Southern New Hampshire University Management Analysis Brief Project . Management Analysis Brief: Your management analysis brief should explain financial in
Southern New Hampshire University Management Analysis Brief Project . Management Analysis Brief: Your management analysis brief should explain financial information to management. Provide evidence from your
accounting workbook to support your ideas where applicable.
A. Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals.
B. Describe the implications of inventory costing, contingent liabilities, and revenue recognition.
C. Identify potential issues in interpretation of financial information, providing examples to support your ideas. ACC 308 Milestone Two Guidelines and Rubric
Overview: For Milestone Two, which is due in Module Five, you will create pro forma financial statements, notes to the financial statements, and develop a
report for management explaining the impact of pro forma financial statements on the companys expansion plans, implications of inventory costing, contingent
liabilities, and revenue recognition. In your management analysis brief, you will also identify potential issues in interpreting financial statements.
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 Two is a draft of some critical elements of the final project. Note that the management analysis brief informs 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 and statements:
A. Create pro forma financial statements for predicting ability to meet future expansion goals.
II. Notes to the Financial Statements: Your notes must contain the following:
A. Create appropriate notes as year-to-year documentation for managing depreciation, supplies, and inventory.
III. Management Analysis Brief: Your management analysis brief should explain financial information to management. Provide evidence from your
accounting workbook to support your ideas where applicable.
A. Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals.
B. Describe the implications of inventory costing, contingent liabilities, and revenue recognition.
C. Identify potential issues in interpretation of financial information, providing examples to support your ideas.
Rubric
Guidelines for Submission: Your accounting workbook must be submitted as a Microsoft Excel document, notes to the financial statement must be submitted in
a Microsoft Word 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%)
Not Evident (0%)
Value
Accounting Workbook: Creates pro forma financial
Pro Forma Financial statements for predicting ability
Statements
to meet future expansion goals
Creates pro forma financial
statements but calculations
contain inaccuracies
Does not create pro forma
financial statements
18
Notes to the Financial Creates appropriate notes as
Statements: Year-to- year-to-year documentation for
Year Documentation managing depreciation, supplies,
and inventory
Creates appropriate notes as
year-to-year documentation for
managing depreciation, supplies
and inventory, but notes are
cursory or illogical
Does not create appropriate notes
as year-to-year documentation for
managing depreciation, supplies,
and inventory
18
Management Analysis Discusses the impact of pro
Brief: Pro Forma
forma financial statements for
Financial Statements predicting ability to meet future
expansion goals
Discusses the impact of pro
Does not discuss the impact of pro
forma financial statements for
forma financial statements
predicting ability to meet future
expansion goals but explanation
is cursory or contains
inaccuracies
18
Describes the implications of
inventory costing, contingent
liabilities, and revenue
recognition, but description is
cursory or illogical
18
Management Analysis
Brief: Inventory
Costing, Contingent
Liabilities, and Revenue
Recognition
Describes the implications of
inventory costing, contingent
liabilities, and revenue
recognition
Management Analysis Identifies potential issues in
Brief: Issues in
interpretation of financial
Interpretation
information, providing examples
to support ideas
Articulation of
Response
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Does not describe the implications
of inventory costing, contingent
liabilities, and revenue recognition
Identifies potential issues in
Does not identify potential issues
interpretation of financial
in interpretation of financial
information but identification or information
examples provided are cursory
or illogical
18
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
10
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
Total
100%
Southern New Hampshire University
ACC 308 – Intermediate Accounting II
MILESTONE 1 (Due in Module 3)
For full instructions see Instructions
MILESTONE 2 (Due in Module 5)
For full instructions see Instructions
Instructions Milestone 1
1.
Trial Balance
Using the Peyton Approved financial data,
create:
Adjusting Entries
Adjusted Trial Balance
2.
1.
Pro Forma Financial
Statements
Using the given Pro Forma information,
create:
Pro Forma Income Statement
Pro Forma Balance Sheet
Revised Financial Statements
Using the Trial Balance and Preliminary
Revised Balance Sheet
Revised Income Statement
Revised Retained Earnings Statement
Revised Statement of Cash Flows
3.
