Southern New Hampshire University
ACC309 - Intermediate Accounting III
MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) FINAL PROJ
Instructions Milestone 1 Instructions Milestone 2 Instructi
1. Adjusting entries 1. Capital Leases 1. Adju
Calculate capital lease
Prepare adjusting entries for: obligations
Unrealized loss
tax issues 2 Pensions
See rubric for written
portion of Milestone Adjuste
1. Calculate pension payouts 2
3 Adjusting entries
3 Revi
Prepare adjusting entries for: St
Capital leases
Pension payouts
See rubric for written
portion of Milestone
2. 4 Earni
,FINAL PROJECT (Due in Module 7)
Instructions Final Project
Adjusting Entries
Prepare adjusting entries for:
Patent
Major repair capitalization
Adjusted Trial Balance
Complete adjusted trial balance
Revised Financial
Statements
Prepare revised financial
statements
Prepare a statement of
comprehensive income -
include on the revised income
statement
Earnings per Share
Determine the impact of
expansion options on
earnings per share
See rubric for written
portion of the final
project.
,Southern New Hampshire University HOME
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 (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 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 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 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. 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 return
· MACRS depreciation was $209,301 higher than book. The tax associated with book depreciation was previously recorded to income tax expense and current income tax payable. 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 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.
Preferred 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 bring in 20,000 new customers over the next six months. The company expects this expansion will require an additional $1,000,000
3
, 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
4
ACC309 - Intermediate Accounting III
MILESTONE 1 (Due in Module 3) MILESTONE 2 (Due in Module 5) FINAL PROJ
Instructions Milestone 1 Instructions Milestone 2 Instructi
1. Adjusting entries 1. Capital Leases 1. Adju
Calculate capital lease
Prepare adjusting entries for: obligations
Unrealized loss
tax issues 2 Pensions
See rubric for written
portion of Milestone Adjuste
1. Calculate pension payouts 2
3 Adjusting entries
3 Revi
Prepare adjusting entries for: St
Capital leases
Pension payouts
See rubric for written
portion of Milestone
2. 4 Earni
,FINAL PROJECT (Due in Module 7)
Instructions Final Project
Adjusting Entries
Prepare adjusting entries for:
Patent
Major repair capitalization
Adjusted Trial Balance
Complete adjusted trial balance
Revised Financial
Statements
Prepare revised financial
statements
Prepare a statement of
comprehensive income -
include on the revised income
statement
Earnings per Share
Determine the impact of
expansion options on
earnings per share
See rubric for written
portion of the final
project.
,Southern New Hampshire University HOME
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 (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 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 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 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. 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 return
· MACRS depreciation was $209,301 higher than book. The tax associated with book depreciation was previously recorded to income tax expense and current income tax payable. 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 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.
Preferred 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 bring in 20,000 new customers over the next six months. The company expects this expansion will require an additional $1,000,000
3
, 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
4
