accounting
BCO 123 ACCOUNTING II Mid - Term Task brief & rubrics Background Louisville Farms, is a breeder of racehorses. The CEO John Carter needs assistance and advice with his financials to allow him to concentrate on the horse breeding rather than trying to figure out the best accounting approaches. You have been recruited as a consultant by the CEO as recent graduate from EU Business school to help out. The mid-term assignment will focus on and consolidate your knowledge developed in the first half of the course. It should give you an opportunity to demonstrate FULLY your knowledge and understanding. Task
• You are required to do a report. This is an individual task • The assignment consists of a case study which is attached below • The task will cover the contents from week 1 to week 4. • Please ensure your address all the points are covered in your responses • Format to be submitted: A word document • Include a Cover, Table of Contents, References
Formalities:
• Wordcount: 2000 - 2500 words, excluding bibliography • Cover, Table of Contents, References and Appendix are excluded of the total wordcount. • Font: Arial 12,5 pts. • Text alignment: Justified. • The in-text References and the Bibliography have to be in Harvard’s citation style.
Submission: Week 4 – Via Moodle (Turnitin). 23 August 23:59 CEST
Weight: This task is 40% of your total grade for this subject.
Tips to achieve the highest success
• The answers should be clear and well presented • There should be no mathematical errors, you have adequate time to do this properly. • Show real understanding in any open questions. • There are marks for presentation
This task assesses the following learning outcomes:
• Understanding the recognition of fixed assets and purpose of depreciation • Understanding shareholder/stockholders equity and what each element means • Understanding Liabilities
Rubrics Exceptional
90-100 Good 80-89
Fair 70-79
Marginal fail 60-69
Fail <60
Knowledge (30%)
Student correctly defines and describes the topics of each at all levels demonstrating a full understanding of the essay theme.
Student defines and describes the topics of each key stage, demonstrating a good understanding of the essay theme (may lack a key aspect).
Student makes a fair attempt at defining and describing the topics however details regarding the business in question are missing.
Student makes an attempt at defining and describing the topics, however important details regarding analysis of the business in question are missing
Student fails to correctly define or describe the key elements of the business in question, demonstrating a lack of understanding of the topic.
Critical evaluation (30%)
There is very good evidence of critical appraisal of ideas and concepts, the insights are outstanding.
Evidence of critical appraisal of ideas and evaluation is good.
There is some evidence of critical appraisal of ideas and concepts, but the analysis and insights are rudimentary for this level of study.
There is limited evidence of critical appraisal of ideas and concepts and/or those that are offered are weak
There is no critical appraisal of ideas and concepts and/or those that are offered are weak
Application (30%)
Applies knowledge and skills in familiar contexts with a high degree of effectiveness, providing relevant examples that support points.
Applies knowledge and skills in familiar contexts with considerable effectiveness, providing some relevant examples that make a good attempt at supporting points.
Applies knowledge and skills in familiar contexts with limited effectiveness, few/ irrelevant examples provided.
Applies knowledge, but does so incorrectly with very weak examples.
No application of knowledge. No examples are provided.
Communication (10%)
Uses conventions, vocabulary, and terminology of the discipline with a high effectiveness.
Uses conventions, vocabulary, and terminology of the discipline with considerable effectiveness.
Uses conventions, vocabulary, and terminology of the discipline with some effectiveness.
Uses conventions, vocabulary, and terminology of the discipline with limited effectiveness.
Work is poorly written and/or difficult to understand.
QUESTION 1: (Points 35)
Louisville Farms, a breeder of racehorses, paid $432,000 cash for a prize-winning stallion on January 1, 2013. The stallion is depreciated on a straight-line basis, with depreciation for partial years rounded to the nearest month. Estimated useful life was nine years, with no residual value. After owning the animal for six years and five months, Louisville Farms sold the stallion on May 31, 2019, for cash of $85,000. Depreciation had last been recorded on December 31, 2018.
1.1. Compute to the nearest full month depreciation for the fractional period from January 1, 2019 to May 31 of 2019. $______________ (Show your calculations).
1.2. Compute the book value of the stallion at May 31, 2019, the date of sale. $______________ (Show your calculations).
1.3. Compute the gain or loss on the sale of the stallion. $______________ [gain/loss] (Show your calculations).
1.4. In the space provided below, prepare the journal entry to record the sale of the stallion on
May 31, 2019. [Use Breeding Stock as the title of the asset account. Assume that depreciation to date of sale already has been recorded.] (Show your calculations).
2009 General Journal
May 31
QUESTION 2: (Points 15)
2.1. Define bonds and explain the type of bonds you think the CEO, Mr. Carter should look at and why? 2.2. Explain the income tax advantage of raising capital by issuing bonds rather than by selling capital stock. 2.3. There is a business saying that “You shouldn't be in business if your company doesn't earn higher than bank rates.” This means that if a company is to succeed, its return on assets should be significantly higher than its cost of borrowing. Explain this saying to Mr. Carter and tell him why is this so important?
QUESTION 3: (Points 35) 3.1. Why is noncumulative preferred stock often considered an unattractive form of investment? 3.2. State the balance sheet or income statement classification (asset, liability, stockholders' equity, revenue, or expense) of each of the following accounts:
A. Cash (received from the issuance of capital stock). B. Organization Costs. C. Preferred Stock. D. Retained Earnings. E. Additional Paid-in Capital. F. Income Taxes Payable.
3.3. Louisville Farms, sold 10,000 shares of common stock, which has a par value of $8, for $13 per share. The company's balance in retained earnings is $75,000. Prepare the stockholders' equity section of the company's balance sheet.
QUESTION 4 (15 Points) Analysing Statements
The statements of Woody Woodpecker Corp. contain the following information: 2019 2018 Cash & Cash Equivalents $ 65,000.00 $ 42,000.00 Accounts Receivable $ 44,000.00 $ 51,000.00 Inventory $ 129,000.00 $ 102,000.00 Prepaid Expenses $ 12,000.00 $ 9,200.00 Other Current Assets $ 9,500.00 $ 8,400.00 Total Assets $ 450,000.00 $ 390,000.00 Non-Current Liabilities $ 180,000.00 $ 180,000.00 Total Liabilities $ 270,000.00 $ 210,000.00 Income from Operations $ 550,000.00 $ 490,000.00 Interest Expense $ 95,000.00 $ 86,000.00
Instruction: (show your calculations and round to 2 decimal places) From the above information calculate: Current Ratio 2019
• Quick Ratio 2019
• Debt Ratio 2019
• Working Capital 2019
• Percentage Change in Working Capital Percentage Change in Total Liabilities Time-Interest-Earned Ratio 2019