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Southern New Hampshire University
ACC 308 - Intermediate Accounting II
Note: This workbook contains instructions and financial information you will need to complete the Workbook portions of Milestones One and Two. For full instructions for the milestone and final project assignments, refer to the guidelines and rubric documents. You can use the links below to navigate from this HOME tab to additional instructions and the worksheets for each milestone.
MILESTONE ONE (Due in Module Three)	MILESTONE TWO (Due in Module Five)	FINAL PROJECT (Due in Module Seven)
Milestone One Workbook Instructions	Milestone Two Workbook Instructions	Note: The final project consists of corrected work from Milestone One and Milestone Two. Incorporate the feedback you received from your instructor.
1. Trial Balance	1. Pro Forma Financial Statements
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. Revised Financial Statements	2. Notes to the Financial Statements
	Note: This part of the project is submitted as a separate Word document. Refer to the Milestone Two Guidelines and Rubric document for submission guidelines.
Using the trial balance and preliminary financial statements, prepare:	Your notes must contain the following:
Revised Balance Sheet	A. Create appropriate notes as year-to-year documentation for managing depreciation, supplies, and inventory.
Revised Income Statement	B. Create appropriate notes for long-term debt.
Revised Retained Earnings Statement
Revised Statement of Cash Flows
3. Ratio Analysis	3. Management Analysis Brief
Note: Refer to the Final Project Scenario for Peyton's ratio formulas.	Note: This part of the project is submitted as a separate Word document. Refer to the Milestone Two Guidelines and Rubric document for submission guidelines.
Using the financial statements from 2015, 2016, and revised 2017, calculate the following ratios:	Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable.
Current Ratio (Working Capital)	A. Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals.
Quick Ratio	B. Describe the implications of inventory costing, contingent liabilities, and revenue recognition.
A/R Turnover	C. Identify potential issues in interpretation of financial information, providing examples to support your ideas.
Inventory Turnover
Gross Margin
Return on Sales
Return on Equity
Return on Assets
4. Management Analysis Brief
Note: This part of the project is submitted as a separate Word document. Refer to the Milestone One Guidelines and Rubric document for submission guidelines.
Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable.
A. Assess the company’s financial health based on ratio analyses presented in the accounting workbook.
B. Compare ratio analysis to trends in financial ratios over time for illustrating their impact, providing examples to support your claims.
C. Summarize the effects of different compounding periods and interest rates on future value of money.
D. Explain how alignment to relevant regulations and ethical reporting influenced your accounting practices and notes, providing examples to support your claims.

Milestone One Instructions

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INSTRUCTIONS FOR MILESTONE ONE (Due in Module Three)
Note: Make sure to completely review the Milestone One Guidelines and Rubric document.
Use the data from this milestone and begin working on your final project, due in Module Seven.
ITEMS TO COMPLETE FOR MILESTONE ONE:
The tabs to complete are linked below and colored blue for convenience.
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.
1. TRIAL BALANCE
Using the Peyton Approved financial data provided below:
A. Create the necessary adjusting journal entries. Use the REF column to reference the entry to each event.
B. Complete the adjusted trial balance.
	Trial Balance 2017
2. REVISED FINANCIAL STATEMENTS
Peyton Approved's preliminary financial statements are provided in the yellow tabs.
	Balance Sheet 2017
	Income Statement 2017
	Retained Earnings 2017
	Cash Flow 2017
Using the preliminary financial statements and the Trial Balance 2017, prepare the following statements:
	Balance Sheet 2017 Revised
	Income Statement 2017 Revised
	Retained Earnings Statement 2017 Revised
	Statement of Cash Flows 2017 Revised
Note: Refer to Module Three resources for a refresher on statement of cash flows.
Peyton Approved's previous years' financial statements are provided in the orange tabs.
	Balance Sheet 2015
	Balance Sheet 2016
	Income Statement 2016
3. RATIO ANALYSIS
Using the revised 2017 financial statements, 2016 financial statements, and 2015 financial statements, prepare a ratio analysis for Peyton Approved.
Note: Refer to the Final Project Scenario for Peyton's ratio formulas.
	Ratio Analysis
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 $3,175—goods of $3,000 and freight of $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.
4. MANAGEMENT ANALYSIS BRIEF
Note: This part of the project is submitted as a separate Word document. Refer to the Milestone One Guidelines and Rubric document for submission guidelines.
Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas where applicable.
A. Assess the company’s financial health based on ratio analyses presented in the accounting workbook.
B. Compare ratio analysis to trends in financial ratios over time for illustrating their impact, providing examples to support your claims.
C. Summarize the effects of different compounding periods and interest rates on future value of money.
D. Explain how alignment to relevant regulations and ethical reporting influenced your accounting practices and notes, providing examples to support your claims.

