ACC 307 Final Project Part II By Writeden.com The production and analysis of financial statements are core tasks for accounting professionals. The activitie

 ACC 307 Final Project Part II Guidelines and Rubric Overview The production and analysis of financial statements are core tasks for accounting professionals. The activities for this final project have traditionally been performed monthly by accountants in most organizations. However, with automation making accounting more efficient, many executives are requiring even more frequent financial statements. This new reality further underscores the need for accurate transaction collection and adjustment computations. Additionally, external users rely on ratio analyses to draw informed conclusions about a company’s financial health. This information often will factor heavily into their investment and lending decisions. In your final project, you will assume the role of an accountant and complete the year-end adjustment process for your company using a provided workbook. This workbook is the first deliverable (Part I) of your final project. In Part II, you will analyze the provided financials of the same company and create a report documenting your findings. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Six. Final Project Part I will be submitted in Module Seven; Final Project Part II is due in Module Eight. In this assignment, you will demonstrate your mastery of the following course competency:  ACC-307-02: Identify issues in financial reporting using key ratios and generally accepted accounting principles Prompt Use the provided workbook and the Final Project Part II template to create your report. Specifically, you must address the critical elements listed below. Most of the critical elements align with a particular course competency (shown in brackets). I. Part II: Ratio Analysis Report A. Abstract: Summarize the story of profitability and liquidity for your company. In other words, highlight the most important aspects of your report, including your major conclusions. [ACC-307-02] B. Computations: Identify and describe your computations from the Financial Analysis tab of your workbook. Be sure to format your key results in table or graphical format, as appropriate. Explain why each cited figure was included in your report in terms of its importance for the organization. [ACC-307-02] C. Comparison: Evaluate the financials of the company by comparing current ratios to both historical and industry-average ratios. Clearly identify all unexpected or aberrant figures. [ACC-307-02] D. Conclusion: Draw informed conclusions based on your computations and comparisons in the previous paragraphs. Be sure to justify your claims with specific evidence and examples. [ACC-307-02] 2 Milestones Milestone Three: Ratio Analysis Report Draft In Module Six, you will submit a complete draft of your ratio analysis report. This milestone will be graded with the Milestone Three Rubric. Final Submission Part II: Final Ratio Analysis Report In Module Eight, you will submit the second part of your final project, which is the final version of your ratio analysis report. It should be a complete, polished artifact containing all of the critical elements of Final Project Part II. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Part II Rubric. Final Project Part II Rubric Guidelines for Submission: Your ratio analysis report must be 2-3 pages in length (plus a cover page and references) and must be written in APA format. Use double spacing, 12-point Times New Roman font, and one-inch margins. All references must be cited in APA format.  

DELETE ALL TEXT IN ITALICS

Review the Final Project Guidelines and Rubric document to see how your paper will be scored.

Be sure to follow APA format when providing references. If you have questions on APA formatting, you can check the Purdue OWL website or seek help from the SNHU Writing Lab .

Notes on APA in a Formal Assignment

Use one-inch margins on all sides.

Use 12-point Times New Roman font with double spacing.

Paragraphs should be at least five to six sentences in length.

Do not include the headings “Introduction” and “Conclusion.” These are included below to help you lay out your paper. APA format assumes that the introduction begins the paper, the body continues the paper, and the conclusion wraps up the paper, so those headings are not needed.

Indent the first line of every paragraph by 0.5”.

Be careful not to use personal pronouns such as “I.”

Make sure to delete headings such as Paragraph One, Paragraph Two, and so on.

Be sure to replace all of the text in italics with your own writing, which should not be in italics. (This entire first page can be deleted after you review the guidelines. Your paper should begin with the title page that follows.)

ACC 307 Final Project Part II: Ratio Analysis Report

[Your Name]

Southern New Hampshire University

REMEMBER: DELETE ALL TEXT IN ITALICS

Abstract (Delete this heading in your final paper)

In your opening paragraph, summarize the overall story of profitability and liquidity for your company. In other words, highlight the most important aspects of your report, including your major conclusions.

