Fluent Essays

Complete a four-part assessment in which you prepare several accounting documents, explain revenue recognition methods, and perform various computations. Introduction Note: An accounting cycle requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order. Competencies Measured By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria: Competency 3: Evaluate economic resources of a business enterprise. Prepare a classified balance sheet. Prepare a multiple-step income statement. Prepare a retained earnings statement. Prepare a statement of cash flows using the indirect method. Competency 4: Analyze financial liabilities and equities of an enterprise. Explain multiple methods of revenue recognition. Preparation The following resources are required to complete the assessment. Assessment 2 Information [DOC]. Assessment 2, Parts 1, 2, and 4 Template [DOC]. Assessment 2, Part 3 Template [XLS]. Overview Note: Do not proceed with this assessment until you have reviewed faculty feedback on Assessment 1. This assessment consists of four parts. Use the following resources to complete the assessment. These documents are linked in Resources under the Required Resources heading. Use the data in the Assessment 2 Information Sheet as the basis for Parts 1-4. Use the Assessment 2, Parts 1, 2, and 4 Template to record your answers for Parts 1, 2, and 4. Use the Assessment 2, Part 3 Template for your answers for Part 3. Submit both completed templates for this assessment. Assume your boss just assigned you four new clients, each with a pressing need for a particular financial statement: Classified balance sheet. Multiple-step income statement. Retained earnings statement. Statement of cash flows. Use the Assessment 2 Information Sheet and the appropriate templates to complete the following four parts. Part 1: Classified Balance Sheet Prepare a classified balance sheet for Jordan Contracting. Part 2: Income Statement D. B. Stanley company decided to discontinue its wholesale operations and to retain its manufacturing operations. On September 15, D. B. Stanley sold the wholesale operations to Wyrick Company. During 2015, there were 150,000 shares of common stock outstanding. Prepare a multiple-step income statement for the D. B. Stanley Company. Prepare a retained earnings statement for the D. B. Stanley Company. Part 3: Cash Flow Statement Analysis For this part: Prepare a statement of cash flows using the indirect method for Falcon Company. Compute these cash-basis measures. Where appropriate, show all calculations leading to the final solution. Current cash debt coverage ratio. Cash debt coverage ratio. Free cash flow. Part 4: Revenue Recognition There are a variety of methods of revenue recognition. Explain the revenue recognition methods below and indicate whether each is in accordance with GAAP. Point of sale. Completed-contract. Percentage-of-completion. Installment-sales. Compute the revenue to be recognized in fiscal year 2015 for the two operating divisions of Worth More Industries in accordance with GAAP. Where appropriate, show all calculations leading to the final solution. Competencies Measured By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria: Competency 3: Evaluate economic resources of a business enterprise. Prepare a classified balance sheet. Prepare a multiple-step income statement. Prepare a retained earnings statement. Prepare a statement of cash flows using the indirect method. Competency 4: Analyze financial liabilities and equities of an enterprise. Explain multiple methods of revenue recognition.Instructions Instructions for the Microsoft Excel Templates Be advised - The workbooks and sheets are not protected. Typing over information may result in the loss of that information. Detail and information on Excel is contained within the manual. Striking the F1 key or following the path Windows>Excel Help will invoke the Office Assistant and bring up one of several help menus. Type your NAME into the cell C2. This will be copied by formula to the rest of the pages as required. Type the COURSE & SECTION identifier into cell C3. This will be copied by formula to the rest of the pages as required. Type the DUE DATE of your problem into cell C4. This will be copied by formula to the rest of the pages as required. The PROBLEM is identified for you in cell B5. In DATE cells enter the date in any of several formats and Excel will format it correctly. If more than one page is preformatted into the problem, page breaks are preset and formulas are set to copy the header into the remaining pages. Place the proper account title in the cell where the word Account appears on the template. Place the amount in the cell where the word Amount appears on the template. A formula may be placed in some of these cells. Enter a number like 914 to signify units or gallons where the word Number appears. Write a formula into cells where the word Formula appears. In these cells, an amount calculated outside of Excel can be entered into Excel if desired. Place the explanation for the entry in the cell where the word Explanation appears on the template. Insert the account number where Acct # appears on the template during posting. Insert the journal reference where Journ # appears on the template during posting. Insert the title in the cell where Title appears on the template. The print area is defined to fit onto 8 1/2 X 11 sheets in portrait or landscape mode as required. The gray filled cells define the perimeter of the problem and the print area. The problem is formatted for whole dollars with comma separations (no cents) except where required. The display may have Freeze Pane invoked so column titles remain visible during data entry. Negative values may be shown as ($400) vice -$400. Enter a string like: ($259,417 X 12 months) + (0.3651 X 5,434,631) where the word Text appears. &CFileName: &F, Tab &A, Page &P of &N, &D, &T Falcon Company Preparation and Analysis of Statement of Cash Flows (Preparation and Analysis of Statement of Cash Flows) Here are the financial statements of Falcon Company. Falcon Company Comparative Balance Sheets December 31, 2018 Assets 2018 2017 Cash $14,300 $18,150 Accounts receivable 15,400 7,700 Merchandise inventory 20,900 13,750 Property, plant, and equipment $38,500 $42,900 Less: Accumulated depreciation (14,850) 23,650 (13,200) 29,700 Total $74,250 $69,300 Liabilities and StockhAssessment 2 Use this template to complete Parts 1, 2, and 4 of Assessment 2. Part 1: Classified Balance Sheet Jordan Contracting Company Balance Sheet December 31, 2018 Assets Current assets Long-term investments Property, plant, and equipment Intangible assets Liabilities and Stockholders’ Equity Current liabilities Long-term liabilities Stockholders’ equity Part 2: Income and Retained Earnings Statements D.B. Stanley Company Income Statement For the Year Ended December 31, 2018 Part 2: Continued D.B. Stanley Company Retained Earnings Statement For the Year Ended December 31, 2018 Part 4: Revenue Recognition 1. Explain each of the following methods of revenue recognition and indicate whether each is in accordance with generally accepted accounting principles. a. Point of sale: b. Completed-contract: c. Percentage-of-completion: d. Installment-sales: 2. Compute the revenue to be recognized in fiscal year 2018 3. 5 for the two operating divisions of Worth More Industries in accordance with generally accepted accounting principles. Where appropriate, show all calculations leading to the final solution. Worth More Industries A. Clear Water Pools Construction Division B. Madoff Securities Division 5Assessment 2 Information, Parts 1–4 Part 1: Classified Balance Sheet The adjusted trial balance of Jordan Contracting and other related information for the year 2018 is presented below. Adjusted Trial Balance December 31, 2018 Debits Credits Cash $22,550 Accounts Receivable 89,925 Allowance for Doubtful Accounts $4,785 Prepaid Insurance 3,245 Inventory 169,675 Long-term Investments 186,450 Land 46,750 Construction Work in Progress 68,200 Patents 19,800 Equipment 220,000 Accumulated Depreciation of Equipment 77,000 Unamortized Discount on Bonds Payable 11,000 Accounts Payable 81,400 Accrued Expenses 27,060 Notes Payable 51,700 Bonds Payable 220,000 Capital Stock 275,000 Premium on Capital Stock 24,750 Retained Earnings   75,900 $837,595 $837,595 Additional Information 1. The LIFO method of inventory valuation is used. 2. The cost and fair value of the long-term investments consisting of stock and bonds is the same. 3. The amount of Construction Work in Progress account represents the costs expended to date on a building in the process of being constructed. The land on which the building sits cost $46,750. 4. The patents were purchased at a cost of $11,000 and are being amortized on a straight-line basis. 5. $1,000 of the unamortized discount on bonds payable will be amortized in 2019. 6. The notes payable are bank loans secured by long-term investments with a fair value of $66,000. The bank loans will mature in 2019. 7. The bonds payable have an interest rate of 11\%. Interest is payable each December 31, and the bonds mature January 1, 2020. 8. 600,000 shares of $1 par value common stock are authorized and 150,000 shares have been issued and are outstanding. Part 2: Income Statement Presented below is information related to D. B. Stanley Company for 2018. Retained earnings balance, January 1, 2018 $539,000 Sales for the year 13,750,000 Cost of goods sold 9,350,000 Interest revenue 38,500 Selling and administrative expenses 2,585,000 Write-off of goodwill (not tax deductible) 451,000 Income taxes for 2018 497,750 Gain on the sale of investments (normal recurring) 60,500 Loss due to flood damage-extraordinary item (net of tax) 214,500 Loss on the disposition of the wholesale division (net of tax) 242,000 Loss on operations of the wholesale division (net of tax) 49,500 Dividends declared on common stock 137,500 Dividends declared on preferred stock 38,500 Part 3: Cash Flow Statement Analysis The financial statements of Falcon Company are found below. Comparative Balance Sheets December 31 Assets 2018 2017 Cash $14,300 $18,150 Accounts receivable 15,400 7,700 Merchandise inve