Southern New Hampshire University

ACC309 - Intermediate Accounting III

MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) FINAL PROJECT

Instructions Milestone 1 Instructions Milestone 2

1. Adjusting entries 1. Capital Leases 1.

Calculate capital lease

Prepare adjusting entries for: obligations
Unrealized loss
Pensions
tax issues 2

See rubric for written portion

of milestone 1 Calculate pension payouts
Adjusting entries 2

3
3
Prepare adjusting entries for:
Capital leases

Pension payouts

See rubric for written portion

of milestone 2 4
FINAL PROJECT (Due in Module 7)

Instructions Final Project

Adjusting Entries

Prepare adjusting entries for:

Patent
Major repair capitalization
Adjusted Trial Balance

Complete adjusted
Revisedtrial balance
Financial
Statements

Prepare revised financial

statements Earnings per Share

Prepare a statement of
comprehensive income -
include on the revised income
statement

Determine the impact of

expansion options on
earnings per share

See rubric for written portion

of the final project
Southern New Hampshire University

ACC309 - Intermediate Accounting III

INSTRUCTIONS FOR MILESTONE 1 (Due Week 3)

IMPORTANT NOTE:

Make sure to completely review the Rubric for Milestone 1

Use the data from this Milestone and begin working on your final presentation due in Week 7

ITEMS TO COMPLETE FOR THIS MILESTONE:

GENERAL

In preparation of the annual audit, prepare appropriate adjusting entries and post to the trial balance workbook (re

ADJUSTING ENTRIES

Prepare adjusting entries for unrealized loss

Prepare adjusting entries for tax issues

MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 1
A. Identify sources of other comprehensive income not included in net income.
B. Explain rationale for the inclusion as comprehensive income (as opposed to net income) of nondisclosure within note
C. Evaluate impacts of company goals and finances for their implications on stockholder equity, using financial informati
D. Evaluate impacts of company goals and finances for their implications on retained earnings per share
E. Explain the impact of issuing preferred stock or debt for determining changes to equity structures.
F. Assess the impact of changes to current tax structure for articulating changes relevant to the company.

FINANCIAL INFORMATION FOR THIS MILESTONE

Comprehensive income items

·       Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale
·       Market value at the balance sheet date is $5,235,00
·       Prepare the adjusting entry to record the unrealized loss and include in comprehensive income

Tax information and implications

·       $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary ad
 ·       The company uses straight line depreciation for book and MACRS depreciation for the tax return
·       MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax.
·       There have been recent tax structure changes the could impact the company. Peyton Approved has been a C C
the beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state).
Stockholder Equity
Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront loc
launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months.
The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 o
profit. The options are:

1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding)
2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue)
3) $500,000 each of preferred stock and bonds
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to the trial balance workbook (red tab)

me) of nondisclosure within notes.

equity, using financial information to support claims.
rnings per share, using financial information to support claims.
ty structures.
t to the company.

rehensive income

or tax. Prepare the necessary adjusting entry.

 for the tax return
ntry for the deferred tax.
Peyton Approved has been a C Corp since
e (20% Federal, 5% state).

ny has added two storefront locations and

er the next 6 months.
nerate an additional $600,000 of after-tax

ss as is currently outstanding)
 PEYTON APPROVED
TRIAL BALANCE
As of December 31, 2017 Adjusting entries
Dr Cr Dr
Cash 1,488,999.34
Marketable Securities 5,500,000.00 1
Accounts Receivable 7,092,495.88
Baking Supplies 1,605,098.52
Merchandise Inventory 128,152.63
Prepaid Rent 71,877.07
Prepaid Insurance 207,834.14
Misc. Supplies 17,647.42
Land 250,000.00
Building 1,250,000.00
Baking Equipment 2,254,140.00 6 106,589.40
27,000.00
Accumulated Depreciation 328,282.00
Patent 8 50,000.00 8
Accounts Payable 1,555,212.85
Wages Payable 250,203.31
Interest Payable 21,888.22
Current Portion of Bonds Payable 1,000,000.00
Income Taxes Currently Payable 1,042,118.16 2
Accrued Pension Liability 4
Accrued Employees Health Insurance 5
Lease Liability 6