Paragraph One: Computations (Delete this heading in your final paper)

In your first body paragraph, complete the computations portion of your report: Identify and describe your computations from the Financial Analysis tab of your workbook. Be sure to format your key results in table or graphical format, as appropriate. Explain why each cited figure was included in your report in terms of its importance for the organization.

Comparison Ratios:

2017

2016

2015

Industry Standard

Quick Ratio

Gross Margin

Net Margin

Return on Equity

Paragraph Two: Comparison (Delete this heading in your final paper)

In your second body paragraph, complete the comparison portion of your report: Evaluate the financials of the company by comparing ratios to both historical and industry-average ratios. Clearly identify all unexpected or aberrant figures.

Paragraph Three: Conclusions (Delete this heading in your final paper)

In your third body paragraph, draw informed conclusions based on your computations and comparisons in the previous paragraphs. Be sure to justify your claims with specific evidence and examples.

References

Wahlen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting: Reporting and analysis (2nd ed.). Boston, MA: Cengage Learning.

Make sure that you provide appropriate in-text citations in APA style with the author’s name and year of publication (Author last name, year). The textbook is provided as an example and should be kept in the references for your paper. Feel free to add other resources. To add credibility to your paper, remember to cite ALL of the sources within the body of the paper, as well as in the References list at the end. References should be in alphabetical order by the author’s last name.

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ACC 307 Final Project Part II: Ratio Analysis Report

Alexis Waterman

Southern New Hampshire University

Ratio Analysis Report

Financial analysis is suitable for planning and ensures that decisions are based on the organization’s performance. The section will look into some of the significant financial ratios, including the quick ratio, gross margin, net margin, and return on Equity. The analysis indicates that the organization has been reducing its profit levels, which poses a significant risk. This calls for proper analysis of the organization’s performance.

This section outlines the financial analysis of the organization. It includes the quick ratio, gross margin, net margin, and return on Equity. The financial years range from 2015 to 2017, which also consists of an industrial standard of each financial ratio. The quick ratio indicates the ability of the organization to meet its short-term obligations with its liquid assets (Wijaya & Sedana, 2020). Organizations prefer to have a higher quick ratio that enables them to be more efficient in their operations. Gross margin is a financial indicator of organizational performance as it looks into the proportion of the gross profit to the net sales.

Organizations prefer to have reduced costs of goods sold to have high gross margin levels. The net margin is close to the gross margin; other than that, it looks into the proportion of the net income to the sales level (Nariswari & Nugraha, 2020). The net income margin will be high if the organization makes more net profit than the sales level. Return on Equity is a financial metric that looks into the percentage of net profit to the shareholder’s Equity (Hidajat, 2018). An organization will be more efficient if it has a higher return on Equity.

Comparison Ratios:

2017

2016

2015

Industry Standard

Quick Ratio

1.66

2.2

2.8

1.75

Gross Margin

0.59

0.55

0.7

0.7

Net Margin

0.23

0.22

0.32

0.24

Return on Equity

0.89

0.9

0.78

0.8

Based on the table above, the quick ratio has decreased over the years. This indicates that the financial liquidity of the organization is at a greater risk. As of 2017, the temporary ratio levels reduced to beneath the industrial standard. This calls for a proper assessment of the organization’s performance. The gross profit margin levels are below the industrial standards and decrease the group. This is an indicator of reduced profit levels, which increased costs of goods sold can bring about the net margin (Wahlen, Jones & Pagach, 2017). The levels reduced drastically from 2015 to 2016. They also declined from 2016 to 2017. This calls for an assessment of the organization’s expenses which may be carrying down the organization.

The net profit as of 2015 was doing better than the industry standard, but it has reduced, which poses a significant risk to the organization. The return on equity levels has improved across the years. The ROE levels improved drastically from 2015 to 2016. They are trying to stagnate from 2016 to 2017. This indicates that the organization has reduced its leverage levels as the ROE levels are above the industrial standard (Wahlen, Jones & Pagach, 2017).

The financial aspect of the organization requires proper scrutiny as the organization is increasing its risk levels which affect the organization in several ways. Organizations need to ensure that the quick ratio levels are way higher than the industrial standards as they will have a competitive advantage (Wahlen, Jones & Pagach, 2017). As the risk levels increase across the years, the organization will be unable to advance its operations or meet financial needs when a financial emergency pops up.