Instructions Milestone 2
Ratio Analysis
Using the financial statements from 2015,
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
Remember the written portion of the
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 companys 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 suppliers warehouse.
2. At 12/31/17, Peyton has $200 worth of merchandise on consignment at Brunos 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
ref
3
4
1
15.506,70
1.238,07
2
2.114,55
2.114,55
170,49
14.000,00
1.606,44
4
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
4
429.136,32
429.136,32
N APPROVED
L BALANCE
cember 31, 2017
Instructions
Milestone 1
Adjusting entries
Dr
Cr
1.000,00
ref
700,00
3.175,00
200,00
2
2.000,00
4
1.000,00
3.175,00
3
1
200,00
1.200,00
100,00
6.375,00
6.375,00
Adjusted trial balance
Dr
Cr
68.520,04
68.519,91
700,00
18.681,70
1.038,07
200,00
2.114,55
2.114,55
170,49
12.000,00
406,44
1.000,00
23.437,11
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
100,00
432.111,32
432.111,32
–
–
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 Receivable
Baking Supplies
Merchandise Inventory
Prepaid Rent
Prepaid Insurance
Misc. Supplies
Other Receivable – Insurance
Consignment Inventory
Liabiliti
68.520,04
68.519,91
18.681,70
1.038,07
2.114,55
2.114,55
170,49
700,00
200,00
Total Current Assets
162.059,31
Long Term/Fixed Assets:
Baking Equipment
12.000,00
Accumulated Depreciation
-406,44
Net Fixed assets
11.593,56
Total Assets:
173.652,87
Approved
e Sheet
mber 31, 2017
Instructions
Milestone 1
Liabilities and Owners’ Equity
Current Liabilities:
Accounts Payable
23.437,11
Wages Payable
3.383,28
Interest Payable
211,46
Customer Deposit
1.000
Total Current Liabilities
Long Term Liabilities:
Notes Payable
Total Long Term Liabilities:
28.031,85
5.000,00
5.000,00
Total Liabilities:
Common Stock
Retained Earnings
33.031,85
20.000,00
120.621,02
Total Equity
140.621,02
Total Liabilities & Equity
173.652,87
–
Instructions
Milestone 1
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
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
100,00
46.357,95
175.476,18
Instructions
Milestone 1
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
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
175.476,18
less Dividends:
Ending Balance
105.000,00
$ 120.621,02
Instructions
Milestone 1
structions
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
Net Income
Depreciation Expense
Loss on Disposal
$ 175.476,18
677,86
100,00
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
Increase in Other Receivable – Insurance
Increase in Consignment inventory
Increase in Customer Deposit
(25.886,91)
(11.362,84)
(243,10)
(449,55)
(1.004,55)
(114,99)
6.467,11
1.850,48
44,96
(700,00)
(200,00)
1.000,00
Operating Cash Flow
Cash Flow from Investments
Equipment Purchases
Insurance Proceeds
Cash Flow from Investments
Cash Flow from Financing
Repayment of Note Payable
Dividends Paid
Cash Flow from Financing
Net Cash Flow
Beginning Cash
Ending Cash
(6.000,00)
700,00
(10.000,00)
(105.000,00)
0
Instructions
Milestone 1
145.654,65
(5.300,00)
(115.000,00)
25.354,65
43.165,39
68.520,04
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 an
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
Instructions
Milestone 1
2016
Current Ratio (Working Capital )
5,78
5,18
Quick Ratio
4,89
4,60
A/R Turnover
5,91
5,53
Inventory Turnover
7,61
8,81
Gross margin
68%
66%
Return on Sales
53%
52%
average A/R
average inventory
Return on Equity
125%
161%
average equity
Return on Assets
101%
109%
average asset
Instructions
Milestone 1
2015
8042,23
580,27
8622,5
2016
2017
38875,99 55576,46
7318,86
794,97
18681,7
1038,07
200
8113,83 19919,77
8368,165
14016,8
63227,47 105382,9
93225,72 138733,5
Total credit Sales/Average A/R
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 years 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…
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