Question;Company;Background & Scenario;The AC;Speed Company is a well-established, publicly-held corporation, operating as;a wholesaler in the auto parts industry.;Specifically, AC Speed purchases auto parts from manufacturers and;sells them to large business customers.;Most purchases and sales are on account, with trade credit terms;(specified below).;You?re a Davenport University student pursuing a bachelor?s;degree in business and employed at the AC Speed Company this semester as an;intern. You?ve worked in various;departments and on several projects so far, learning a lot about the;company?s business operations.;Management seems impressed with your enthusiasm and the quality of;your work.;The;company?s accountant has just been called away for a family emergency and;will likely be absent for a month or so.;The General Manager asks you to take over the accountant?s regular;duties on an interim basis. You?re;nervous about doing so, but are confident that what you?ve learned in;accounting class, plus your personal problem-solving skills, will make this a;successful experience. What a great;learning opportunity, not to mention an enhancement to your resume!;Project;Overview & Instructions;A.;Overview;a. Part 1 is a financial accounting activity that requires you;to record various business transactions during the month, close the;accounting records at the end of the month, and prepare the financial;statements. These tasks relate to the;steps in the accounting cycle that you learned in your first accounting;course.`;b. Part 2 is an activity that requires you to analyze the;company?s year-end financial statements to assist management in assessing the;company?s position and making decisions about its future direction.;c. This is an individual, not a team, project. While you may discuss this project with;others, you must prepare and submit your own work. Refer to the academic integrity statement;in the project workbook.;d. Before starting work, review the entire project: all instructions, business transactions;descriptions, workbook sections, check figures, due dates, and submission;requirements.;B.;General Instructions;a. The parts of this project, including specific business;transactions and steps in the accounting cycle, must be completed in;sequence. This is particularly;important with business transactions relating to purchases and sales of;inventory.;b. You are also;encouraged to use your textbook?s table of contents (front) or index (back);to locate helpful references.;c. These project instructions will not address every detail of;every task. If you have questions, ask;your instructor.;d. Most of your work for this project will be accomplished in;Excel. A basic skill level in this;application is expected. That is, you;should be able to such things as move around in a workbook, enter data in;cells, use the sum function, compose basic formulas, and save your work.;e. If rounding is required, round to the nearest cent. For example, $96.835 would be entered as;$96.84.;f. Use the check figures provided to check your work as you;progress through the project.;Investigate any discrepancies and correct them as you go along.;g. Refer to the project rubric to determine how components of;the project will be assessed.;h. Appearance counts! Pay;attention to the format, to spelling, and to other details of;appearance. This reflects on;management?s perception of you as a professional.;C.;Submission Requirements;a. Final submission of all parts of this project must be in;electronic (not paper) form. That is;you will submit your completed work via an assignment link in a Blackboard;course site or via an email attachment.;Follow your instructor?s directions.;b. Save backup copies of your work. If you have multiple versions of the;project, clearly label them for your own reference and to ensure that you;submit the appropriate version to your instructor.;c. You must read the academic integrity statement in the project;workbook and enter your student ID number on the form to signify your;agreement with and adherence to that statement. Final project submissions will not be;accepted without this.;d. Due dates for the parts of this project will be provided by;your instructor in the course syllabus, in the Blackboard course site, or in;a designated handout. Be sure to enter;these on your personal calendar and plan your work on this project;accordingly.;D.;Credit Terms & Inventory Accounting;a. When AC Speed purchases merchandise (inventory only) from a;supplier or vendor on account, they receive credit terms of 2/15, net 30.;b. When AC Speed sells merchandise to a customer on account;they offer that customer credit terms of 2/30, net 45.;c. AC Speed accounts for the specific types of merchandise in;their inventory with a set of subsidiary ledgers (inventory control;cards). The balances in these;subsidiary ledger records, in total, must equal the balance in the;Merchandise Inventory account in the general ledger.;d. AC Speed uses a perpetual inventory accounting system and a;last-in, first-out (LIFO) inventory costing method.;e. Subsidiary ledger records are kept for each customer and for;each vendor. The balances in the;customer subsidiary ledger records, in total, must equal the Accounts;Receivable account balance in the general ledger. The balances in the vendor subsidiary;ledger records, in total, must equal the Accounts Payable account balance in;the general ledger.;E.;Financial Accounting Steps;a. Record each business transaction, in sequence by date, in the;appropriate special journal or the general journal. Also, immediately record any transaction;involving inventory, a customer, or a vendor in the appropriate subsidiary;ledger record.;b. At the end of the month, post each entry in the general;journal to the general ledger.;c. At the end of the month, total each column in each special;journal and post that total to the general ledger. EXCEPT for entries in the ?Other? columns;which must be posted individually to the general ledger.;d. When posting is completed, bring the balance in each general;ledger account up to date.;e. When posting is completed, bring the balance in each;subsidiary ledger account up to date.;f. At this point in the closing process, the balances of all;subsidiary ledger accounts would be totaled and that total compared to the;balance of the corresponding control account in the general ledger. That is, the total of inventory control;cards would be compared to the Merchandise Inventory balance, the customer;subsidiary ledger total to the Accounts Receivable balance, and the vendor;subsidiary ledger total to the Accounts Payable balance. Any discrepancies would be investigated and;corrected. Given;the limited scope of this project scenario, reconciliation between subsidiary;ledgers and control accounts is not possible.;g. List all general ledger account balances in the unadjusted;trial balance columns of the worksheet.;Use the sum function in Excel to total the debit and credit;columns. These totals should be equal.;h. Prepare the end-of-month adjusting entries. Record these entries in the general journal;and post them to the general ledger.;Also record the adjusting entries in the designated columns in the;worksheet and total the debit and credit columns. These totals should be equal.;i. Update general ledger account balances after posting;adjusting journal entries.;j. Complete the unadjusted trial balance columns on the;worksheet. Use Excel formulas to carry;balances from the unadjusted trial balance columns, adjusting as necessary by;entries in the adjustments columns.;Check your results against the balances recorded in the general;ledger.;k. Sort the dollars recorded in the adjusted trial balance;columns into either the income statement or the balance sheet columns. Total these columns. The entry of net income should cause the;debit and credit columns to equal one another.;l. Use the income statement information on the worksheet to;prepare a multi-step income statement in good form. Look at examples of this income statement;format in your textbook, such as the one on page 220.;m. Prepare a statement of retained earnings in good form. Look at examples of this statement in your;textbook. Remember that net income;from your just-completed income statement is a necessary component of this;statement.;n. Use the balance sheet information on the worksheet to prepare;a classified balance sheet, similar in format to the example on page;711. Remember that the ending retained;earnings balance from the just-completed statement is a necessary component;of the equity section of the balance sheet.;o. Prepare the end-of-month closing entries. Record these entries in the general journal;and post them to the general ledger.;Update balances in the general ledger accounts.;p. List the general ledger accounts that have balances other;than zero on the post-closing trial balance.;The totals of the debit column and the credit column should be equal.;F. Part;2 of this project requires you to analyze the company?s year-end financial;statements to assist the management of AC Speed in assessing the company?s;financial position and making decisions about its future direction.;a. Before beginning this part of the project, you will find it;helpful to review Chapter 18 on financial statement analysis. Page 809, a summary of ratios, will be;particularly useful.;b. Tabs in the project workbook provide trial balance data for;the current and two preceding years for AC Speed and a location to;calculation a selection of ratios. Use;the trial balance data and the formulas in Chapter 18 to compute the ratios;listed for each of the three years.;YOU MUST STRUCTURE YOUR RATIO CALCULATIONS AS FORMULAS AND LINKS TO;APPROPRIATE CELLS ON THE TRIAL BALANCE TAB.;You will lose points by simply typing the final ratio numbers or;percentages.;c. After you calculate the ratios, consider whether there is a;trend over the three-year period. Also;compare the ratios you calculated for AC Speed with those listed as industry;averages. Review the information in;Chapter 18 to help you determine what the ratios are telling you about;various aspects of AC Speed?s business operations.;d. Use Word to prepare a memo (minimum 500 words) to AC Speed?s;general manager, addressing the three questions listed at the bottom of the;ratios tab. This should be formatted;as a business memo, not an APA paper.;Be sure to include a brief introduction and conclusion in the;memo. Each question should be;addressed in one or two paragraphs in the body of the memo. Remember that the general manager will;expect details/facts/ratios to support statements you may make about the;status of the business. Your writing;should be concise, clear, and readable, with a fairly formal tone (since it?s;addressed to AC Speed?s general manager, who is likely to share it with other;members of management). Your;instructor will provide the due date and submission requirements for this;part of the project.
Paper#41074 | Written in 18-Jul-2015Price : $57