Deferred Tax Liability 3

Bonds Payable 4,000,000.00
Preferred Stock 500,000.00
Common Stock 1,750,000.00
Beginning Retained earnings 2,213,122.59
Dividends - Preferred 50,000.00
Dividends - Common 5,250,000.00
Bakery Sales 33,881,157.15
Merchandise Sales 124,795.80
Cost of Goods Sold - Baked 10,954,907.36
Cost of Goods Sold - Merch 88,994.79
Rent Expense 1,576,731.95 6
Wages Expense 2,604,526.23
Misc. Supplies Expense 263,224.56
Repairs and Maintenance 47,353.05 7
Business License Expense 211,757.65
Misc. Expense 141,171.08 8
Depreciation Expense 634,520.00 6 20,000.00
Insurance Expense 112,937.69
Advertising Expense 160,413.49
Interest Expense 484,703.27
Telephone Expense 50,821.34
Pension Expense 4 107,041.70
Retired Employees Health Ins. 5 43,718.91
Patent Amortization 2,500.00

Unrealized Gain/(Loss) on Marketable Securities Held for Sale 1 265,000.00

Income Taxes 4,168,472.62 2 375.00

Deferred tax Expense 3 52,325.25

46,666,780.08 46,666,780.08 674,550.26

(1) To record Unrealized Loss o

(2) To adjust income taxes for co
$1,500 Meals permanent diff
(3) To record Deffered taxes for
vs MACRS Depreciation
(4) To record Pension Liability e
(5) To record Health Insurance e
(6) To record leased asset and l
**6 (20000 .-
6b To credit amount back to ren

(7)
(8)
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Adjusting entries
Cr Dr Cr
1,488,999.34
265,000.00 5,235,000.00
7,092,495.88
1,605,098.52
128,152.63
71,877.07
207,834.14
17,647.42
250,000.00
1,250,000.00
2,387,729.40

328,282.00
2,500.00 47,500.00
1,555,212.85
250,203.31
21,888.22
1,000,000.00
375.00 1,042,493.16
107,041.70 107,041.70
43,718.91 43,718.91
106,589.40 106,589.40
-
52,325.25 52,325.25
4,000,000.00
500,000.00
1,750,000.00
2,213,122.59
50,000.00
5,250,000.00
33,881,157.15
124,795.80
10,954,907.36
88,994.79
20,000.00 1,556,731.95
2,604,526.23
263,224.56
27,000.00 20,353.05
211,757.65
 50,000.00 91,171.08
654,520.00
112,937.69
160,413.49
484,703.27
50,821.34
107,041.70
43,718.91
2,500.00
-
265,000.00
-
4,168,847.62
52,325.25

674,550.26 46,976,830.34 46,976,830.34

rd Unrealized Loss on Marketable Securities milestone 1

st income taxes for correct effective rate: milestone 1
Meals permanent difference X 25%
rd Deffered taxes for timing difference on book milestone 1
RS Depreciation 209,301.00
rd Pension Liability expense & liability. milestone 2
rd Health Insurance expense & liability. milestone 2
rd leased asset and liability:
106,589.40 ) milestone 2
t amount back to rent/ lease expense

final
final

-
Southern New Hampshire University

ACC309 - Intermediate Accounting III

INSTRUCTIONS FOR MILESTONE 2 (Due Week 5)

IMPORTANT NOTE:

Make sure to completely review the Rubric for Milestone 2

Use the data from this Milestone and begin working on your final presentation due in Week 7

ITEMS TO COMPLETE FOR THIS MILESTONE:

GENERAL
In preparation of the annual audit, make calculations (green tab) and prepare appropriate adjusting entries and post to th
balance workbook (red tab)

CAPITAL LEASES

Calculate capital lease obligations

Prepare appropriate adjusting entries

PENSION PAYOUTS
Calculate pension liability
Calculate health insurance liability

ADJUSTING ENTRIES

Prepare adjusting entries for capital lease obligations

Prepare adjusting entries for pension payouts

MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for milestone 2
A. Explain the implications of capital lease based on how it relates to the company’s equipment usage.
B. Explain how postretirement plans will impact the company financially in the short and long term, using examples from
accounting workbook to support claims.

FINANCIAL INFORMATION FOR THIS MILESTONE

Postretirement Benefits
 Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Manageme
requested that you report the short- and long-term financial implications of this.
·       The company is currently employing 60, and actuaries estimate that the company has a pension liability of $10
·       The estimated cost of retired employees’ health insurance is $43,718.91.
·       Prepare adjusting entries for the pension liability and the health insurance liability

Leases
·       Six ovens were rented on December 31, with $20,000 charged to rent expense. The lease runs for 6 years with
interest rate of 5%. At the end of the 6 years, Peyton will own them. Make any necessary adjusting entries.
 HOME

e adjusting entries and post to the trial

uipment usage.
d long term, using examples from the
o retired employees. Management has

any has a pension liability of $107,041.70.

. The lease runs for 6 years with an implicit

essary adjusting entries.
 Capital Leases

Lease
Payment # Payment PVF @ 5% Present Value
0 1 $ 20,000.00 1 $ 20,000.00
1 2 $ 20,000.00 0.9523809524 $ 19,047.62
2 3 $ 20,000.00 0.9070294785 $ 18,140.59
3 4 $ 20,000.00 0.8638375985 $ 17,276.75
4 5 $ 20,000.00 0.8227024748 $ 16,454.05
5 6 $ 20,000.00 0.7835261665 $ 15,670.52

Fair Value of Lease Obligation $ 106,589.53

Lease
Interest Obligation Lease
Payment Expense Reduced by Obligation
reduced by:
1 $ 20,000.00 $ 20,000.00 $ 86,589.53 (Balance After payment):
2 $ 20,000.00 $ 4,329.50 $ 19,047.62 $ 67,541.91 1
3 $ 20,000.00 $ 3,545.98 $ 18,140.59 $ 49,401.32 2
4 $ 20,000.00 $ 2,723.27 $ 17,276.75 $ 32,124.57 3
5 $ 20,000.00 $ 1,859.44 $ 16,454.05 $ 15,670.52 4
6 $ 20,000.00 $ 952.41 $ 15,670.52 $ - 5

$ 120,000.00 $ 13,410.60 $ (106,589.40)

They lease the ovens on 12/31/17 an immediately make a $20,000 payment. Because they make a payment at the s

They make a payment of $20,000 the same day. There is neither interest nor deprciation on the day they sign the lea

So the adjustments are:

31-Dec Equipment 106,589.40
Lease Equipment 106,589.40
To record the aquistion of the lease obligation asset and liability

31-Dec Lease Equipment 20,000.00

Rent Expense 20,000.00
To correct intial recording of equipment lease aquistion under rent expenes
account. Lease obligation would have been correct account

Pension
· The company is currently employing 60, and actuaries estimate that the company has a pension liability of $10
· The estimated cost of retired employees’ health insurance is $43,718.91.
31-Dec Pension Expense 107,041.70
Accrued Pension Expense 107,041.70

31-Dec Retired Employees Health Ins 43718.91

Accrued Employees Health Insurance 43718.91

106,589.40
6
17,764.90
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make a payment at the start, it's a 6 year 5% annuity due. The correct PV factor is 5.3295. They should capitalize the asset at $106,590 (20

n the day they sign the lease. The payment just reduces the lease obligation by $20,000.

a pension liability of $107,041.70.

he asset at $106,590 (20,000 X 5.3295) with a credit to lease obligation.
Southern New Hampshire University

ACC309 - Intermediate Accounting III

INSTRUCTIONS FOR FINAL (Due Week 7)

IMPORTANT NOTE:

Make sure to completely review the Rubric for Final Project

This page contains new information the must be included in the final project but has not been in milestone 1 or mileston

ITEMS TO COMPLETE FOR THIS MILESTONE:

GENERAL
adjusted trial balance and the preliminary 2017 statements (yellow tabs) to prepare revised financial statements that are audit
Calculate the impact on earnings per share that the expansion options will cause. (Orange tabs)

ADJUSTING ENTRIES

Prepare appropriate adjusting entries for patent

Prepare appropriate adjusting entries for capitalization of machine repair

ADJUSTED TRIAL BALANCE

Prepare the adjusted trial balance

REVISED FINANCIAL STATEMENTS

Prepare a revised income statement - include comprehensive income

Prepare a revised retained earnings statement
Prepare a revised balance sheet

EARNINGS PER SHARE

Determine the impact on earnings per share caused by each expansion plan option

NOTESA.
TOCompose
THE FINANCIAL STATEMENTS
appropriate - Prepare
footnotes withininaastatement
Word document - see the rubricincome
of comprehensive for finalinproject
accordance with applicable acc
standards, such as GAAP, International Financial Reporting Standards, and SEC, as applicable.

MANAGEMENT BRIEF - Prepare in a Word document - see the rubric for final project
I. Evaluate the company’s current performance based on the outcomes of relevant ratio analysis.
 J. Discuss types of accounting changes encountered and when retrospective and prospective approaches
K. Predict the impact of new credit policies or a change in product or markets based on relevant ratio analysis.
L. Discuss relevant accounting standards for informing the company’s financial reporting strategies.
M. Explain how the four-step process was used for effectively correcting and reporting errors in the revision process.

FINANCIAL INFORMATION FOR THIS MILESTONE

Stockholder Equity / Earnings per share

Peyton Approved prides itself on transparency with shareholders and investors. The company has added two storefront loca
launched a new marketing campaign, which is estimated to bring in 20,000 new customers over the next 6 months.
The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of
profit. The options are:
1) Issuing an additional $1,000,000 of 10%, 100-par convertible preferred stock (same class as is currently outstanding)
2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue)
3) $500,000 each of preferred stock and bonds

Other Items

·       On December 31, 20XX, the company repaired a packaging machine at cost of $27,000.00. It is expected that th
will extend the life of the machine by four years. No depreciation is necessary this year.

·       The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The patent took effec
1/1/20XX and provides 20 years of protection. The $50,000 amount was incorrectly charged to Misc. Expense
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been in milestone 1 or milestone 2

ancial statements that are audit ready.

)

n accordance with applicable accounting

applicable.
 ctive approaches should be used.
relevant ratio analysis.
strategies.
rrors in the revision process.

ny has added two storefront locations and

er the next 6 months.
nerate an additional $600,000 of after-tax

lass as is currently outstanding)

$27,000.00. It is expected that the repair

year.

dog treats. The patent took effect on

y charged to Misc. Expense
 Assets Liabilities and Owners' Equity
Current Assets: Current Liabilities:
Cash 1,488,999.34 Accounts Payable 1,555,212.85
Marketable Securities 5,500,000.00 Wages Payable 250,203.31
Accounts Receivable 7,092,495.88 Interest Payable 21,888.22
Baking Supplies 1,605,098.52 Current Portion of Bonds Payable 1,000,000.00
Merchandise Inventory 128,152.63 Income taxes currently payable 1,042,118.16
Prepaid Rent 71,877.07
Prepaid Insurance 207,834.14
Misc. Supplies 17,647.42

Total Current Assets 16,112,105.00 Total Current Liabilities 3,869,422.54

Long Term Liabilities:

Long Term/Fixed Assets: Bonds Payable 10%, 20 year 4,000,000.00
Land 250,000.00
Building 1,250,000.00
Baking Equipment 2,254,140.00 Total Long Term Liabilities: 4,000,000.00
Accumulated Depreciation -328,282.00
Net Fixed assets 3,425,858.00 Total Liabilities: 7,869,422.54

