The production and analysis of financial statements are core tasks for accounting professionals. The activities for this final project have traditionally been
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
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 | 165,250.00 | |||||
| Merchandise Inventory (FIFO) | 25,750.00 | 25,750.00 | |||||
| Prepaid Rent | 7,500.00 | 7,500.00 | |||||
| Prepaid Insurance | 2,400.00 | 2,400.00 | |||||
| Baking Equipment | 17,000.00 | 17,000.00 | |||||
| Accumulated Depreciation | 3,285.72 | 3,285.72 | |||||
| Leasehold Improvements | 10,000.00 | 10,000.00 | |||||
| Accumulated Amortization | 2,000.00 | 2,000.00 | |||||
| Trademark | 2,300.00 | 2,300.00 | |||||
| Office Supplies | 1,600.00 | 1,600.00 | |||||
| Accounts Receivable | 30,401.00 | 30,401.00 | |||||
| Notes Payable | 10,000.00 | 10,000.00 | |||||
| Interest Payable | – 0 | ||||||
| Accounts Payable | 27,325.00 | 27,325.00 | |||||
| Wages Payable | – 0 | ||||||
| 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 | – 0 | ||||||
| Rent Expense | 90,000.00 | 90,000.00 | |||||
| Interest Expense | – 0 | ||||||
| Insurance Expense | – 0 | ||||||
| Depreciation Expense | – 0 | ||||||
| Amortization Expense | – 0 | ||||||
| Misc. Expense | 2,780.00 | 2,780.00 | |||||
| Office Supplies Expense | – 0 | ||||||
| Business License Expense | 375.00 | 375.00 | |||||
| Advertising Expense | 5,200.00 | 5,200.00 | |||||
| Wages Expense | – 0 | ||||||
| Telephone Expense | 3,456.00 | 3,456.00 | |||||
| Merchandise COGS (FIFO) | 15,760.00 | 15,760.00 | |||||
| Total | 464,485.72 | 464,485.72 | – 0 | – 0 | 464,485.72 | 464,485.72 | |
Adjusting Entries
| Peyton Approved | ||||
| Adjusting Journal Entries | ||||
| 2017 | ||||
| Date | Accounts | Debit | Credit | |
| 31-Dec | Depreciation Expense | |||
| Accumulated depreciation | ||||
| 31-Dec | Amortization Expense | |||
| Accumulated Amortization | ||||
| 31-Dec | Interest Expense | |||
| Interest Payable | ||||
| 31-Dec | Insurance Expense | |||
| Prepaid Insurance | ||||
| 31-Dec | Baking Cost of Goods Sold | |||
| Baking Supplies | ||||
| 31-Dec | Office Supplies Expense | |||
| Office Supplies | ||||
| 31-Dec | Wages Expense | |||
| Wages Payable | ||||
| – 0 | – 0 | |||
Income Statement
| Peyton Approved | ||||
| Income Statement | ||||
| For Year Ending 12/31/2017 | ||||
| Bakery Sales | ||||
| Merchandise Sales | ||||
| Total Revenues | – 0 | |||
| Merchandise Cost of Goods Sold (FIFO) | ||||
| Baking Cost of Goods Sold | ||||
| Gross Profit | – 0 | |||
| Operating Expenses: | ||||
| Rent Expense | ||||
| Interest Expense | ||||
| Insurance Expense | ||||
| Depreciation Expense | ||||
| Amortization Expense | ||||
| Misc. Expense | ||||
| Office Supplies Expense | ||||
| Business License Expense | ||||
| Advertising Expense | ||||
| Wages Expense | ||||
| Telephone Expense | ||||
| Total Operating Expenses: | – 0 | |||
| Net Income | – 0 | |||
Closing Entries
| Peyton Approved | ||||
| Closing Entries | ||||
| For Year Ending 12/31/2017 | ||||
| Date | Accounts | Debit | Credit | |
| 31-Dec | Bakery Sales | |||
| Merchandise Sales | ||||
| Income Summary | – 0 | |||
| 31-Dec | Income Summary | – 0 | ||
| Baking Cost of Goods Sold | ||||
| Rent Expense | ||||
| Interest Expense | ||||
| Insurance Expense | ||||
| Depreciation Expense | ||||
| Amortization Expense | ||||
| Misc. Expense | ||||
| Office Supplies Expense | ||||
| Business License Expense | ||||
| Advertising Expense | ||||
| Wages Expense | ||||
| Telephone Expense | ||||
| Merchandise Cost of Goods Sold (FIFO) | ||||
| 31-Dec | Income Summary | – 0 | ||
| Retained Earnings | – 0 | |||
| 31-Dec | Retained Earnings | |||
| Dividends | ||||
| – 0 | – 0 | |||
Statement of Retained Earnings
| Peyton Approved | ||||
| Statement of Retained Earnings | ||||
| For Year Ending 12/31/2017 | ||||
| Beginning Balance: | – 0 | |||
| plus Net Income | ||||
| less Dividends: | ||||
| Ending Balance: | – 0 | |||
Balance Sheet
| Peyton Approved | |||||||||
| Balance Sheet | |||||||||
| As of December 31, 2017 | |||||||||
| Assets | Liabilities and Owners' Equity | ||||||||
| Current Assets: | Current Liabilities: | ||||||||
| Cash | Accounts Payable | ||||||||
| Baking Supplies | Wages Payable | ||||||||
| Merchandise Inventory (FIFO) | Interest Payable | ||||||||
| Prepaid Rent | Total Current Liabilities | – 0 | |||||||
| Prepaid Insurance | |||||||||
| Office Supplies | Long Term Liabilities: | ||||||||
| Accounts Receivable | Notes Payable | ||||||||
| Total Current Assets | – 0 | Loans Payable | |||||||
| Total Long Term Liabilities: | – 0 | ||||||||
| Total Liabilities: | – 0 | ||||||||
| Long Term/Fixed Assets: | |||||||||
| Baking Equipment | Common Stock | ||||||||
| Accumulated Depreciation | Retained Earnings | ||||||||
| – 0 | |||||||||
| Leasehold Improvements | Total Equity | – 0 | |||||||
| Accumulated Amortization | – 0 | ||||||||
| Trademark | |||||||||
| Total Assets: | – 0 | Total Liabilities & Equity | – 0 | ||||||
Financial Analysis
| 2017 | 2016 | 2015 | Industry Standard | |
| Quick Ratio | 2.2 | 2.8 | 1.75 | |
| Gross Margin | 0.55 | 0.7 | 0.7 | |
| Net Margin | 0.22 | 0.32 | 0.24 | |
| Return on Equity | 0.9 | 0.78 | 0.8 |
,
1
ACC 307 Final Project Part I 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 adj ustment 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 o f 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 competencies:
• ACC-307-01: Demonstrate the year-end adjustment process in the preparation of a business’s financial documentation
• ACC-307-03: Apply generally accepted accounting principles in preparing financial statements
Prompt Review the Final Project Scenario document for information about the financial background of your hypothetical company. Use the provided workbook to complete Part I of your final project. 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 I: Final Project Workbook A. Demonstrate the year-end adjustment process:
1. Prepare the adjusting journal entries in the Adjusting Entries tab in the provided workbook. [ACC-307-01] 2. Transfer the values from the Adjusting Entries tab to the proper cells of the Adjusting Entries columns in the Worksheet tab. [ACC-307-
01] 3. Create the adjusted trial balance by computing the Adjusted Trial Balance columns using the Worksheet tab. [ACC-307-01] 4. Close temporary accounts by completing the Closing Entries tab. [ACC-307-01]
2
B. Prepare the financial statements: 1. Prepare an income statement for the provided company by completing the Income Statement tab in your workbook. [ACC-307-03] 2. Prepare a statement of retained earnings by completing the Statement of Retained Earnings tab. [ACC-307-03] 3. Prepare a balance sheet by completing the Balance Sheets tab. [ACC-307-03]
Milestones Milestone One: Partial Workbook In Module Three, you will submit the first part of your final project workbook, including the adjusting entries, adjusted trial balance, closing entries, and income statement. This milestone will be graded with the Milestone One Rubric. Milestone Two: Completed Workbook In Module Five, you will submit the second part of your final project workbook, including the statement of retained earnings and the balance sheet. This milestone will be graded with the Milestone Two Rubric. Final Project Part I Submission: Final Workbook In Module Seven, you will submit the first part of your final project, which is the final version of the project workbook. It should be a complete, polished artifact containing all of the critical elements of Final Project Part I. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Project Part I Rubric.
