ACC 308 7-1 Final Project Submission: Notes to Financial Statements

Managing Depreciation To calculate the depreciation of Peyton Approved’s equipment I utilized the straight-line method which is calculated by equally distributing the depreciation throughout the asset’s depreciable life. For 2017 Payton Approved’s baking equipment cost $12,000 with an accumulated depreciation equaling $406.44 a year totaling $2032.20 over a five-year period. As shown on the Pro Forma Income Statement and Pro Forma Balance Sheets, depreciation for the new location is estimated at $2,142.86. To manage depreciation, Peyton Approved’s new location should adopt the same method as the current location to ensure that shareholders, investors and management can easily compare the depreciation of equipment evenly amongst all locations. Managing Supplies Peyton Approved currently has $28,358.87 in supplies. To manage supplies year-to-year, Peyton Approved needs to “understand the cost and value of the entire supply chain. Without a thorough understanding of all costs, from raw materials through the end product or service, and the value provided by each supplier in the process, a supplier cannot be evaluated.” (Blanchard, 2012). Managing Notes Payable On June 1, 2016 Peyton Approved secured a 5-year loan for $15,000, but with the remaining $5,000 due in 2017 the company will be saving on the accumulated 7.5% annual rate. If Peyton Approved decided to pay on the note for the full 5-year term, then the interest paid would be $3,034.15. By paying of the loan in 18 months ($906.34 interest) the company has saved $2127.81. ACC 308 7-1 Final Project Submission: Notes to Financial Statements 3 Managing Inventory Peyton Approved currently has $229.27 in merchandise inventory and utilizes last in first out (LIFO) method for merchandise and baking. To manage inventory from year to year, Peyton Approved should look for ways to reduce costs of inventory, prevent shortages, and forecast supply and demand. With the new location Peyton Approved should rely on the inventory reports from the first location to assist them in managing their inventory. ACC 308 7-1 Final Project Submission: Notes to Financial Statements 4 Reference Blanchard, D. (2012, May 22). 10 Strategies for Managing Suppliers. Retrieved February 10, 2019, from