Preferred Stock - (10,000 authorized, 500,000.00

5,000 issued, 10%, $100 par value)
Common Stock - (2,000,000 shares 1,750,000.00
authorized, 1,750,000 issued, $1 par)
Retained Earnings 9,418,540.46

Total Equity 11,668,540.46

Total Assets: 19,537,963.00 Total Liabilities & Equity 19,537,963.00

Bakery Sales $ 33,881,157.15
Merchandise Sales 124,795.80
Total Revenues 34,005,952.95
Cost of Goods Sold - Baked 10,954,907.36
Cost of Goods Sold - Merchandise 88,994.79
Total Cost of Goods Sold 11,043,902.15
Gross Profit 22,962,050.80

Operating Expenses:

Rent Expense 1,576,731.95

Wages Expense 2,604,526.23
Misc. Supplies Expense 263,224.56
Repairs and Maintenance 47,353.05
Business License Expense 211,757.65
Misc. Expense 141,171.08
Depreciation Expense 634,520.00
Insurance Expense 112,937.69
Advertising Expense 160,413.49
Interest Expense 484,703.27
Telephone Expense 50,821.34
Total Operating Expenses: 6,288,160.31

Earnings before Income Tax 16,673,890.49

Income Taxes 4,168,472.62

Net Income 12,505,417.87

 Peyton Approved HOME
Statement of Retained Earnings
For Year Ended 12/31/20XX

Beginning Balance: $ 2,213,122.59

plus Net Income 12,505,417.87

less Dividends: Preferred 50,000.00

Common 5,250,000.00
Ending Balance $ 9,418,540.46

$ 9,418,540.46
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 Peyton Approved
Income Statement
For Year Ended 12/31/20XX

Bakery Sales 33,881,157.15

Merchandise Sales 124,795.80
Total Revenues 34,005,952.95
Cost of Goods Sold - Baked 10,954,907.36
Cost of Goods Sold - Merchandise 88,994.79
Total Cost of Goods Sold 11,043,902.15
Gross Profit 22,962,050.80

Operating Expenses:

Rent Expense 1,556,731.95

Wages Expense 2,604,526.23
Misc. Supplies Expense 263,224.56
Repairs and Maintenance 20,353.05
Business License Expense 211,757.65
Misc. Expense 91,171.08
Depreciation Expense 654,520.00
Insurance Expense 112,937.69
Advertising Expense 160,413.49
Interest Expense 484,703.27
Telephone Expense 50,821.34
Pension Expense 107,041.70
Retired Employees Health Ins. 43,718.91
Patent Amortization 2,500.00

Total Operating Expenses: 6,364,420.92

Operating Income 16,597,629.88

Income Taxes 4,168,847.62

Deferred tax Expense 52,325.25
Total Tax Expense 4,221,172.87
 Net Income 12,376,457.01

Unrealized Gain/(Loss) on Marketable Securi 265,000.00

Comprehensive Income 12,111,457.01

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 Peyton Approved
Statement of Retained Earnings
For Year Ended 12/31/20XX

Beginning Balance:
plus Comprehensive Income

less Dividends: Preferred

Common
Ending Balance

0
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2,213,122.59
12,111,457.01

50,000.00
5,250,000.00
$ 9,024,579.60
 Peyton Approved
Balance Sheet
As of December 31, 20XX

Assets Liabi
Current Assets:
Cash 1,488,999.34 Accounts Payable
Marketable Securities 5,235,000.00 Wages Payable
Accounts Receivable 7,092,495.88 Interest Payable
Baking Supplies 1,605,098.52 Current Portion of Bonds
Merchandise Inventory 128,152.63 Income taxes currently p
Prepaid Rent 71,877.07 Accrued Pension Liabilit
Prepaid Insurance 207,834.14 Accrued Employees Hea
Misc. Supplies 17,647.42 Lease Liability
Contingent Liability - Law
Deferred Tax Liability

Total Current Assets $ 15,847,105.00

Long Term/Fixed Assets: Bonds Payable 10%, 20

Land 250,000.00
Building 1,250,000.00
Baking Equipment 2,387,729.40
Accumulated Depreciati -328,282.00
Net Fixed assets $ 3,559,447.40

Patent Net of Amortization 47,500.00 Preferred Stock - (10,00

5,000 issued, 10%, $
Common Stock - (2,000
authorized, 1,750,000
Retained Earnings

Total Assets: $ 19,454,052.40

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eet
31, 20XX

Liabilities and Owners' Equity

Current Liabilities:
Accounts Payable 1,555,212.85
Wages Payable 250,203.31
Interest Payable 21,888.22
Current Portion of Bonds Payable 1,000,000.00
Income taxes currently payable 1,042,493.16
Accrued Pension Liability 107,041.70
Accrued Employees Health Insuran 43,718.91
Lease Liability 106,589.40
Contingent Liability - Lawsuit 0.00
Deferred Tax Liability 52,325.25

Total Current Liabilities 4,179,472.80

Long Term Liabilities:

Bonds Payable 10%, 20 year 4,000,000.00

Total Long Term Liabilities: 4,000,000.00

Total Liabilities: 8,179,472.80

Preferred Stock - (10,000 authorize 500,000.00

5,000 issued, 10%, $100 par value)
Common Stock - (2,000,000 shares 1,750,000.00
authorized, 1,750,000 issued, $1 par)
Retained Earnings 9,024,579.60

Total Equity 11,274,579.60

Total Liabilities & Equity $ 19,454,052.40

 Peyton Approved
Earnings per Share
For Year Ended 12/31/20XX

Net Income 12,376,457.01

Less: Preferred Dividends 50,000.00
Earnings Available to Common Shareholders 12,326,457.01
Common Shares Outstanding 2,000,000.00
Basic EPS 6.16

If all preferred shares are converted:

Net Income 12,376,457.01

Additional Common Shares 500,000.00
Common Shares Outstanding after conversion 2,500,000.00
EPS if preferred shares converted 4.95
Preferred shares are antidilutive

If all bonds are converted:

Net Income 12,376,457.01
Less: Preferred Dividends 50,000.00
Add back interest on bonds, net of income tax 1,000,000.00
Earnings Available to Common Shareholders 13,326,457.01
Additional Common Shares 2,000,000.00
Common Shares Outstanding after conversion 4,000,000.00
Fully diluted EPS 3.33

Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate
that it will enable them to earn an additional $600,000 after tax. What would be the impact on
earnings per share if the raise the $1,000,000 by:
a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share
can be coverted into 10 shares of Peyton common stock?
b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into?
5 shares of Peyton common stock?
c) $500,000 of each of the above?
 Net Income 600,000.00
Less: Preferred Dividends 100,000.00
Earnings Available to Common Shareholders 500,000.00
Common Shares Outstanding 100,000.00
Basic EPS 5.00

a If all preferred shares are converted:

Net Income 600,000.00

Additional Common Shares 100,000.00
Common Shares Outstanding after conversion 200,000.00
EPS if preferred shares converted 3.00
Preferred shares are antidilutive

b If all bonds are converted:

Net Income 600,000.00
Less: Preferred Dividends -
Add back interest on bonds, net of income tax 48,000.00
Earnings Available to Common Shareholders 648,000.00
Additional Common Shares 5,000.00
Common Shares Outstanding after conversion 105,000.00
EPS if peferred shares converted (diluted eps) 6.17

c. Net Income 500,000.00

Less: Preferred Dividends 500,000.00
Add back interest on bonds, net of income tax 24,000.00
Earnings Available to Common Shareholders 574,000.00
Additional Common Shares Peferred Stocl 50,000.00
Additonal from Bonds 2,500.00
Common Shares Outstanding 152,500.00
EPS is bonds and
preferred shares
are converted
(Diluted EPS ) 3.76
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oming year. They anticipate

would be the impact on

preferred stock, where share

bond can be converted into?

