BUS 5110- Managerial Accounting- Written Assignment Unit 1 #10 PDF

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BUS 5110: Managerial Accounting- Written Assignment Unit 1

Written Assignment Unit 1 Managerial Accounting Analysis of Polly Pet Food Financial Statement Term 4 2020 BUS 5110 University of the People April 2020

BUS 5110: Managerial Accounting- Written Assignment Unit 1

Written Assignment

Submit a paper which is 2-3 pages in length (no more than 3-pages), exclusive of the reference page. Paper should be double spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in size. The paper should cite at least three sources in APA format. In this paper, in addition to presenting the computed answers, please also discuss how you arrived at each answer the accounting problem asks. The accounting problem presents a company’s balance sheet, income statement, and statement of cash flows for a theoretical company, Polly’s Pet Products. Each of these statements has blank lines. Determine the values that would be appropriate for each blank line.

Provide a narrative of how you arrived at each value. Include in this narrative an explanation of: 1) the financial statement being completed; 2) the account being valued; 3) Its relationship to the other financial data. For example, if the accounts payable (AP) line was missing, describe what a balance sheet is and explain that you can derive the AP value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet. Finally, analyze, evaluate, and develop a conclusion about the company’s performance based on the completed statements.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

To complete this assignment, refer to the income statement, balance sheet, and statement of cash flows of Polly’s Pet Products. Superior papers will mention and explain the following elements when responding to the assignment question: 

Define the financial statement being completed.

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Discuss how the values were determined.

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Define and explain each account line that was completed.

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Analyze, evaluate, and develop conclusions about the company’s performance based on the financial information.

Be sure to use APA formatting in your paper. Purdue University’s Online Writing LAB (OWL) is a free website that provides excellent information and resources for understanding and using the APA format and style. The OWL website can be accessed here: http://owl.english.purdue.edu/owl/resource/560/01/

This assignment will be assessed using the BUS 5110 Unit 1 Written Assignment rubric.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

Polly’s Pet Products DEFINITION OF BALANCE SHEET A balance sheet is prepared at a date to know the financial position of a company of that date. The ledger account balances that remain after the preparation of income statements are assets, liabilities, and capital. The statement which is prepared on the end day of an accounting period with assets, liabilities and owner’s equity is called a balance sheet. The balance sheet is called the statement of financial position. DEFINITION AND DETERMINATION OF ACCOUNT LINES IN THE BALANCE SHEET Cash: The is $200,000, it is the addition of Net change in cash and cash at the beginning of the year. This amount is brought from the cash flow statement. This is the cash balance derived at the end of the year. Total Current Asset: This is $275,000, it is the aggregate amount of all cash, receivables, prepaid expenses, and inventory on an organization's balance sheet. This is derived by adding cash, account receivable and other assets. Total Asset: This is $350,000, it is the assets owned by the entity that has economic value whose benefits can be derived in the future as recorded in the company's balance sheet. This is derived by adding Total current asset plus fixed asset Accrued expenses: This is $30,000, it is derived by subtracting all other listed current liabilities from the total current liabilities.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

Notes Payable: This is $38,000, it is a long-term liability. It is derived by subtracting current liabilities from total liabilities. Retained Earnings: This is $168,000, it is derived by adding net income and retained earnings beginning balance. It is equal to the accumulated net income fewer dividend distributions to shareholders Total Stockholders Equity: This is $188,500, It is derived by adding retained earnings, common stock and additional paid in capital. It is the ownership claim on total assets. Total Liabilities and Stockholders’ Equity: This is $350,000, it is the amount of the total liability and the equity from stockholders. This is derived by adding the total liabilities and total stockholders’ equity. Accounting Liability is the future payment of obligations and services that the company is expected to pay. Current liabilities are those set of liabilities that the company is expected to square off within the business year and it includes accounts payable, notes payable, current portion of long-term debt, current lease payment, accrued expenses, current tax payables. DEFINITION OF INCOME STATEMENT The statement which is prepared at the end of an accounting period with the help of periodic income and expenditure to know the operating result i.e. profit or loss of a company is called an income statement. The main source of income of a business concern is sales and for the profiteering service-oriented organization is the income received from service rendered.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

DEFINITION AND DETERMINATION OF ACCOUNT LINES IN THE INCOME STATEMENT Operating Cost: The answer is $445,000. Operating costs are the costs of a company's main operations that have been used up during the period indicated on the income statement. For example, a retailer's operating expenses consist of its cost of goods sold and its selling, general and administrative expenses. Revenue and the gross profit values are provided. The gross profit was subtracted from the revenue to get the operating cost. Operating Income: The answer is $130,000. Operating income is the company's operating revenues minus its operating expenses. It is also reported as income from operations, operating earnings, or operating profit. This was derived by General and Administrative expenses from Gross Profit. Income Before Provision for Income Taxes: The answer is $70,000. This is derived by subtracting other expenses from operating income. Net Income: The answer is $65,000. Net income is a company’s income minus cost of goods sold, all expenses, and interest for an accounting period. This is calculated by subtracting provision from income tax from income before provision for income tax. Retained Earnings ending Balance: This answer is $168,500. Retained earnings is the cumulative amount of earnings since the corporation was formed minus the cumulative amount of dividends that were declared. Retained earnings is the company's past earnings that have not been distributed as dividends to its stockholders. The money not paid to shareholders counts as retained earnings. This was calculated by adding the retained earnings beginning balance to the net income.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

DEFINITION OF STATEMENT OF CASH FLOW The statement of cash flows reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified in the heading of the statement. DEFINITION AND DETERMINATION OF ACCOUNT LINES IN THE STATEMENT OF CASH FLOW Cash paid out to suppliers and employees: This is $400,000. Cash paid to suppliers and employee’s expenses is subtracted from net cash provided from operating activities. Net cash provided by financing activities: This is $10,000. This is a section of a company's cash flow statement, which shows the net flows of cash that are used to fund the company. Net change in cash: This is $170,000. The net change in cash is the amount a company's cash balance increases or decreases in an accounting period. Cash Balance at the end of the year: The answer is $200,000. This is the addition of Net change in cash and cash at the beginning of the year. This amount is then taken to the balance sheet as part of the calculation of current asset. ANALYSIS ON COMPANY’S PERFORMANCE With the use of working capital which is Total Current Assets – Total Current Liabilities = $350,000 – $161,500 = $151,500. The working capital number is more than enough to pay down current liabilities coming due. Cash alone can easily cover the current liabilities.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

With the use of a Current Ratio, a measure to know how much liquidity a company has, the formula for calculating a company’s current ratio is: Current Ratio = (Total Current Assets/ Total Current Liabilities) = $275,000/$123,500= 2.2 As a rule, a current ratio of 1.5 or greater is normally sufficient to meet near term operating needs. Therefore, POLLY’S PET management is meeting the operating needs of the company.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

REFERENCES Harold Averkamp. (2020). AccountingCoach.com from https://www.accountingcoach.com/blog IEduNotes. (n.d) Financial Statements: Definition, Component, Importance. From https://www.iedunote.com/financial-statements-definition-component-importance Outsourcing Hub India. (n.d). How to Analyze a Balance Sheet. From https://www.outsourcinghubindia.com/analyze-balance-sheet/ Thomas Weisman (2012) Accounting Simplified. https://business-accountingguides.com/balance-sheet-analysis/...