ACC 309 Milestone One Guidelines and Rubric Overview: For Milestone One, which is due in Module Three, you will develop a portion of the workbook and a brief memo to management explaining the impacts...

ACC 309 Milestone One Guidelines and Ru
ic

Overview: For Milestone One, which is due in Module Three, you will develop a portion of the workbook and a
ief memo to management explaining the
impacts to stockholder equity and the impact of tax structures. You will build on this milestone in subsequent modules to create the balance sheet and executive
summary portions of your final project.

Prompt: First, review the Final Project Scenario document. Using your review of the scenario, begin your balance sheet and discuss the impacts in your
management
ief, including impacts on stockholder equity and impacts based on changes to tax structure.

Note: Milestone One is a draft of some of the critical elements of the final project.

Specifically, the following critical elements must be addressed:

I. Workbook
A. Prepare adjusting entries for unrealized loss and tax issues.

II. Management Brief
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.
Ru
ic
Guidelines for Submission: Your balance sheet must be submitted as a Microsoft Excel document, and your management
ief should be a 1-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
Workbook:
Adjusting Entries
Prepare adjusting entries for
unrealized loss and tax
issues
Prepares adjusting entries
for unrealized loss and tax
issues, but entries contain
inaccuracies
Does not prepare adjusting
entries for unrealized loss and
tax issues
12.5
Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
Management Brief:
Other Sources of
Comprehensive
Income
Identifies sources of other
comprehensive income not
included in net income
Identifies sources of other
comprehensive income not
included in net income, but
sources identified are cursory
or response contains
inaccuracies
Does not identify sources of
other comprehensive income not
included in net income
12.5
Management Brief:
Comprehensive
Income
Explains rationale for the
inclusion as comprehensive
income (as opposed to net
income) of nondisclosure
within notes

Explains rationale for the
inclusion as comprehensive
income (as opposed to net
income) of nondisclosure
within notes, but response is
cursory or contains
inaccuracies

Does not explain rationale for the
inclusion as comprehensive
income (as opposed to net
income) of nondisclosure

12.5
Management Brief:
Stockholder Equity
Evaluates impacts of company
goals and finances for their
implications on stockholder
equity, using financial
information to support claims
Evaluates impacts of company
goals and finances for their
implications on stockholder
equity, but response is cursory
or inaccurate or financial
information used to support is
cursory or illogical
Does not evaluate impacts of
company goals and finances for
their implications on stockholder
equity
12.5
Management Brief:
Retained Earnings per
Share
Evaluates impacts of company
goals and finances for their
implications on retained
earnings per share, using
financial information to
support claims
Evaluates impacts of company
goals and finances for their
implications on retained
earnings per share, but
esponse is cursory or
inaccurate or financial
information used to support is
cursory or illogical
Does not evaluate impacts of
company goals and finances for
their implications on retained
earnings per share
12.5
Management Brief:
Prefe
ed Stock or
Debt
Explains the impact of issuing
prefe
ed stock or debt for
determining changes to equity
structures
Explains the impact of issuing
prefe
ed stock or debt for
determining changes to equity
structures, but explanation is
cursory or illogical
Does not explain the impact of
issuing prefe
ed stock or debt
12.5
Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
Management Brief:
Cu
ent Tax Structure
Assesses the impact of
accounting for income taxes
and disclosure issues relevant
to the company
Discusses accounting for
Income taxes encountered, but
explanation of temporary and
permanent tax differences is
cursory or illogical or contains
inaccuracies
Does not assess the impact of
changes to cu
ent tax structure
12.5
Articulation of
Response
Submission has no major e
ors
elated to citations, grammar,
spelling, syntax, or organization
Submission has major e
ors
elated to citations, grammar,
spelling, syntax, or organization
that negatively impact
eadability and articulation of
main ideas
Submission has critical e
ors
elated to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
12.5
Total 100%


ACC 309 Final Project Scenario
Peyton Approved

Overview
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

Peyton Approved Financial Information
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 $5,235,000
 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. This item
was not previously included in the income tax calculation. Prepare the necessary adjusting
entry.
 The company uses straight line depreciation for book and MACRS depreciation for the tax
eturn.
 MACRS depreciation was $209,301 higher than book. The tax associated with book depreciation
was previously recorded to income tax expense and cu
ent income tax payable. Prepare the
adjusting entry for the defe
ed tax.
 There have been recent tax structure changes that 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).

Potentially Dilutive Securities
Peyton has the following potential dilutive securities:
$4,000,000 in bonds payable 10%, 20 year. Every $1,000 bond can convert to 5 shares of
common stock.
Prefe
ed stock—Every share issued can convert to 1 share of common stock.
Expansion Plans
The company is adding two storefront locations and launching a new marketing campaign, which is
estimated to
ing in 20,000 new customers over the next six 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 financing 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. Issuing an additional $1,000,000 of 8% convertible bonds (same terms as the existing issue)
3. Issuing $500,000 each of prefe
ed stock and bonds

Postretirement Benefits
Peyton Approved has revised its postretirement plan. It will now provide health insurance to retired
employees. Management has requested that you report the short- and long-term financial implications
of this.
 The company is cu
ently employing 60, and actuaries estimate that the company has a pension
liability of $107,041.70.
 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 an implicit interest rate of 5%. At the end of the 6 years, Peyton will own them. Make
any necessary adjusting entries.

Other Items
 On December 31, 20XX, the company repaired a packaging machine at cost of $27, XXXXXXXXXXIt is
expected that the repair will extend the life of the machine by four years. No depreciation is
necessary this year. The initial entry recorded the repair to the repair and maintenance account.
 The company spent $50,000 to obtain and defend a patent for its formula for dog treats. The
patent took effect on 1/1/20XX and provides 20 years of protection. The $50,000 amount was
inco
ectly charged to Misc. Expense
 Make any necessary adjusting entries.

Note 9—Accumulated Other Comprehensive Loss

Changes in the composition of accumulated other comprehensive loss for 2014, 2015, and 2106 are as
follows (in millions)—
Foreign cu
ency
translation
adjustments
Unrealized gains
on available-for-
sale securities Total
Balances as of January 1, 2014 $ (187) $ 2 $ (185)
Other comprehensive income(loss XXXXXXXXXX)
Balances as of December 31, XXXXXXXXXX)
Other comprehensive income(loss XXXXXXXXXX)
Balances as of December 31, XXXXXXXXXX)
Other comprehensive income(loss XXXXXXXXXX)
Balances as of December 31, 2016 $ (1,001) $ 16 $