ACC308 Milestone Two Guidelines and Rubric

 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%

2

>Trial Balance 2

0 1

7

1,

Dr Cr ref Dr Cr

3

68,519.91

4

700.00

1

2

2 200.00 200.00

2,114.55

2,114.55 2,114.55

170.49

4

4

1,000.00 3 1,000.00

3,175.00 1

3,383.28

211.46

5,000.00

20,000.00

50,144.84

105,000.00

327,322.55

1,205.64

105,834.29

859.77

24,549.19

10,670.72

3,000.46

2,045.77

1,363.84

677.86

1,091.08

1,549.74

818.31

490.98

4

100.00

429,136.32

6,375.00

432,111.32

																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																				Milestone One Workbook Instructions
PEYTON APPROVED
TRIAL BALANCE
As of December		3	2017
Unadjusted trial balance	Adjusting entries	Adjusted trial balance
		Dr			Cr		ref
					Cash	67,520.0				4				1,000.00		68,520.04
					Accounts Receivable				68,519.91
	Other Receivable – Insurance			700.00
					Baking Supplies		15,506.70		3,175.00	18,681.70
					Merchandise Inventory		1,238.07			200.00		1,038.07
Consignment Inventory
					Prepaid Rent								2,114.55
					Prepaid Insurance
					Misc. Supplies				170.49
					Baking Equipment		14,000.00	2,000.00		12,000.00
Accumulated Depreciation	1,606.44	1,200.00	406.44
	Customer Deposit
					Accounts Payable	20,262.11	23,437.11
					Wages Payable				3,383.28
					Interest Payable				211.46
					Notes Payable						5,000.00
					Common Stock						20,000.00
Beginning Retained earnings			50,144.84
Dividends				105,000.00
				Bakery Sales		327,322.55
				Merchandise Sales				1,205.64
				Cost of Goods Sold – Baked				105,834.29
				Cost of Goods Sold – Merchandise				859.77
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
Gain/Loss on disposal of equipment				100.00
	429,136.32		6,375.00		432,111.32

Balance Sheet

2017

Balance Sheet
Cash

Accounts Payable

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

Notes Payable 5,000.00

Baking Equipment 14,000.00

5,000.00

Common Stock 20,000.00

$ 169,577.87

			Preliminary
											Peyton Approved
	As of December 31, 2017
				Assets					Liabilities and Owners’ Equity
				Current Assets:					Current Liabilities:
$	67,520.04	$ 20,262.11
			Total Current Assets	$ 157,184.31				Total Current Liabilities	$ 23,856.85
				Long Term Liabilities:
				Long Term/Fixed Assets:
				Total Long Term Liabilities:
				Accumulated Depreciation	-1,606.44
		Net Fixed assets	12,393.56					Total Liabilities:	28,856.85
				Retained Earnings	120,721.02
			Total Equity	140,721.02
				Total Assets:		$ 169,577.87				Total Liabilities & Equity

Balance Sheet 2017 Revised

Milestone One
Workbook Instructions

Peyton Approved
Balance Sheet
As of December 31, 2017

Assets Liabilities and Owners’ Equity
Current Assets: Current Liabilities:

Cash

Accounts Payable

Accounts Receivable 68,519.91 Wages Payable 3,383.28

Other Receivable – Insurance 700.00 Interest Payable 211.46
Baking Supplies

Customer Deposit

Merchandise Inventory 1,038.07

Prepaid Rent 2,114.55
Prepaid Insurance 2,114.55
Misc. Supplies 170.49

Total Current Assets

Total Current Liabilities

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

Total Liabilities:

Common Stock 20,000.00

Retained Earnings

Total Equity

Total Assets:

Total Liabilities & Equity $ 173,652.87

			Revised
$ 68,520.04	$ 23,437.11
18,881.70	1000.00
$ 162,059.31	$ 28,031.85
-406.44
Net Fixed Assets	11,593.56	33,031.85
120,621.02
140,621.02
	$ 173,652.87

Income Statement

2017

Preliminary

Peyton Approved

Income Statement
Bakery Sales

Merchandise Sales 1,205.64
Cost of Goods Sold – Baked 105,834.29
Cost of Goods Sold – Merchandise 859.77