Final Project Part I Rubric Guidelines for Submission: All tabs should be completed in your final workbook submission.
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Year-End Adjustment Process: Adjusting
Journal entries [ACC-307-01]
Accurately prepares all adjusting entries (100%)
Prepares adjusting entries, but there are gaps or inaccuracies (55%)
Does not prepare adjusting entries (0%)
12.25
Year-End Adjustment Process: Transfer
[ACC-307-01]
Meets “Proficient” criteria and all values are accurate based on the provided data (100%)
Transfers values from their Adjusting Entries tab to the proper cells of the Adjusting Entries columns in the Worksheet tab based on the values from the previous step (85%)
Transfers values to the Adjusting Entries columns in the Worksheet tab, but there are gaps or inaccuracies (55%)
Does not transfer values to the Adjusting Entries columns in the Worksheet tab (0%)
12.25
3
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Year-End Adjustment Process: Adjusted
Trial Balance [ACC-307-01]
Meets “Proficient” criteria, and all values are accurate based on the provided data (100%)
Accurately prepares the adjusted trial balance based on the values from the previous step (85%)
Prepares the adjusted trial balance, but there are gaps or inaccuracies (55%)
Does not prepare the adjusted trial balance (0%)
12.25
Year-End Adjustment Process: Closing
Entries [ACC-307-01]
Meets “Proficient” criteria, and all values are accurate based on the provided data (100%)
Accurately prepares all closing entries based on the values from the previous step (85%)
Prepares closing entries, but there are gaps or inaccuracies (55%)
Does not prepare closing entries (0%)
12.25
Financial Statements: Income
Statement [ACC-307-03]
Meets “Proficient” criteria, and all values are accurate based on the provided data (100%)
Accurately prepares the income statement based on the values from the previous step (85%)
Prepares the income statement, but there are gaps or inaccuracies (55%)
Does not prepare the income statement (0%)
17
Financial Statements: Statement of
Retained Earnings [ACC-307-03]
Meets “Proficient” criteria, and all values are accurate based on the provided data (100%)
Accurately prepares the statement of retained earnings based on the values from the previous step (85%)
Prepares statement of retained earnings, but there are gaps or inaccuracies (55%)
Does not prepare statement of retained earnings (0%)
17
Financial Statements: Balance
Sheet [ACC-307-03]
Meets “Proficient” criteria, and all values are accurate based on the provided data (100%)
Accurately prepares the balance sheet based on the values from the previous step (85%)
Prepares the balance sheet, but there are gaps or inaccuracies (55%)
Does not prepare the balance sheet (0%)
17
Total 100%
,
ACC 307 Final Project Scenario I
Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the following accounting practices:
Inventory: Periodic, FIFO for both baking and merchandise
o Baking supplies: $27,850 ending inventory Equipment: Straight line method used for equipment
o Mixing machine: $5,000 initial cost, $500 salvage value, 3rd year of use of 7 total ($642.86 per year)
o Ovens: $8,000 initial cost, $1,000 salvage value, 3rd year of use of 7 total ($1,000 per year)
o Other depreciable equipment: $4,000 initial cost, $0 salvage value, 1st year of use of 4 total ($1,000 per year)
o Bakery Leasehold Improvements: $10,000, 2nd year of use ($2,000 per year) o Trademark for company name: Initial cost, $2,300, 3rd year of use
Office supplies: Periodic, FIFO. Ending balance is $250. Pay period is every 2 weeks. Last pay period ended December 27.
o 60 employees with a daily pay of $5,700. All receive pay through December 31. Financing:
o 6% interest note payable was made on January 31, 2017, and is due February 1, 2019. o 5-year loan was made on June 1, 2017. Terms are 7.5% annual rate, interest only until
due date. Insurance: Annual policy covers 12 months, purchased in February, covering March 2017–
February 2018. No monthly adjustments have been made. Other information: An employee slipped and fell in the baking area and has filed a lawsuit. The company lawyer indicates that it is probable that the company will be found liable. No additional information is available.
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