1000000*.10
 RATIO ANALYSIS SPREADSHEET
BALANCE SHEET RATIOS: Stability (Staying Power)
1 Current
Current Assets $ 15,847,105.00
3.791652
Current Liabilities $ 4,179,472.80
2 Quick
Cash + Accts. Rec. $ 8,581,495.22
2.053248
Current Liabilities $ 4,179,472.80
3 Debt-to-Worth
Total Liabilities $ 8,179,472.80
42%
Net Worth $ 19,454,052.40

INCOME STATEMENT RATIOS: Profitability (Earning Power)

4 Gross Margin
Gross Profit $ 22,962,050.80
68%
Sales $ 34,005,952.95
5 Net Margin
Net Profit Before Tax $ 12,376,457.01
36%
Sales $ 34,005,952.95

ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios

6 Sales-to-Assets
Sales $ 34,005,952.95
1.748014
Total Assets $ 19,454,052.40
7 Return on Assets
Net Profit Before Tax $ 16,597,629.88
85%
Total Assets $ 19,454,052.40
8 Return on Investment
Net Profit Before Tax $ 16,597,629.88
1.472128
Net Worth $ 11,274,579.60

ASSET MANAGEMENT RATIOS: Working Capital Cycle Ratios

9 Inventory Turnover
Cost of Goods Sold $ 11,043,902.15
6.371784
Inventory $ 1,733,251.15
10 Inventory Turn-Days
360 360
56.49909
Inventory Turnover $ 6.37
11 Accounts Receivable Turnover
Sales $ 34,005,952.95
4.794638
Accounts Receivable $ 7,092,495.88
12 Accounts Receivable Turn-Days
360 360
75.08387
Accts. Rec. Turnover $ 4.79
13 Accounts Payable Turnover
 Cost of Goods Sold $ 11,043,902.15
7.101216
Accounts Payable $ 1,555,212.85
14 Average Payment Period
360 360
50.69554
Accts. Pay. Turnover $ 7.10
** Todo this properly not enough information is provided so I am using the Prel balance as the previous yea

Visual Method

Peyton Approved
Statement of Retained Earnings
For Year Ended 12/31/20XX

Beginning Balance: 2213122.59

plus Comprehensive Income 12111457

less Dividends: Preferred 50000

Common 5250000
Ending Balance 9024579.6

Accounts Prel Balance 12/31/xx Balance

Current Assets: 1,488,999.34 1,488,999.34
Marketable Securities 5,500,000.00 5,235,000.00
Accounts Receivable 7,092,495.88 7,092,495.88
Baking Supplies 1,605,098.52 1,605,098.52
Merchandise Inventory 128,152.63 128,152.63
Prepaid Rent 71,877.07 71,877.07
Prepaid Insurance 207,834.14 207,834.14
Misc. Supplies 17,647.42 17,647.42

Accured Expenses 6,288,160.31 6,364,420.92 76,260.61

Notes Pay 4,000,000.00 4,000,000.00 -
Common Stock 1,750,000.00 1,750,000.00 -
Retiained Earnings 9024579.5975 9024579.5975 -
Total Liab & SHE 19,537,963.00 19454052.398 (83,910.60)

To record Unrealized Loss on Marketable Securities

To adjust income taxes for correct effective rate:
$1,500 Meals permanent difference X 25%
To record Deffered taxes for timing difference on book
vs MACRS Depreciation
To record Pension Liability expense & liability.
To record Health Insurance expense & liability.
To record leased asset and liability:
(20000
To credit amount back to rent/ lease expense
To capitalize repair of packing Machine
To Record cost of patent by rectifying Miscellaneous
Expense and amortizing patent for year
Cost of Patent
Amortization
balance as the previous years to complete