For this assignment you will be making adjustments to the financial statements based on new transactions and describing various financial reports.
Company Overview
For this assignment you will be making adjustments to the financial statements based on new transactions and describing various financial reports. Refer to the Excel spreadsheet, “Company Overview Template,” for the instructions and details to complete this assignment.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
You are not required to submit this assignment to LopesWrite.
Toys, Inc began operations on December 31, 2019 with the following transactions:
1. Purchased equipment for $15,000
2. Purchased inventory on account for $6,000
3. Issued common stock for $20,000
Toys, Inc’s balance sheet including those transactions as of December 31, 2019, was as follows:
Toys, Inc.
Balance Sheet
As of December 31, 2019
Assets:
Cash $ 5,000
Receivables –
Inventory 6,000
Land –
Property Plant and Equipment 15,000
Total Assets $ 26,000
Liabilities and Equity:
Accounts Payable $ 6,000
Note Payable –
Common Stock 20,000
Retained Earnings – Total liabilities and stockholders’ equity $ 26,000
During January 2020, the company had the following transactions:
Example: Made payments of $4,000 on outstanding accounts payable
1. Sold $2,000 of inventory to customers for $3,000 in cash.
2. Purchased $2,500 of new inventory for cash
3. Sold $3,500 of inventory to customers on account for $5,500.
4. During the month, received $3,500 from customers as payments on their accounts
5. Borrowed $20,000 from the bank and issued stock for $5,000 to purchase land for $25,000 for a future warehouse
6. Paid employees $2,000 for payroll
Required:
1. Record the January 2020 transactions by adding and subtracting amounts in the rows of the following table in a way that the row totals represent the end of the month balances in the financial statements. (fill in the shaded area as needed)
2. Explain the main characteristics of the balance sheet and the income statement and the relationship between those two statements.
Balance Transaction Number
at 12/31/19 Example 1 2 3 4 5 6 Total
Cash $ 5,000 (4,000) $ 1,000
Receivables – –
Inventory 6,000 6,000
Land – –
Property Plant and Equipment 15,000 15,000
Total Assets $ 26,000 $ 22,000
Accounts Payable $ 6,000 (4,000) $ 2,000
Note Payable – –
Common Stock 20,000 20,000
Retained Earnings – – –
Total Liabilities and Equity $ 26,000 $ 22,000
Check (must equal zero) –
Income Statement
Sales $ –
Cost of Goods Sold –
Payroll expenses –
Net Income $ –
Requirement 2
Characteristics of a Balance Sheet
Characteristics of an Income Statement
Relationship between the Balance Sheet and the Income Statement
ACC502 Accounting Practices
Week 2 Assignment
Analyzing Revenue
The purpose of this assignment is to apply the accounting revenue recognition concepts in a case study.
One of the most common methods to manipulate revenue is through a strategy called channel stuffing. Refer to the “Krispy Kreme, Sarbanes-Oxley, and Corporate Greed” and the “A Hole in Krispy Kreme’s Story,” located in the study materials, and summarize the company’s unethical accounting practices and the impact on its stock price. Provide a 500-750 word memo to your supervisor summarizing and analyzing the Krispy Kreme transactions and their impact on financial reporting and stock value. You must address the following items in your memo:
Describe the five steps of the revenue recognition model. Specifically provide an explanation and example as to what signifies a performance obligation.
Provide an overview of Krispy Kreme’s business model and summarize the unethical accounting and business practices at the company as detailed in “Krispy Kreme, Sarbanes-Oxley, and Corporate Greed.” Specifically, report on the company’s channel stuffing business procedures.
Summarize the facts presented in Krispy Kreme’s stock value as detailed in “A Hole in Krispy Kreme’s Stock.”
Explain the relationship between the company’s unethical accounting practices and the decrease in value of its stock.
ACC502 Accounting Practices
Week 3 Assignment
Analyzing Asset Ratios
The purpose of this assignment is to calculate asset ratios, analyze them, and compare them between two competitors in the same industry.
Review the most recent annual reports of The Coca-Cola Company and PepsiCo focusing on the balance sheet and footnote inventories.
Using the correct formulas and a separate tab for each ratio, calculate the following ratios for each company for the last 2 years using Excel:
Inventory turnover
Average days in inventory
In a Word file, include the following:
Explain the meaning of each ratio and what the calculated results tell you about each of the companies. Refer to the calculated ratios in your analysis. Your explanation should consider how the ratios changed in the last 2 years. Your explanation should include a separate paragraph for each ratio.
Summarize how effective the company is in managing inventory based upon the type(s) of products the company sells and the industry in which it competes. Include discussion about whether the inventory turnover ratio is increasing or decreasing, what is causing the ratio increase/decrease, and whether the total value of inventory is increasing or decreasing on the balance sheet.
ACC502 Accounting Practices
Week 4 Assignment
Long-Term Asset Capitalization
The purpose of this assignment is to analyze long-term assets in the financial statements and to interpret financial statement footnotes related to long-term assets.
Complete Problem 10.6 from the textbook.
Name the PDF file LastnameFirstinitial.ACC502.T4, where the T4 refers to Topic 4 assignment.
ACC502 Accounting Practices
Week 5 Assignment
Analyzing Liabilities
The purpose of this assignment is to analyze liabilities when making business decisions.
Read Case Study 13-1 “Accounting for Contingent Assets: The Case of Cardinal Health,” from Chapter 13 in the textbook.
In a 250-500 word executive summary to the Cardinal Health CEO, address the following:
Explain the justification that could be given for deducting the expected litigation gain from cost of good sold and explain why Cardinal Health chose this alternative rather than reporting it as a nonoperating item.
Explain what the senior Cardinal Health executive meant when he said, “We do not need much to get over the hump, although the preference would be the vitamin case so that we do not steal from Q3.” Include specific clarification of the phrase “not steal from Q3.”