References

Wahlen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting: Reporting and analysis (2nd ed.). Boston, MA: Cengage Learning.

Wijaya, D. P., & Sedana, I. B. P. (2020). Effects of quick ratio, return on assets and exchange rates on stock returns. Am. J. Humanities Soc. Sci. Res, 4, 323-329.

Nariswari, T. N., & Nugraha, N. M. (2020). Profit growth: impact of net profit margin, gross profit margin and total assets turnover. International Journal of Finance & Banking Studies (2147-4486), 9(4), 87-96.

Hidajat, N. C. (2018). Pengaruh return on equity, earnings per share, economic value added, dan market value added terhadap return saham perusahaan sektor pertanian yang terdaftar di bursa efek indonesia periode 2010-2016. Jurnal Ekonomi, 23(1), 62-75.

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Chart of Accounts

Asset Accounts Liability Accounts Equity Accounts
Acct # Acct # Acct #
Cash 101 Notes Payable 201 Common Stock 301
Baking Supplies 102 Accounts Payable 202 Dividends 302
Prepaid Rent 103 Wages Payable 203
Prepaid Insurance 104 Interest Payable 204
Baking Equipment 105 Loans Payable 205
Office Supplies 106
Accounts Receivable 107
Accumulated Depreciation 108
Trademark 109
Leasehold Improvements 110
Accumulated Amortization 111
Revenue Accounts
This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you. Acct #
Bakery Sales 401
Merchandise Sales 402
Expense Accounts
Acct #
Baking Cost of Goods Sold 501
Merchandise Cost of Goods Sold (FIFO) 502
Rent Expense 503
Insurance Expense 504
Misc. Expense 505
Business License Expense 506
Advertising Expense 507
Wages Expense 508
Telephone Expense 509
Interest Expense 510
Depreciation Expense 511
Amortization Expense 512
Office Supplies Expense 513

Worksheet

Peyton Approved
Trial Balance
2017
Unadjusted trial balance Adjusting entries Adjusted trial balance
Account Debit Credit Debit Credit Debit Credit
Cash 64,713.72 64,713.72
Baking Supplies 165,250.00 137,400.00 27,850.00
Merchandise Inventory (FIFO) 25,750.00 25,750.00
Prepaid Rent 7,500.00 7,500.00
Prepaid Insurance 2,400.00 2,000.00 400.00
Baking Equipment 17,000.00 17,000.00
Accumulated Depreciation 3,285.72 2,642.86 5,928.58
Leasehold Improvements 10,000.00 10,000.00
Accumulated Amortization 2,000.00 2,000.00 4,000.00
Trademark 2,300.00 2,300.00
Office Supplies 1,600.00 1,350.00 250.00
Accounts Receivable 30,401.00 30,401.00
Notes Payable 10,000.00 10,000.00
Interest Payable 1,468.75 1,468.75
Accounts Payable 27,325.00 27,325.00
Wages Payable 22,800.00 22,800.00
Loans Payable 21,000.00 21,000.00
Common Stock 30,000.00 30,000.00
Dividends 20,000.00 20,000.00
Bakery Sales 335,675.00 335,675.00
Merchandise Sales 35,200.00 35,200.00
Baking Cost of Goods Sold 137,400.00 137,400.00
Rent Expense 90,000.00 90,000.00
Interest Expense 1,468.75 1,468.75
Insurance Expense 2,000.00 2,000.00
Depreciation Expense 2,642.86 2,642.86
Amortization Expense 2,000.00 2,000.00
Misc. Expense 2,780.00 2,780.00
Office Supplies Expense 1,350.00 1,350.00
Business License Expense 375.00 375.00
Advertising Expense 5,200.00 5,200.00
Wages Expense 22,800.00 22,800.00
Telephone Expense 3,456.00 3,456.00
Merchandise COGS (FIFO) 15,760.00 15,760.00
Total 464,485.72 464,485.72 169,661.61 169,661.61 493,397.33 493,397.33

