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					Assignment Type: Individual Project      Deliverable Length: 2-3 paragraphs
Points Possible: 125     Due Date: 9/6/2009 11:59:59 PM CT

Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago.
From all appearances, the business has prospered. In the past few years, you have become friends with
O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would
consider selling it for the right price. You are interested in buying this business, and you obtain its most
recent monthly unadjusted trial balance which follows:


  O'Henry's Data Services Unadjusted Trial Balance November 30,
                              20XX

 Cash………………………………                        $9,700

 Accounts receivable………………………            7,900

 Prepaid expenses…………                    2,600

 Furniture, fixtures, & equipment        151,300

 Accumulated depreciation                                   $15,600

 Accounts payable…………                                       3,800

 Salary payable………………

 Unearned service revenue                                   6,700

 Benjamin O'Henry, capital                                  137,400

 Benjamin O'Henry, withdrawals           2,000

 Service revenue…………                                        14,300

 Rent expense……………

 Salary expense…………                      3,400

 Utilities expense………                    900

 Depreciation expense

 Supplies expense……

 Total………………………………………….                  $177,800           $177,800


Revenues and expenses vary little from month to month, and November is a typical month. Your
investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of
$2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire
a manager who would require a monthly salary of $3,000.

The most you would pay for the business is 20 times the monthly net income you could expect to earn
from it. Compute this possible price. The least O'Henry will take for the business is his ending capital.
Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.

Please submit your assignment.




   Instructor Comments:
    In the O’Henry assignment you must create an income statement and a statement of
    owners equity (do not create a balance sheet). Please use Chapter 5 page 270-271 of
    the text as a guide to help you build your income statement and statement of owners
    equity

    First, you need to create an income statement for the buyer. You need this for 2
    reasons; (1) to determine the monthly net income you would pay (times 20) for the
    business, and (2) the net income figure needs to be "closed out" and "turned into"
    retained earnings which are part of the calculation for ending capital (a.k.a., owners
    equity). Look at the text, to determine what accounts go on the income statement
    (revenue and expenses only, please). Then take the net income figure multiplied by 20
    to determine the amount the buyer is willing to pay for O'Henry's business. REMEMBER,
    the buyer needs a manager, so the cost of the manager needs to be included in the
    income statement as well as the monthly revenue and expense figures discussed in the
    narrative of the assignment.

    Next you need to determine how much O'Henry wants for the business. The least
    O'Henry will take is his ending capital. Capital (or owners equity) is calculated as
    follows: beginning capital (owners equity) plus retained earnings less any withdrawals
    or dividends = ending capital (or owners equity). REMEMBER that the net income figure
    you use to calculate how much O'Henry wants for the business should not include the
    cost of the manager, since O’Henry does not need the manager.

    You must show your calculations. If you simply provide O’Henry’s asking price and the
    buyers offer figures without showing your calculations you will not receive any points
    for this assignment, even if your figures are correct!

    In any business transaction you can negotiate the price. Finally, make sure you
    remember to discuss how much should you offer O'Henry and give your reason.

    By the way, did you know that we specifically address issues in the IP and DB and
    discuss how concepts in the chapters tie into the assignments in our weekly live chats?
    Join us and see 
    Assignment Type: Discussion Board       Deliverable Length: 2-3 paragraphs
    Points Possible: 70    Due Date: 9/6/2009 11:59:59 PM CT

    The net income of Simon and Hobbs, a department store, decreased sharply during 2000. Carol Simon,
    owner of the store, anticipates the need for a bank loan in 2001. Late in 2000, Simon instructs the
    store's accountant to record a $10,000 sale of furniture to the Simon family, even though the goods will
    not be shipped from the manufacturer until January 2001. Simon also tells the accountant not to make
    the following December 31, 2000 adjusting entries:


     Salaries owed to employees: $900
     Prepaid insurance that has expired: $400

    Why is Simon taking this action? Is her action ethical? Give your reason, identifying the parties helped
    and the parties harmed by Simon's action.

    In your own words, please post a response to the Discussion Board and comment on other
 postings. You will be graded on the quality of your postings.




 Instructor Comments:
 Make sure you consider this situation from all angles; Simon's responsibility to the employees, Simon's
 responsibility to the bankers, etc. Then take this one step further and do a little investigation. What principle
 of GAAP is Carol violating, is she breaking any laws (look at Sarbanes-Oxley act of 2002)?

 In order to be awarded 50 points (a grade of ‘C’) students should answer the discussion board question fully
 and intelligently. To earn 70 points (a high A), the student must: provide additional information to the
 discussion that would be informative; elaborate and expand on previous comments from others; present
 explanations of concepts or methods to help fellow students; present reasons for or against a topic in a
 persuasive fashion; share your own personal experiences that relate to the topic; share a URL website with
 other students and explanation for an area you researched on the Internet. Through out the week I post
 additional, optional questions which give students another opportunity to demonstrate their knowledge.
 Answering the additional questions posted is not required. This time you may want to consider taking and
 defending a view contrary to the overall opinion of the other students. Remember that due to the interactive
 nature of the DB, late submission will not be accepted under any circumstance. Can you defend Carol’s
 actions? Remember that sometimes in these discussions there is no right or wrong answer, just how well you
 can defend your position!


Unit 3 - Statement of Financial Position

Reading Assignment: Horngren chapter 4
 Assignment Type: Group Project         Deliverable Length: Income Statement, Balance Sheet, and
 paragraph
 Points Possible: 150      Due Date: 9/13/2009 11:59:59 PM CT

 Group Project

 Doug Maltbee formed a lawn service business as a summer job. To start the business on May 1, he
 deposited $1,000 in a new bank account in the name of the proprietorship. The $1,000 consisted of a
 $600 loan from his father and $400 of his own money. Doug rented lawn equipment, purchased
 supplies, and hired fellow students to mow and trim his customer's lawns.

