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Imagine that you are working as a financial accountant for Peyton Approved, and you have been charged with revising its financial information. The company has experienced tremendous growth in the past...

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Imagine that you are working as a financial accountant for Peyton Approved, and you have been charged with revising its financial information. The company has experienced tremendous growth in the past three years, and it is now a well-known bakery chain for pet products. They have become a publicly traded company and have several locations that they deliver to regionally. You will find the company’s financial information in the Peyton Approved Balance Sheet and Income Statement. This document will need revisions and appropriate notes added in order to prepare for the year-end audit accordingly. In addition to ensuring that the balance sheet is ready for the year-end audit, you will address other major areas of need, including:  Assessing tax implications  Evaluating and explaining stockholder equity  Accounting for postretirement benefits (The amounts would be determined by actuaries.)  Assessing impacts of leases
Answered Same Day Aug 14, 2021

Solution

Sumit answered on Aug 15 2021
121 Votes
Instructions
    Southern New Hampshire University
    ACC309 - Intermediate Accounting III
    MILESTONE 1 (Due in Module 3)                MILESTONE 2 (Due in Module 5)                    FINAL PROJECT (Due in Module 7)
    1.                    1.                    1.
        Prepare adjusting entries for:                    Calculate capital lease obligations                    Prepare adjusting entries for:
        Unrealized loss                                        Patent
        tax issues                2                        Major repair capitalization
        See ru
ic for written portion of milestone 1                    Calculate pension payouts                2
                                                Complete adjusted trial balance
                        3
                                            3
                            Prepare adjusting entries for:
                            Capital leases
                            Pension payouts                    Prepare revised financial statements
                                                Prepare a statement of comprehensive income - include on the revised income statement
                            See ru
ic for written portion of milestone 2                4
                                                Determine the impact of expansion options on earnings per share
                                                See ru
ic for written portion of the final project
Adjusting entries
xl/drawings/drawing1.xml#'Trial%20Balance%202017'!A1Capital Leases
xl/drawings/drawing1.xml#ContributionMarginAdjusting Entries
xl/drawings/drawing1.xml#'Trial%20Balance%202017'!A1Instructions Milestone 1
xl/drawings/drawing1.xml#'Instructions%20-%20Milestone%201'!A1Instructions Milestone 2
xl/drawings/drawing1.xml#'Instructions%20-Milestone%202'!A1Instructions Final Project
xl/drawings/drawing1.xml#'Instructions%20-%20final'!A1Pensions
xl/drawings/drawing1.xml#BreakevenAnalysisAdjusting entries
xl/drawings/drawing1.xml#'Trial%20Balance%202017'!A1Adjusted Trial Balance
xl/drawings/drawing1.xml#'Trial%20Balance%202017'!A1Revised Financial Statements
xl/drawings/drawing1.xml#'IS%202017%20Revised'!A1Earnings per Share
xl/drawings/drawing1.xml#EPS!A1
Instructions - Milestone 1
    Southern New Hampshire University
    ACC309 - Intermediate Accounting III
    INSTRUCTIONS FOR MILESTONE 1 (Due Week 3)
    IMPORTANT NOTE:
    Make sure to completely review the Ru
ic 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 (red tab)
    ADJUSTING ENTRIES
    Prepare adjusting entries for unrealized loss
    Prepare adjusting entries for tax issues
    MANAGEMENT BRIEF - Prepare in a Word document - see the ru
ic 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 notes.
     C. Evaluate impacts of company goals and finances for their implications on stockholder equity, using financial information to support claims.
     D. Evaluate impacts of company goals and finances for their implications on retained earnings per share, using financial information to support claims.
     E. Explain the impact of issuing prefe
ed stock or debt for determining changes to equity structures.
     F. Assess the impact of changes to cu
ent 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 adjusting entry.
    ·       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 defe
ed tax.
    ·       There have been recent tax structure changes the could impact the company. Peyton Approved has been a C Corp since 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 locations and launched a new marketing campaign, which is estimated to
ing 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 after-tax profit. The options are:
    
     1) Issuing an additional $1,000,000 of 10%, 100-par convertible prefe
ed stock (same class as is cu
ently outstanding)
     2) Issue an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue)
     3) $500,000 each of prefe
ed stock and bonds
HOME
xl/drawings/drawing2.xml#Instructions!A1
Trial Balance 2017
                    PEYTON APPROVED
                    TRIAL BALANCE
                    As of December 31, 2017            Adjusting entries
                Dr        Cr        Dr        Cr        Dr        C
        Cash        1,488,999.34                                1,488,999.34
        Marketable Securities        5,500,000.00                        265,000.00        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
        Land        250,000.00                                250,000.00
        Building        1,250,000.00                                1,250,000.00
        Baking Equipment        2,254,140.00                101,498.00                2,382,638.00
                                27,000.00
        Accumulated Depreciation                328,282.00                                328,282.00
        Patent                        50,000.00        2,500.00        47,500.00
        Accounts Payable                1,555,212.85                                1,555,212.85
        Wages Payable                250,203.31                                250,203.31
        Interest Payable                21,888.22                                21,888.22
        Cu
ent Portion of Bonds Payable                1,000,000.00                                1,000,000.00
        Income Taxes Cu
ently Payable                1,042,118.16                375.00                1,042,493.16
        Accrued Pension Liability                                107,041.70                107,041.70
        Accrued Employees Health Insurance                                43,718.91                43,718.91
        Lease Liability                                101,498.00                101,498.00
                                                        - 0
        Defe
ed Tax Liability                                52,325.25                52,325.25
        Bonds Payable                4,000,000.00                                4,000,000.00
        Prefe
ed Stock                500,000.00                                500,000.00
        Common Stock                1,750,000.00                                1,750,000.00
        Beginning Retained earnings                2,213,122.59                                2,213,122.59
        Dividends - Prefe
ed        50,000.00                                50,000.00
        Dividends - Common        5,250,000.00                                5,250,000.00
        Bakery Sales                33,881,157.15                                33,881,157.15
        Merchandise Sales                124,795.80                                124,795.80
        Cost of Goods Sold - Baked        10,954,907.36                                10,954,907.36
        Cost of Goods Sold - Merchandise        88,994.79                                88,994.79
        Rent Expense        1,576,731.95                        20,000.00        1,556,731.95
        Wages Expense        2,604,526.23                                2,604,526.23
        Misc. Supplies Expense        263,224.56                                263,224.56
        Repairs and Maintenance        47,353.05                        27,000.00        20,353.05
        Business License...
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