Explain specifically what Cardinal Health did to get into trouble with the SEC.
Justify the timing of the $10 million and $12 million gains, and explain how Cardinal Health’s senior managers defend these decisions.
Cardinal Health received more than $22 million from the litigation settlement. Discuss whether the actions of Cardinal Health senior managers were so wrong that they justify the actions of the SEC. Classify Cardinal Health’s behavior on a scale from 1-10, with 1 being “relatively harmless” and 10 being “downright fraudulent.” Justify your rating..
ACC502 Accounting Practices
Week 6 Assignment
Analyzing Stockholders’ Equity
The purpose of this assignment is to analyze stockholders’ equity to recommend strategies for generating cash. Understanding a company’s position as it relates to stockholders and stockholders’ equity is important when considering options and making decisions related to the strategies that should be implemented to generate cash for the company.
The chief executive officer (CFO) of the company wants to generate cash for the organization and has tasked you to review the current stockholders’ equity position for the company and use your findings to recommend strategies for generating cash flow. The CEO has requested you summarize your findings in a memo that is addressed to the CFO, but one that could be shared with other stakeholders.
Refer to the “Annual Reports for Approved Companies” and access the Form 10-K. Review and study the following information related to stocks:
Identify and discuss the current types of stock, such as common or preferred stock, currently issued, and outstanding. Include a narrative description along with the values and number of shares found on the balance sheet.
Identify the presence of treasury stock and its impact on overall stockholders’ equity. If the company does not have treasury stock, indicate the absence of treasury stock and provide some discussion as to why the company may not have purchased back any of its originally issued stock.
Review the notes to the financial statements to determine if the company has any convertible bonds and summarize the characteristics of those bonds. If there are no convertible bonds in the notes, discuss why a company may want to consider convertible bonds in the future.
Using the summary of your research, write a 500-word memo to the CEO explaining the pros and cons of issuing new stock, reissuing treasury stock (if applicable), and issuing convertible bonds. In addition, include your recommendations on how the company could generate cash from issuing new common stock, preferred stock, convertible bonds or reissuing treasury stock. Support your recommendations with examples that show the impact on cash.
ACC502 Accounting Practices
Week 7 Assignment
Analyzing Statement of Cash Flows
The purpose of this assignment is to analyze a statement of cash flows to determine the financial strengths and weaknesses of a company.
Understanding a company’s major sources and uses of cash and how cash is being used in the business through the analysis of the statement of cash flows is essential. This analysis guides financial decision making and is used to determine financial strengths and weaknesses within the company.
The accounting manager has asked you to prepare a 5-10 minute presentation for company stakeholders summarizing your analysis of the statement of cash flows and the financial strengths and weaknesses of the company.
In the Form 10-K for the company you selected, review the M&D section of the annual report and the management’s discussion of changes in the cash flows.
Create a PowerPoint presentation (5-8 slides) that summarizes your analysis and addresses the following. Include screenshot content from the statement of cash flows as needed to illustrate key findings and information.
Discuss the company’s major sources of cash in each of the three sections.
Discuss the company’s major uses of cash in each of the three sections.
Discuss the major differences between the net income and the cash provided or used by operating activities, and explain the cause of the major difference between the two values.
Summarize the financial strengths of the business and justify your analysis based on evidence in the statement of cash flows. Include discussion of whether you anticipate the company will experience continued success and explain why. Only information from the statement of cash flow should be referenced.
Summarize the financial weaknesses of the business and justify your analysis based on evidence in the statement of cash flows. Include discussion of whether you anticipate the company will experience continued challenges in this area and explain why. Only information from the statement of cash flows should be referenced.
Refer to the resource, “Creating Effective PowerPoint Presentations,” located in the Student Success Center, for additional guidance on completing this assignment in the appropriate style.
Using the PowerPoint you created, practice your presentation. Use Loom to record your 5-10 minute presentation for the company stakeholders and submit the Loom file to the instructor. Refer to the study materials for additional guidance on recording your presentation with Loom.
ACC502 Accounting Practices
Week 8 Assignment
Investment Recommendations
The purpose of this assignment is to analyze the financial performance of a company to make recommendations to potential investors about the purchase of stock. Studying all aspects of a company’s financial statements is necessary in order to understand the financial performance and health of a company. This is particularly important for investors trying to determine whether to buy stock in the company.
An investor has approached you about whether purchasing stock in the company would be a wise investment. Using your financial analysis of the company, you will send a letter to the investor summarizing your findings and explaining whether you recommend a stock purchase at this time. Refer to the “Annual Reports for Approved Companies” located in the course materials. You will use information in the Form 10-K to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel
You will use information in the Form 10-K for the company you selected in the Topic 1 to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel:
Three liquidity ratios for the past 2 years
Three solvency ratios for the past 2 years
Three profitability ratios for the past 2 years
In addition, conduct research about a competitor company within the same sector using IBIS World and other topic resources. Complete a competitor analysis that includes a minimum of three ratios and compares your company to a competitor company using these ratios to determine financial performance as well as how the company compares to overall industry averages. Justify your analysis by explaining your findings.
Using your research findings and analysis of company performance in relation to industry competitors, construct a 500-750 word letter making stock purchase recommendations for a potential investor. In the letter, address the following, referencing specific ratios and comparative numbers as appropriate.
Discuss the overall financial performance of your company in relation to industry averages and a specific competitor. Explain whether the company performed better or worse than the competition using specific numbers and providing an explanation of what the numbers illustrate.
Recommend whether the potential investor should purchase stock in your company and justify your recommendation based upon your research and analysis of the company ratios and industry competition.
Submit the Excel file that contains your ratios and the Word file letter to LoudCloud.
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