 At the end of each month, Doug mailed bills to his customers. On August 31, he was ready to dissolve
 the business and return to Louisiana State University for the fall semester. Because he was so busy, he
 kept few records other than his checkbook and a list of amounts owed to him by customers.

 At August 31, Doug's checkbook shows a balance of $690, and his customers still owe him $500. During
 the summer, he collected $4,250 from customers. His checkbook lists payments for supplies totaling
 $400, and he still has gasoline, weedeater cord, and other supplies that cost a total of $50. He paid his
 employees $1,900, and he still owes them $200 for the final week of the summer.

 Doug rented some equipment from Scholes Machine Shop. On May 1, he signed a six-month lease on
 mowers and paid $600 for the full lease period. Scholes will refund the unused potion of the
 prepayment if the equipment is in good shape. To get the refund, Doug has kept the mower in excellent
 condition. In fact, he had to pay $300 to repair a mower.

 To transport employees and equipment to jobs, Doug used a trailer that he bought for $300. He figures
 that the summer's work used up one-third of the trailer's service potential. The business checkbook lists
 a payment of $460 for cash withdrawals by Doug during the summer. Doug paid his father back during
 August.

 As a team, prepare the income statement of Maltbee Lawn Service for the four months May through
August. Prepare the classified balance sheet of Maltbee Lawn Service at August 31.

Please add your file.

Next, as a small group discuss the following. Was Maltbee's summer work successful? Give the reason
for your answer. What are the steps in the accounting cycle?

Please add your file.




Instructor Comments:
If you ever thought of joining a chat, this should be the week! We will talk at length about this assignment
and you may find the discussion useful 

Specific hints for the assignment: Let's start with the income statement Take a look at salary expense and
ask yourself 'has Doug's employees completed their service to Doug?' if so, what is the basic rule of accrual
accounting with regards of when you can book revenue and expense? Same principle applies to the supply
expense, how much of the supplies Doug purchased did he actually use? If all the supplies were not used the
remaining supplies are an asset of the company to be liquidated later. What about rental expense, did Doug
use 6 months of rent, if not, then isn't he owed a refund (wouldn't you want a refund?) and how do you
record a refund on the books, what statement do you show amounts that are owed to the company?

Next let’s look at transactions that directly affect the balance sheet (review Chapter 3 pages 148-151 for
same ideas on format and flow). With regard to the loan from dad, loans are never expensed, they are
booked as a liability on the balance sheet and as they are paid off only the cash account and the loan liability
account are affected. The only expense item that ever occurs in a loan is the interest charged (which Doug's
dad does not charge him interest). Since loans HAVE TO be paid back they are considered a liability as
opposed to an investment, which is not required to be paid back. Finally, the trailer raises the issue of
depreciation. Depreciation has 2 purposes: (1) to show on the balance sheet the actual value of an asset
(based on the estimated useful life of the asset), and (2) to record the amount of the fixed asset that is 'used
up' each year by expensing that portion year after year until the asset is worth $0 or almost $0 on the books.
The concept of depreciation is very similar to what happens to the value of your car when you drive it off the
dealers lot. Each year, should you decide to sell the car, you would receive less and less until all you could
get is salvage value.

Let's look at the statement of owners equity. The $1,000 that Doug starts out with is $400 of his own money
that he invests in the company and a $600 loan from his dad. The difference between a loan and an
investment in owners equity is that a loan HAS to be paid back and the investment that owners make in a
company they can only HOPE to get back one day :)

Make sure you convene your group quickly so you can have enough time to complete the assignment. This is
a challenging project, so individual submissions will not be accepted. Also remember that mere membership
in the team does not guarantee you sharing in the group grade. Each group should put a cover sheet on their
paper indicating the names of the members that participated and what their contribution was to this project.
Points are awarded as follows:

    Possible                             Activity
     Points
    75 points     The Income Statement (25 points), Statement of
                  Owners Equity (25 points), Balance Sheet (25 points)
    25 points     Was Doug’s summer work successful, why
    25 points     Description of the accounting cycle
    25 points     Team participation and contribution to final project




Assignment Type: Discussion Board         Deliverable Length: 1-2 paragraphs
Points Possible: 70     Due Date: 9/13/2009 11:59:59 PM CT
 Select a company you are familiar with.

 Explain each step of the accounting cycle. Describe at least one transaction that would occur at the
 company you selected in each of these steps.

 In your own words, please post a response to the Discussion Board and comment on other
 postings. You will be graded on the quality of your postings.




 Instructor Comments:
 Take the time to meet your accounting department and talk to them about the accounting cycle. Ask them
 how, or if, you and your duties within the company fit into the accounting cycle. You might find this to be
 very enlightening :)

 In order to be awarded 50 points (a grade of ‘C’) students should answer the discussion board question fully
 and intelligently. To earn 70 points (a high A), the student must: provide additional information to the
 discussion that would be informative; elaborate and expand on previous comments from others; present
 explanations of concepts or methods to help fellow students; present reasons for or against a topic in a
 persuasive fashion; share your own personal experiences that relate to the topic; share a URL website with
 other students and explanation for an area you researched on the Internet. Through out the week I post
 additional, optional questions which give students another opportunity to demonstrate their knowledge.
 Answering the additional questions posted is not required. Responses must be posted within the allotted
 timeframe and written at a college-level. Reponses to other students such as ‘Good post’, or ‘I like the way
 you presented the material it really made sense’ are nice comments that foster the positive nature of our
 virtual team environment, but they are not sufficient alone to further the discussion. Remember that due to
 the interactive nature of the DB, late submission will not be accepted under any circumstance.

Unit 4 - Accounting for Merchandising Organizations

				
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