BUS 5110- Managerial Accounting- Written Assignment Unit 1 #11 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 Polly’s Pet Products has provided this author with the three key managerial financial statements, including their Income Statement as of December 31, 2018, Balance Sheet as of December 31, 2018, and Statement of Cash Flows as of December 31, 2018. However, some of the spreadsheet cells contained missing information. This assignment seeks to determine the missing financial information while providing a narrative of the rationale used to complete the calculations. Income Statement The income statement is a reflection of an enterprise’s efficiency by looking at profit and expenses over a period of time (Accounting Hub, n.d.). The Polly’s Pet Products income statement includes 12 rows of calculations, six of which were missing. In order to calculate operating costs (expenses related to day-to-day administration of a business), the difference between the revenues and gross profit must be calculated ($650,000-$205,000 = $445,000). Gross profit refers to profit prior to subtracting additional expenses such as administrative, interest, or tax expenses (Patriot Software, 2018). Once the aforementioned values are deducted, one is left with the net profit or net income. The operating income (a measure of profit after deducting operating expenses such as wages) is calculated by subtracting the general and administrative expenses from the gross profit ($205,000-$75,000 = $130,000).

BUS 5110: Managerial Accounting- Written Assignment Unit 1

The value found by taking the operating income and subtracting other expenses is the income provision before taxes ($130,000-$60,000 = $70,000). After the final reduction for income taxes, the final value is the net income ($70,000$5,000 = $65,000). Net income is carried down unchanged from row 22to row 27. The retained earnings, ending balance (amount of net income left over after a business has paid dividends to shareholders) is calculated by finding the sum of the retained earnings, 4(aggregated amount of all cash, receivables, and inventory) is calculated by finding the sum of cash, accounts receivable, and other assets (($200,000+$50,000+$25,000 = $275,000). Total current assets is added to the long term fixed assets to calculate total assets ($275,000+$75,000 =$350,000). Accrued expenses (expenses accrued by not yet recorded in a general ledger) was calculated by finding the difference between the total current liabilities and the sum of accounts payable, income tax payable, current portion of notes payable, and deferred income taxes($123,500-($75,000+$5,000+$12,000+$1,500) = $30,000). Long term notes payable liability (a formal written promise to pay a certain amount on a certain date) is calculated by finding the difference between total liabilities and total current liabilities ($161,500-$123,500 = $38,000). Stockholder equity (total amount of capital given to shareholders in exchange for stock) is calculated by finding the difference between total assets and total liabilities ($350,000-$161,500= $188,500). Then, subtract common stock and additional paid-in capital from total stockholder equity to calculate retained earnings ($188,500-$5,000-$15,000 = $168,500), which is the

BUS 5110: Managerial Accounting- Written Assignment Unit 1

amount of net income left over after a business pays out dividends to shareholders. Total liabilities and stockholder equity is found by adding those two values ($161,500+ $188,500 =$350,000). Polly’s Pet Products assets is equal to their total liabilities and stockholder equity, meaning there is a zero balance, and thus the calculations are correct 3 beginning balance and the net income ($103,500+$65,000 = $168,500). The income statement for Polly’s Pet Products shows a retained earnings ending balance of $168,500. Statement of Cash Flows The statement of cash flow tracks all the cash coming into and out of an enterprise over a set period of time, by looking at cash utilized and generated via operating activities, investing activities, and financing activities (Accounting Hub, n.d.). Under the heading Cash Flows from Operating Activities, cash paid out to suppliers and employees (salaries and expenses paid) is calculated by finding the difference between the net cash and the sum of cash received from customers, interest paid, and taxes paid ($185,000+$5,000+$10,000$600,000 = $-400,000). Net cash provided by financing activities (net amount of funding generated to finance the company) is determined by calculating the sum of all the rows under the Cash Flows from Financing Activities heading ($50,000-$45,000+$5,000 = $10,000). To calculate the net change in cash (amount by which a company’s balance increases or decreases over a period of time), find the sum of net cash provided by operating activities, net cash used in investing activities, and net cash provided by financing activities ($185,000-$25,000+ $10,000 = $170,000).

BUS 5110: Managerial Accounting- Written Assignment Unit 1

The cash balance, end of year (total available cash at the end of the year), is determined by adding the beginning of year balance to the net change in cash ($170,000+ $30,000 = $200,000). Polly’s Pet Products has an end of year cash balance of $200,000. Balance Sheet An enterprise’s assets are equivalent to their liabilities plus equity, and the balance sheet captures these values for an organization at a specific date (Accounting Hub, n.d.).The Polly’s Pet Products balance sheet is calculated as of Dec 31, 2018. The value for cash was taken from the cash balance, end of year from the statement of cash flows. The total current assets Conclusion The income statement, statement of cash flows, and balance sheet each provide different “information in support of internal management processes” (Walther & Skousen, 2018, p. 10). Polly’s Pet Product’s balance sheet as of Dec 31, 2018 shows a zero balance. Additionally, they have a positive cash flow due to an end of year cash balance of $200,000 while only starting the year with $30,000. The enterprise is also profitable, shown via the $65,000 net income. Using the available financial information, Polly’s Pet Products is a healthy enterprise.

BUS 5110: Managerial Accounting- Written Assignment Unit 1

References Accounting Hub. (n.d.). Accounting . Boundless.com CC BY-SA 4.0. Retrieved From http://oer.org/mods/en boundless/www.boundless.com/accounting/index.htmlPatriot Software. (2018, October 9). Gross profit vs. net profit [Blog post]. Retrieved from patriotsoftware.com/accounting/training/blog/gross-profit-vs-net-profit/Walther, L. M. & Skousen, C. J. (2018). Managerial and Cost Accounting . Retrieved from https://my.uopeople.edu/pluginfile.php/616278/mod_resource/content/3/managerialand-cost-accounting-compressed.pdf...