5-1 final project milestone 2

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Instructions

Southern New Hampshire University
ACC 308 - Intermediate Accounting II
MILESTONE 1 (Due in Module 3)		MILESTONE 2 (Due in Module 5)
	For full instructions see Instructions Milestone 1 page			For full instructions see Instructions Milestone 2 page
1.			1.
	Using the Peyton Approved financial data, create:			Using the given Pro Forma information, create:
	Adjusting Entries			Pro Forma Income Statement
	Adjusted Trial Balance			Pro Forma Balance Sheet
2.
	Using the Trial Balance and Preliminary financial statements, prepare:			Remember the written portion of the Milestone! See the Milestone 2 Assignment Guidelines and Rubric document.
	Revised Balance Sheet
	Revised Income Statement
	Revised Retained Earnings Statement
	Revised Statement of Cash Flows
3.
	Using the financial statements from 2015, 2016, and revised 2017, calculate 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
	Remember the written portion of the Milestone! See the Milestone 1 Assignment Guidelines and Rubric document.

Trial Balance

/xl/drawings/drawing1.xml#'Trial%20Balance%202017'!A1

Ratio Analysis

/xl/drawings/drawing1.xml#'Ratio%20Analysis'!A1

Revised Financial Statements

/xl/drawings/drawing1.xml#'BS%202017%20Revised'!A1

Pro Forma Financial Statements

/xl/drawings/drawing1.xml#'Pro%20Forma%20IS'!A1

Instructions Milestone 1

/xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%201'!A1

Instructions Milestone 2

/xl/drawings/drawing1.xml#'Milestone%202%20Instructions'!A1

Instructions - Milestone 1

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 company’s 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 supplier’s warehouse.
	2. At 12/31/17, Peyton has $200 worth of merchandise on consignment at Bruno’s 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.

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Trial Balance 2017

PEYTON APPROVED
TRIAL BALANCE
As of December 31, 2017
	Unadjusted trial balance			Adjusting entries			Adjusted trial balance
	Dr	Cr	ref	Dr	Cr	ref	Dr	Cr
Cash	67,520.04			1,000.00			68,520.04
Accounts Receivable	68,519.91						68,519.91
Other Receivable - Insurance				700.00			700.00
Baking Supplies	15,506.70			3,175.00			18,681.70
Merchandise Inventory	1,238.07				200.00		1,038.07
Consignment Inventory				200.00			200.00
Prepaid Rent	2,114.55						2,114.55
Prepaid Insurance	2,114.55						2,114.55
Misc. Supplies	170.49						170.49
Baking Equipment	14,000.00				2,000.00		12,000.00
Accumulated Depreciation		1,606.44		1,200.00				406.44
Customer Deposit					1,000.00			1,000.00
Accounts Payable		20,262.11			3,175.00			23,437.11
Wages Payable		3,383.28						3,383.28
Interest Payable		211.46						211.46
Notes Payable		5,000.00						5,000.00
Common Stock		20,000.00						20,000.00
Beginning Retained earnings		50,144.84						50,144.84
Dividends	105,000.00						105,000.00
Bakery Sales		327,322.55						327,322.55
Merchandise Sales		1,205.64						1,205.64
Cost of Goods Sold - Baked	105,834.29						105,834.29
Cost of Goods Sold - Merchandise	859.77						859.77
Rent Expense	24,549.19						24,549.19
Wages Expense	10,670.72						10,670.72
Misc. Supplies Expense	3,000.46						3,000.46
Business License Expense	2,045.77						2,045.77
Misc. Expense	1,363.84						1,363.84
Depreciation Expense	677.86						677.86
Insurance Expense	1,091.08						1,091.08
Advertising Expense	1,549.74						1,549.74
Interest Expense	818.31						818.31
Telephone Expense	490.98						490.98
Gain/Loss on disposal of equipment				100.00			100.00
	429,136.32	429,136.32		6,375.00	6,375.00		432,111.32	432,111.32

Instructions Milestone 1

/xl/drawings/drawing3.xml#'Instructions%20-%20Milestone%201'!A1

Balance Sheet 2017

	Preliminary
Peyton Approved
Balance Sheet
As of December 31, 2017
Assets				Liabilities and Owners' Equity
	Current Assets:				Current Liabilities:
	Cash	68,520.04			Accounts Payable	23,437.11
	Accounts Receivable	68,519.91			Wages Payable	3,383.28
	Other Receivable (insurance)	700.00			Customer Deposit	1,000.00
	Baking Supplies	18,681.70			Interest Payable	211.46
	Merchandise Inventory	1,038.07
	Consignment Inventory	200.00
	Prepaid Rent	2,114.55
	Prepaid Insurance	2,114.55
	Misc. Supplies	170.49
	Total Current Assets		162,059.31		Total Current Liabilities		28,031.85
					Long Term Liabilities:
	Long Term/Fixed Assets:				Notes Payable	5,000.00
	Baking Equipment	12,000.00			Total Long Term Liabilities:		5,000.00
	Accumulated Depreciation	406.44
	Net Fixed assets		11,593.56		Total Liabilities:		33,031.85
					Common Stock	20,000.00
					Retained Earnings	120,621.02
					Total Equity		140,621.02
	Total Assets:		173,652.87		Total Liabilities & Equity		173,652.87

BS 2017 Revised

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets				Liabilities and Owners' Equity
	Current Assets:				Current Liabilities:
	Cash	68,520.04			Accounts Payable	23,437.11
	Accounts Receivable	68,519.91			Wages Payable	3,383.28
	Other Receivable (insurance)	700.00			Customer Deposit	1,000.00
	Baking Supplies	18,681.70			Interest Payable	211.46
	Merchandise Inventory	1,038.07
	Consignment Inventory	200.00
	Prepaid Rent	2,114.55
	Prepaid Insurance	2,114.55
	Misc. Supplies	170.49
	Total Current Assets		162,059.31		Total Current Liabilities		28,031.85
					Long Term Liabilities:
	Long Term/Fixed Assets:				Notes Payable	5,000.00
	Baking Equipment	12,000.00			Total Long Term Liabilities:		5,000.00
	Accumulated Depreciation	406.44
	Net Fixed assets		11,593.56		Total Liabilities:		33,031.85
					Common Stock	20,000.00
					Retained Earnings	120,621.02
					Total Equity		140,621.02
	Total Assets:		173,652.87		Total Liabilities & Equity		173,652.87

Instructions Milestone 1

/xl/drawings/drawing4.xml#'Instructions%20-%20Milestone%201'!A1

Income Statement 2017

	Preliminary
Peyton Approved
Income Statement
For Year Ended 12/31/2017
	Bakery Sales	$ 327,322.55
	Merchandise Sales	1,205.64
	Total Revenues		328,528.19
	Cost of Goods Sold - Baked	105,834.29
	Cost of Goods Sold - Merchandise	859.77
	Total Cost of Goods Sold		106,694.06
	Gross Profit		221,834.13
	Operating Expenses:
	Rent Expense	24,549.19
	Wages Expense	10,670.72
	Misc. Supplies Expense	3,000.46
	Business License Expense	2,045.77
	Misc. Expense	1,363.84
	Depreciation Expense	677.86
	Insurance Expense	1,091.08
	Advertising Expense	1,549.74
	Interest Expense	818.31
	Telephone Expense	490.98
	Gain/Loss on disposal of equipment	100.00
	Total Operating Expenses:		46,357.95
	Net Income		175,476.18

IS 2017 Revised

Peyton Approved
Income Statement
For Year Ended 12/31/2017
Bakery Sales	$ 327,322.55
Merchandise Sales	1,205.64
Total Revenues		328,528.19
Cost of Goods Sold - Baked	105,834.29
Cost of Goods Sold - Merchandise	859.77
Total Cost of Goods Sold		106,694.06
Gross Profit		221,834.13
Operating Expenses:
Rent Expense	24,549.19
Wages Expense	10,670.72
Misc. Supplies Expense	3,000.46
Business License Expense	2,045.77
Misc. Expense	1,363.84
Depreciation Expense	677.86
Insurance Expense	1,091.08
Advertising Expense	1,549.74
Interest Expense	818.31
Telephone Expense	490.98
Gain/Loss on disposal of equipment	100.00
Total Operating Expenses:		46,357.95
Net Income		175,476.18

Instructions Milestone 1

/xl/drawings/drawing5.xml#'Instructions%20-%20Milestone%201'!A1

Retained Earnings 2017

	Preliminary
Peyton Approved
Statement of Retained Earnings
For Year Ended 12/31/2017
	Beginning Balance:	$ 50,144.84
	plus Net Income	175,476.18
	less Dividends:	105,000.00
	Ending Balance	$ 120,621.02