24,549.19

10,670.72

3,000.46

2,045.77

1,363.84

677.86

1,091.08

1,549.74

818.31

490.98

					for Year Ended 12/31/2017
	$ 327,322.55
			Total Revenues		328,528.19
			Total Cost of Goods Sold		106,694.06
			Gross Profit		221,834.13
			Operating Expenses:
			Rent Expense
			Wages Expense
			Misc. Supplies Expense
			Business License Expense
			Misc. Expense
			Depreciation Expense
			Insurance Expense
			Advertising Expense
			Interest Expense
			Telephone Expense
			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

100.00

Total Operating Expenses:

	Loss on Disposal of Equipment
46,357.95
	Net Income		175,476.18

Retained Earnings 2017

Preliminary

Peyton Approved

for Year Ended 12/31/2017

175,576.18

105,000.00

	Statement of Retained Earnings
	Beginning Balance:		$ 50,144.84
	plus Net Income
less Dividends:
	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

105,000.00

Ending Balance

less Dividends:

$ 120,621.02

Cash Flow 2017

Preliminary

Peyton Approved
for Year Ended 12/31/2017
Net Income

Depreciation Expense 677.86
Cash Flow from Investments (6,000.00)

)

Cash Flow from Financing

)

67,520.04

	Statement of Cash Flow
$ 175,576.18
	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 Financing
	Repayment of Note Payable		(		10,000.00
	Dividends Paid		(105,000.00)
	(1		15,000.00
	Net Cash Flow	24,354.65
	Beginning Cash			43,165.39
	Ending Cash

Cash Flow 2017 Revised

Milestone One
Workbook Instructions
Revised
Peyton Approved
Statement of Cash Flow
for Year Ended 12/31/2017

Net Income

Depreciation Expense 677.86

Loss on Disposal of Equipment 100.00

176,254.04

Increase in Accounts Receivable (25,886.91)

Increase in Baking Supplies

Increase in Prepaid Rent (449.55)
Increase in Prepaid Insurance (1,004.55)
Increase in Misc. Supplies (114.99)

1,000.00

Increase in Accounts Payable

Increase in Wages Payable 1,850.48
Increase in Interest Payable 44.96

Operating Cash Flow

Cash Flow from Investments

Equipment Purchases

Cash Flow from Investments (5,300.00)

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

Beginning Cash 43,165.39

Ending Cash 68,520.04
0

$ 175,476.18
Increase in Other Receivable – Insurance	(700.00)
(11,562.84)
Increase in Merchandise Inventory	(243.10)
Increase in Customer Deposit
6,467.11
145,654.65
	(5,300.00)
25,354.65

Balance sheet 2015

Peyton Approved
Balance Sheet

Assets Liabilities and Owners’ Equity
Current Assets: Current Liabilities:

Cash

Accounts Payable

Accounts Receivable

Wages Payable

Baking Supplies

Interest Payable

Merchandise Inventory

Prepaid Rent

Prepaid Insurance

Misc. Supplies

Total Current Assets

Total Current Liabilities

Long Term Liabilities:

Long Term/Fixed Assets: Notes Payable 10,000.00
Baking Equipment

Total Long Term Liabilities: 10,000.00

Accumulated Depreciation

Net Fixed assets

Total Liabilities:

Common Stock 20,000.00

Retained Earnings

Total Equity

Total Assets:

Total Liabilities & Equity 82,637.30

As of December 31, 2015
31507.58	15086.84
35118.97	1118.83
8042.23	121.53
580.27
1215.32
810.21
40.51
77,315.09	16,327.20
6000
-677.79
5,322.21	26,327.20
36,310.10
56,310.10
	82,637.30

Balance Sheet

2016

Peyton Approved
Balance Sheet

Assets Liabilities and Owners’ Equity
Current Assets: Current Liabilities:

Cash 43,165.39 Accounts Payable

Accounts Receivable

Wages Payable

Baking Supplies

Interest Payable

Merchandise Inventory

Prepaid Rent

Prepaid Insurance

Misc. Supplies

Total Current Assets

Total Current Liabilities

Long Term Liabilities:

Long Term/Fixed Assets: Notes Payable 15,000.00
Baking Equipment

Total Long Term Liabilities: 15,000.00

Accumulated Depreciation

Net Fixed assets

Total Liabilities:

Common Stock 20,000.00

Retained Earnings 50,144.84
Total Equity

Total Assets:

Total Liabilities & Equity 103,814.14

As of December 31, 2016
16,970.00
42,633.00	1,532.80
7,318.86	166.50
794.97
1,665.00
1,110.00
55.50
96,742.72	18,669.30
8,000.00
-928.58
7,071.42	33,669.30
70,144.84
	103,814.14

Income Statement 2016

Peyton Approved
Income Statement

Bakery Sales

Merchandise Sales

Total Revenues

Cost of Goods Sold – Baked

Cost of Goods Sold – Merchandise

Total Cost of Goods Sold

Gross Profit

Operating Expenses:

Rent Expense

Wages Expense

Misc. Supplies Expense

Business License Expense

Misc. Expense

Depreciation Expense

Insurance Expense

Advertising Expense

Interest Expense

Telephone Expense

Total Operating Expenses:

Net Income

for Year Ended 12/31/2016
214,256.48
770.76
215,027.24
73,159.59
549.64
73,709.23
141,818.01
15,694.23
6,821.76
1,668.18
1,307.85
871.9
433.36
697.52
740.74
523.14
313.88
29,072.56
112,745.45

Ratio Analysis

Milestone One
Workbook Instructions

Peyton Approved

Ratio Analysis
2017 2016

Current Ratio (Working Capital)	5.78	5.18
Quick Ratio	4.89	4.60
A/R Turnover	5.91	5.53
Inventory Turnover	7.61	8.81
Gross Margin	0.68	0.66
Return on Sales	0.53	0.52
Return on Equity	1.25	1.61
Return on Assets	1.01	1.09

Pro Forma IS

Bakery Sales

Merchandise Sales

Total Revenues

Cost of Goods Sold – Baked

Cost of Goods Sold – Merchandise

Total Cost of Goods Sold

Gross Profit

Operating Expenses:

Rent Expense

Wages Expense

Misc. Supplies Expense

Business License Expense

Misc. Expense

Depreciation Expense

Insurance Expense

Advertising Expense

Interest Expense

Telephone Expense

Total Operating Expenses:

Net Income

	Milestone Two Workbook Instructions
	Peyton Approved Second Location
Pro Forma Income Statement
for Year Ending 12/31/2018
$ 261,858.04
$ 964.51
$ 262,822.55
$ 84,667.43
$ 687.82
$ 85,355.25
$ 177,467.30
$ 18,000.00
$ 75,000.00
$ 2,400.37
$ 1,636.62
$ 1,091.07
$ 2,142.86
$ 872.86
$ 1,239.79
$ 654.65
$ 392.78
$ 103,431.00
		$ 74,036.30

Pro Forma BS

Milestone Two
Workbook Instructions
Peyton Approved Second Location
Assets Liabilities and Owners’ Equity
Current Assets: Current Liabilities:
Cash

Accounts Payable

Accounts Receivable

Wages Payable

Baking Supplies

Interest Payable

Merchandise Inventory

Prepaid Rent

Prepaid Insurance $ 1,691.64
Misc. Supplies

Long Term Liabilities:

Long Term/Fixed Assets: Notes Payable

Baking Equipment

Total Long Term Liabilities: $ 20,000.00

Accumulated Depreciation

Total Liabilities:

Common Stock

Retained Earnings $ 74,036.30

$ 74,036.30

Total Assets:

$ 117,534.20

Pro Forma Balance Sheet
As of December 31, 2018
$ 7,000.00	$ 20,622.11
$ 65,705.64	$ 2,706.62
$ 28,222.48	$ 169.17
$ 229.27
	$ 1,691.64
$ 136.39
Total Current Assets:	$ 104,677.06	Total Current Liabilities:	$ 23,497.90
	$ 20,000.00
$ 15,000.00
$ (2,142.86)
Net Fixed Assets:	$ 12,857.14	$ 43,497.90
$ – 0
Total Equity:
	$ 117,534.20	Total Liabilities & Equity: