Accounting Workbook: Your accounting workbook must include appropriate calculations and statements: A. Create pro forma fi

 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. 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? II. Notes to the Financial Statements: You will find an example for how to format these notes located in the module 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. 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.  

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 company’s 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 Final Project Workbook. Follow the instructions below and complete the workbook with the information provided in the scenario. 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 bri ef.

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. 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?

II. Notes to the Financial Statements: You will find an example for how to format these notes located in the module 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.

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: You will submit three files for this milestone. Your accounting workbook must be submitted as a Microsoft Excel document. Your notes to the financial statement must be submitted in a Microsoft Word document. Your management analysis brief should be a separate 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: Pro Forma Financial

Statements

Creates pro forma financial statements for predicting ability to meet future expansion goals

Creates pro forma financial statements but calculations contain inaccuracies

Does not create pro forma financial statements

15

Notes to the Financial Statements: Year-to-Year

Documentation

Creates appropriate notes as year-to- year documentation for 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

15

Notes to the Financial Statements:

Long-Term Debt

Creates appropriate notes for long-term debt

Creates appropriate notes for long-term debt, but notes are cursory or illogical

Does not create appropriate notes for long term debt

15

Management Analysis Brief: Pro Forma Financial

Statements

Discusses the impact of pro forma financial statements for predicting ability to meet future expansion goals

Discusses the impact of pro forma financial statements for predicting ability to meet future expansion goals, but explanation is cursory or contains inaccuracies

Does not discuss the impact of pro forma financial statements

15

Management Analysis Brief: Inventory Costing,

Contingent Liabilities, and Revenue Recognition

Describes the implications of inventory costing, contingent liabilities, and revenue recognition

Describes the implications of inventory costing, contingent liabilities, and revenue recognition, but description is cursory or illogical

Does not describe the implications of inventory costing, contingent liabilities, and revenue recognition

15

Management Analysis Brief: Issues in Interpretation

Identifies potential issues in interpretation of financial information, providing examples to support ideas

Identifies potential issues in interpretation of financial information, but identification or examples provided are cursory or illogical

Does not identify potential issues in interpretation of financial information

15

Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization

Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas

Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas

10

Total 100%

,

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 3 1,000.00 68,520.04
Accounts Receivable 68,519.91 68,519.91
Other Receivable – Insurance 4 700.00 700.00
Baking Supplies 15,506.70 1 3,175.00 18,681.70
Merchandise Inventory 1,238.07 200.00 2 1,038.07
Consignment Inventory 2 200.00 200.00
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 4 12,000.00
Accumulated Depreciation 1,606.44 4 1,200.00 406.44
Customer Deposit 1,000.00 3 1,000.00
Accounts Payable 20,262.11 3,175.00 1 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 4 100.00 100.00
429,136.32 429,136.32 6,375.00 6,375.00 432,111.32 432,111.32

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
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 Interest Payable 211.46
Baking Supplies 18,881.70 Customer Deposit 1000.00
Merchandise Inventory 1,038.07
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

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
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
Loss on Disposal of Equipment 100.00
Total Operating Expenses: 46,357.95
Net Income 175,476.18

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
Beginning Balance: $ 50,144.84
plus Net Income 175,476.18
less Dividends: 105,000.00
Ending Balance $ 120,621.02

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

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Milestone One Workbook Instructions
Revised
Peyton Approved
Statement of Cash Flow
for Year Ended 12/31/2017
Net Income $ 175,476.18
Depreciation Expense 677.86
Loss on Disposal of Equipment 100.00
176,254.04
Increase in Accounts Receivable (25,886.91)
Increase in Other Receivable – Insurance (700.00)
Increase in Baking Supplies (11,562.84)
Increase in Merchandise Inventory (243.10)
Increase in Prepaid Rent (449.55)
Increase in Prepaid Insurance (1,004.55)
Increase in Misc. Supplies (114.99)
Increase in Customer Deposit 1,000.00
Increase in Accounts Payable 6,467.11
Increase in Wages Payable