RE 2017 Revised

Peyton Approved
Statement of Retained Earnings
For Year Ended 12/31/2017
	Beginning Balance:	$ 50,144.84
	plus Net Income	175,476.18
	less Dividends:	105,000.00
	Ending Balance	$ 120,621.02

Instructions Milestone 1

/xl/drawings/drawing6.xml#'Instructions%20-%20Milestone%201'!A1

Cash Flow 2017

Preliminary
	Peyton Approved
	Statement of cash Flow
	For Year Ended 12/31/2017
	Net Income		$ 175,476.18
	Depreciation Expense		677.86
				176,154.04
	Increase in Accounts Receivable			(25,886.91)
	Increase in Other Receivable (Insurance)			(700.00)
	Increase in Baking Supplies			(11,362.84)
	Increase in Merchandise inventory			(243.10)
	Increase in Consignment inventory			(200.00)
	Increase in Prepaid Rent			(449.55)
	Increase in Prepaid Insurance			(1,004.55)
	Increase in Misc. Supplies			(114.99)
	Increase in Accounts Payable			6,467.11
	Increase in Wages Payable			1,850.48
	Increase in Interest Payable			44.96
	Increase in Customer deposit			1,000.00
		Operating Cash Flow			145,554.65
	Cash Flow from Investments
	Equipment Purchases			(4,000.00)
		Cash Flow from Investments			(4,000.00)
	Cash Flow from Financing
	Repayment of Note Payable			- 0
	Dividends Paid			(105,000.00)
		Cash Flow from Financing			(105,000.00)
		Net Cash Flow			36,554.65	36,554.65
	Beginning Cash				43,165.39
	Ending Cash				68,520.04

CF 2017 Revised

Peyton Approved
Statement of cash Flow
For Year Ended 12/31/2017
Operating Activities:
Net income			$ 175,476.18
Adjustments for differences between net income and cash flows from operating activites:
Add:	Depreciation expense		677.86
	Increase in Accounts Payable		6467.11
	Increase in Wages Payable		1,850.48
	Increase in Interest Payable		44.96
	Increase in Customer deposit		1,000.00
Less:	Increase in Accounts Receivable		(25,886.91)
	Increase in Other Receivable (Insurance)		(700.00)
	Increase in Baking Supplies		(11,362.84)
	Increase in Merchandise inventory		(243.10)
	Increase in Consignment inventory		(200.00)
	Increase in Prepaid Rent		(449.55)
	Increase in Prepaid Insurance		(1,004.55)
	Increase in Misc. Supplies		(114.99)
Net cash provided by operating activities				$ 145,554.65
Investing Activities:
Equipment Purchases			(4,000.00)
Net cash used for investing activities				(4,000.00)
Financing Activities:
Repayment of Note Payable			- 0
Dividends Paid			(105,000.00)
Net cash provided by finacing activities				(105,000.00)
Net increase in cash				$ 36,554.65
Cash, January 1, 2017				43,165.39
Cash, December 31, 2017				$ 79,720.04
		0

Instructions Milestone 1

/xl/drawings/drawing7.xml#'Instructions%20-%20Milestone%201'!A1

Balance sheet 2015

Peyton Approved
Balance Sheet
As of December 31, 2015
Assets				Liabilities and Owners' Equity
	Current Assets:				Current Liabilities:
	Cash	31507.58			Accounts Payable	15086.84
	Accounts Receivable	35118.97			Wages Payable	1118.83
	Baking Supplies	8042.23			Interest Payable	121.53
	Merchandise Inventory	580.27
	Prepaid Rent	1215.32
	Prepaid Insurance	810.21
	Misc. Supplies	40.51
	Total Current Assets		77,315.09		Total Current Liabilities		16,327.20
					Long Term Liabilities:
	Long Term/Fixed Assets:				Notes Payable	10,000.00
	Baking Equipment	6000			Total Long Term Liabilities:		10,000.00
	Accumulated Depreciation	-677.79
	Net Fixed assets		5,322.21		Total Liabilities:		26,327.20
					Common Stock	20,000.00
					Retained Earnings	36,310.10
					Total Equity		56,310.10
	Total Assets:		82,637.30		Total Liabilities & Equity		82,637.30