Trial Balance 2017

Milestone One Workbook Instructions
					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									67,520.04
	Accounts Receivable	68,519.91									68,519.91
	Other Receivable - Insurance										- 0
	Baking Supplies	15,506.70									15,506.70
	Merchandise Inventory	1,238.07									1,238.07
	Consignment Inventory										- 0
	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									14,000.00
	Accumulated Depreciation			1,606.44									1,606.44
	Customer Deposit												- 0
	Accounts Payable			20,262.11									20,262.11
	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
		429,136.32		429,136.32			- 0		- 0		429,136.32		429,136.32

Balance Sheet 2017

	Preliminary
			Peyton Approved
			Balance Sheet
			As of December 31, 2017
Assets				Liabilities and Owners' Equity
	Current Assets:				Current Liabilities:
	Cash	$ 67,520.04			Accounts Payable	$ 20,262.11
	Accounts Receivable	68,519.91			Wages Payable	3,383.28
	Baking Supplies	15,506.70			Interest Payable	211.46
	Merchandise Inventory	1,238.07
	Prepaid Rent	2,114.55
	Prepaid Insurance	2,114.55
	Misc. Supplies	170.49
	Total Current Assets		$ 157,184.31		Total Current Liabilities		$ 23,856.85
					Long Term Liabilities:
	Long Term/Fixed Assets:				Notes Payable	5,000.00
	Baking Equipment	14,000.00			Total Long Term Liabilities:		5,000.00
	Accumulated Depreciation	-1,606.44
	Net Fixed assets		12,393.56		Total Liabilities:		28,856.85
					Common Stock	20,000.00
					Retained Earnings	120,721.02
					Total Equity		140,721.02
	Total Assets:		$ 169,577.87		Total Liabilities & Equity		$ 169,577.87

Balance Sheet 2017 Revised

Milestone One Workbook Instructions	Revised
		Peyton Approved
		Balance Sheet
		As of December 31, 2017

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
Total Operating Expenses:			46,257.95
Net Income			175,576.18

Income Statement 2017 Revised

Milestone One Workbook Instructions
	Revised
		Peyton Approved
		Income Statement
		for Year Ended 12/31/2017

Retained Earnings 2017

Preliminary
	Peyton Approved
	Statement of Retained Earnings
	for Year Ended 12/31/2017
Beginning Balance:		$ 50,144.84
plus Net Income		175,576.18
less Dividends:		105,000.00
Ending Balance		$ 120,721.02

Retained Earnings 2017 Revised

Milestone One Workbook Instructions
	Revised
		Peyton Approved
		Statement of Retained Earnings
		for Year Ended 12/31/2017

Cash Flow 2017

Preliminary
			Peyton Approved
			Statement of Cash Flow
			for Year Ended 12/31/2017
	Net Income			$ 175,576.18
	Depreciation Expense			677.86
					176,254.04
	Increase in Accounts Receivable				(25,886.91)
	Increase in Baking Supplies				(8,187.84)
	Increase in Merchandise inventory				(443.10)
	Increase in Prepaid Rent				(449.55)
	Increase in Prepaid Insurance				(1,004.55)
	Increase in Misc. Supplies				(114.99)
	Increase in Accounts Payable				3,292.11
	Increase in Wages Payable				1,850.48
	Increase in Interest Payable				44.96
		Operating Cash Flow				145,354.65
	Cash Flow from Investments
	Equipment Purchases				(6,000.00)
		Cash Flow from Investments				(6,000.00)
	Cash Flow from Financing
	Repayment of Note Payable				(10,000.00)
	Dividends Paid				(105,000.00)
		Cash Flow from Financing				(115,000.00)
		Net Cash Flow				24,354.65
	Beginning Cash					43,165.39
	Ending Cash					67,520.04

Cash Flow 2017 Revised

Milestone One Workbook Instructions
	Revised
		Peyton Approved
		Statement of Cash Flow
		for Year Ended 12/31/2017
		0

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			141,318.01
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			112,245.45

Ratio Analysis

Milestone One Workbook Instructions
Note: Refer to the Final Project Scenario document for Peyton's ratio formulas.
	Peyton Approved
	Ratio Analysis
	2017	2016
Current Ratio (Working Capital)
Quick Ratio
A/R Turnover
Inventory Turnover
Gross Margin
Return on Sales
Return on Equity
Return on Assets

Milestone Two Instructions

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INSTRUCTIONS FOR MILESTONE TWO (Due in Module Five)
Note: Make sure to completely review the Milestone Two Guidelines and Rubric document.
Use the data from Milestone One and this milestone to complete your final project, due in Module Seven.
ITEMS TO COMPLETE FOR MILESTONE TWO:
The tabs to complete are linked below and colored green for convenience.
GENERAL
Use information from Milestone One and the plan to open a new location for your statements. Peyton Approved's pro forma information is provided below.
1. PRO FORMA FINANCIAL STATEMENTS
Note: Pro forma statements are "what if" statements. If the company opens the second location, what will the budgeted income statement and budgeted balance sheets be?
Using the preliminary statements as a base, 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, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full year’s depreciation for the first year. Equipment purchase was financed with a long-term note.
3. Cost of hiring and training new employees: three at $25,000 each for the first year.
4. 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.
5. Except as noted above, 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
2. NOTES TO THE FINANCIAL STATEMENTS
Note: This part of the project is submitted as a separate Word document. Refer to the Milestone Two Guidelines and Rubric document for submission guidelines. You will find an example for how to format these notes located in the Module Five resources.
Your notes must contain the following:
A. Create appropriate notes as year-to-year documentation for managing depreciation, supplies, and inventory.
B. Create appropriate notes for long-term debt.
Peyton Approved uses the following accounting practices: • Inventory: Periodic, LIFO for both baking and merchandise • Equipment: Straight line method used for equipment
3. MANAGEMENT ANALYSIS BRIEF
Note: This part of the project is submitted as a separate Word document expanding on the work you completed for Milestone One. Refer to the Milestone Two Guidelines and Rubric document for submission guidelines.
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.

Pro Forma IS

	Milestone Two Workbook Instructions
				Peyton Approved Second Location
				Pro Forma Income Statement
				for Year Ending 12/31/2018

Pro Forma BS

	Milestone Two Workbook Instructions
			Peyton Approved Second Location
			Pro Forma Balance Sheet
			As of December 31, 2018