Adjusting Entries

Peyton Approved
Adjusting Journal Entries
2017
Date Accounts Debit Credit
31-Dec Depreciation Expense 2,642.86
Accumulated depreciation 2,642.86
31-Dec Amortization Expense 2,000.00
Accumulated Amortization 2,000.00
31-Dec Interest Expense 1,468.75
Interest Payable 1,468.75
31-Dec Insurance Expense 2,000.00
Prepaid Insurance 2,000.00
31-Dec Baking Cost of Goods Sold 137,400.00
Baking Supplies 137,400.00
31-Dec Office Supplies Expense 1,350.00
Office Supplies 1,350.00
31-Dec Wages Expense 22,800.00
Wages Payable 22,800.00
169,661.61 169,661.61

Income Statement

Peyton Approved
Income Statement
For Year Ending 12/31/2017
Bakery Sales $ 335,675.00
Merchandise Sales $ 35,200.00
Total Revenues 370,875.00
Merchandise Cost of Goods Sold (FIFO) 15,760.00
Baking Cost of Goods Sold 137,400.00
Gross Profit 217,715.00
Operating Expenses:
Rent Expense 90,000.00
Interest Expense 1,468.75
Insurance Expense 2,000.00
Depreciation Expense 2,642.00
Amortization Expense 2,000.00
Misc. Expense 2,780.00
Office Supplies Expense 1,350.00
Business License Expense 375.00
Advertising Expense 5,200.00
Wages Expense 22,800.00
Telephone Expense 3,456.00
Total Operating Expenses: 134,071.75
Net Income 83,643.25

Closing Entries

Peyton Approved
Closing Entries
For Year Ending 12/31/2017
Date Accounts Debit Credit
31-Dec Bakery Sales 335,675.00
Merchandise Sales 35,200.00
Income Summary 370,875.00
31-Dec Income Summary 287,232.61
Baking Cost of Goods Sold 137,400.00
Rent Expense 90,000.00
Interest Expense 1,468.75
Insurance Expense 2,000.00
Depreciation Expense 2,642.86
Amortization Expense 2,000.00
Misc. Expense 2,780.00
Office Supplies Expense 1,350.00
Business License Expense 375.00
Advertising Expense 5,200.00
Wages Expense 22,800.00
Telephone Expense 3,456.00
Merchandise Cost of Goods Sold (FIFO) 15,760.00
31-Dec Income Summary 83,642.39
Retained Earnings 83,642.39
31-Dec Retained Earnings 20,000.00
Dividends 20,000.00
761,750.00 761,750.00

Statement of Retained Earnings

Peyton Approved
Statement of Retained Earnings
For Year Ending 12/31/2017
Beginning Balance: – 0
plus Net Income 84,642.00
less Dividends: 20,000.00
Ending Balance: 64,642.00

Balance Sheet

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets Liabilities and Owners' Equity
Current Assets: Current Liabilities:
Cash 64,713.72 Accounts Payable 27,325.00
Baking Supplies 27,850.00 Wages Payable 22,800.00
Merchandise Inventory (FIFO) 25,750.00 Interest Payable 1,468.75
Prepaid Rent 7,500.00 Total Current Liabilities 51,593.75
Prepaid Insurance 400.00
Office Supplies 250.00 Long Term Liabilities:
Accounts Receivable 30,401.00 Notes Payable 10,000.00
Total Current Assets 156,864.72 Loans Payable 21,000.00
Total Long Term Liabilities: 31,000.00
Total Liabilities: 82,593.75
Long Term/Fixed Assets:
Baking Equipment 17,000.00 Common Stock 30,000.00
Accumulated Depreciation 5,928.58 Retained Earnings 84,642.00
11,071.42
Leasehold Improvements 10,000.00 Total Equity 114,642.00
Accumulated Amortization 4,000.00 6,000.00
Trademark 2,300.00
Total Assets: 176,236.14 Total Liabilities & Equity 176,236.00

Financial Analysis

2017 2016 2015 Industry Standard
Quick Ratio 1.66 2.2 2.8 1.75
Gross Margin 0.59 0.55 0.7 0.7
Net Margin 0.23 0.22 0.32 0.24
Return on Equity 0.89 0.9 0.78 0.8

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