Balance Sheet 2016

Peyton Approved
Balance Sheet
As of December 31, 2016
Assets				Liabilities and Owners' Equity
	Current Assets:				Current Liabilities:
	Cash	43,165.39			Accounts Payable	16,970.00
	Accounts Receivable	42,633.00			Wages Payable	1,532.80
	Baking Supplies	7,318.86			Interest Payable	166.50
	Merchandise Inventory	794.97
	Prepaid Rent	1,665.00
	Prepaid Insurance	1,110.00
	Misc. Supplies	55.50
	Total Current Assets		96,742.72		Total Current Liabilities		18,669.30
					Long Term Liabilities:
	Long Term/Fixed Assets:				Notes Payable	15,000.00
	Baking Equipment	8,000.00			Total Long Term Liabilities:		15,000.00
	Accumulated Depreciation	-928.58
	Net Fixed assets		7,071.42		Total Liabilities:		33,669.30
					Common Stock	20,000.00
					Retained Earnings	50,144.84
					Total Equity		70,144.84
	Total Assets:		103,814.14		Total Liabilities & Equity		103,814.14

Income Statement 2016

Peyton Approved
Income Statement
For Year Ended 12/31/2016
Bakery Sales	214,256.48
Merchandise Sales	770.76
Total Revenues		215,027.24
Cost of Goods Sold - Baked	73,159.59
Cost of Goods Sold - Merchandise	549.64
Total Cost of Goods Sold		73,709.23
Gross Profit		141,818.01
Operating Expenses:
Rent Expense	15,694.23
Wages Expense	6,821.76
Misc. Supplies Expense	1,668.18
Business License Expense	1,307.85
Misc. Expense	871.9
Depreciation Expense	433.36
Insurance Expense	697.52
Advertising Expense	740.74
Interest Expense	523.14
Telephone Expense	313.88
Total Operating Expenses:		29,072.56
Net Income		112,745.45

Ratio Analysis

	2017	2016
Current Ratio (Working Capital )	5.78	5.18
Quick Ratio	4.89	4.60
A/R Turnover	5.87	5.04
Inventory Turnover	116.41	107.19
Gross margin	68%	66%
Return on Sales	79%	80%
Return on Equity	125%	161%
Return on Assets	126%	121%

Instructions Milestone 1

/xl/drawings/drawing8.xml#'Instructions%20-%20Milestone%201'!A1

Milestone 2 Instructions

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 location using 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 year’s depreciation for 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 store (from preliminary statements) except no stock. Retained earnings = net income.
	5. Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable.

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Pro Forma IS

	Peyton Approved Second Location
	Pro Forma Income Statement
	For Year Ending 12/31/2018
Bakery Sales		$ 261,858.04
Merchandise Sales		964.51
Total Revenues			$ 262,822.55
Cost of Goods Sold-Baked		84,667.43
Cost of Goods Sold-Merchandise		687.82
Total Cost of Goods Sold			85,355.25
Gross Profit			177467.30
Operating Expenses:
Rent expense		18,000.00
Wages Eepenses		75,000.00
Mis.cupplies Expenses		2,400.37
Business License Expense		1,636.62
Mis. Expense		1,091.07
Depreciation Expense		2,142.86
Insurance Expense		872.86
Avertising Expense		1,239.79
Interest Expense		654.65
Telephone Expense		392.78
Total Openrating Expenses			103,431.00
Net Income			$ 74,036.30

Instructions Milestone 2

/xl/drawings/drawing10.xml#'Milestone%202%20Instructions'!A1

Pro Forma BS

Peyton Approved Second Location
Pro Forma Balance Sheet
As of December 31, 2018
Assets
	Current Assets:			Liabilities and Owners's Equity
	Cash	$ 7,000.00			Current liabilities:
	Accounts Receivable	65,705.64			Accounts Payable	$ 20,622.11
	Baking Supplies	28,222.48			Wages Payable	2,706.62
	Merchandise Inventory	229.27			Interest Payable	169.17
	Prepaid Rent	1,691.64
	Prepaid Insurance	1,691.64
	Mis.Supplies	136.39
	Total Current Assets		104,677.06		Total Current Liabilities		23,497.90
	Long Term /Fixeed Assets:				Long Term liabilities
	Baking Equipment	15,000.00			Notes payable	20,000.00
	Accumulated Depreciation	(2,142.86)			Total long term liabilities		20,000.00
	Net Fixed Assets		12,857.14		Total Liabilities:		43,497.90
					Retained Earnings	74,036.30
					Total Equity		74,036.30
	Total Assets		$ 117,534.20		Toal liabilities and Equity		$ 117,534.20

Instructions Milestone 2

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