,105.00 Total Current Liabilities Long Term Liabilities: Bonds Payable 10%, 20 year 250,000.00 1,250,000.00 2,254,140.00 -328,282.00 3,425,858.00 19,537,963.00 4,000,000.00 Total Long Term Liabilities: 4,000,000.00 Total Liabilities: 7,869,422.54 Preferred Stock - (10,000 authorized, 5,000 issued, 10%, $100 par value) Common Stock - (2,000,000 shares authorized, 1,750,000 issued, $1 par) Retained Earnings Total Assets: 3,869,422.54 500,000.00 1,750,000.00 9,418,540.46 Total Equity 11,668,540.46 Total Liabilities & Equity 19,537,963.00 Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold - Baked Cost of Goods Sold - Merchandise Total Cost of Goods Sold Gross Profit $ 33,881,157.15 124,795.80 34,005,952.95 10,954,907.36 88,994.79 11,043,902.15 22,962,050.80 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Repairs and Maintenance Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Total Operating Expenses: Earnings before Income Tax Income Taxes Net Income 1,576,731.95 2,604,526.23 263,224.56 47,353.05 211,757.65 141,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 6,288,160.31 16,673,890.49 4,168,472.62 12,505,417.87 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/20XX Beginning Balance: plus Net Income $ 2,213,122.59 12,505,417.87 less Dividends: Preferred Common Ending Balance $ 50,000.00 5,250,000.00 9,418,540.46 $ 9,418,540.46 HOME HOME Peyton Approved Income Statement For Year Ended 12/31/20XX Bakery Sales $ Merchandise Sales Total Revenues Cost of Goods Sold - Baked $ Cost of Goods Sold - Merchandise $ Total Cost of Goods Sold Gross Profit 33,881,157.15 124,795.80 10,954,907.36 88,994.79 Operating Expenses: Rent Expense Wages Expense Misc. Supplies Expense Repairs and Maintenance Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense Pension Expense Retired Employees Health Ins. Patent Amortization $ 1,556,731.95 2,604,526.23 263,224.56 20,353.05 211,757.65 91,171.08 634,520.00 112,937.69 160,413.49 484,703.27 50,821.34 107,041.70 43,718.91 2,500.00 Total Operating Expenses: Operating Income Income Taxes Deferred tax Expense Total Tax Expense Net Income 4,168,847.62 52,325.25 Unrealized Gain/(Loss) on Marketable Securities Held for Sal Comprehensive Income HOME 34,005,952.95 11,043,902.15 22,962,050.80 6,344,420.92 16,617,629.88 4,221,172.87 12,396,457.01 265,000.00 12,661,457.01 Peyton Approved Statement of Retained Earnings For Year Ended 12/31/20XX Beginning Balance: plus Comprehensive Inc less Dividends: Preferred Common Ending Balance 2,213,122.59 12,661,457.01 50,000.00 5,250,000.00 9,574,579.60 0 HOME Peyton Approved Balance Sheet As of December 31, 20XX Assets Current Assets: Cash Marketable Securities Accounts Receivable Baking Supplies Merchandise Inventory Prepaid Rent Prepaid Insurance Misc. Supplies 1,488,999.34 5,235,000.00 7,092,495.88 1,605,098.52 128,152.63 71,877.07 207,834.14 17,647.42 Total Current Assets Long Term/Fixed Assets: Land Building Baking Equipment Accumulated Depreciati Net Fixed assets Patent Net of Amortization Total Assets: Accounts Payable Wages Payable Interest Payable Current Portion of B Income taxes curren Accrued Pension Li Accrued Employees Lease Liability Contingent Liability Deferred Tax Liabili 15,847,105.00 Bonds Payable 10% 250,000.00 1,250,000.00 2,387,729.40 -328,282.00 3,559,447.40 2,500.00 19,404,052.40 Preferred Stock - (1 5,000 issued, 10 Common Stock - (2 authorized, 1,750 Retained Earnings oved eet 31, 20XX HOME Liabilities and Owners' Equity Current Liabilities: Accounts Payable 1,555,212.85 Wages Payable 250,203.31 Interest Payable 21,888.22 Current Portion of Bonds Payable 1,000,000.00 Income taxes currently payable 1,042,493.16 Accrued Pension Liability 107,041.70 Accrued Employees Health Insurance 43,718.91 Lease Liability 86,589.40 Contingent Liability - Lawsuit Deferred Tax Liability 52,325.25 Total Current Liabilities Long Term Liabilities: Bonds Payable 10%, 20 year 4,159,472.80 4,000,000.00 Total Long Term Liabilities: 4,000,000.00 Total Liabilities: 8,159,472.80 Preferred Stock - (10,000 authorized, 500,000.00 5,000 issued, 10%, $100 par value) Common Stock - (2,000,000 shares 1,750,000.00 authorized, 1,750,000 issued, $1 par) Retained Earnings 9,574,579.60 Total Equity 11,824,579.60 Total Liabilities & Equity 19,984,052.40 Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticip that it will enable them to earn an additional $...
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