Project: Accounting Data Analyses
Preparing financial statements and analyzing the implications for a business.
INTRODUCTION -
The transition from principles of accounting to intermediate level of difficulty can be abrupt for students, and instructors can wrongly assume that all the skills learned in the prior courses are available for new intermediate tasks. This practice set provides a transition from introductory to intermediate level of difficulty, while reinforcing or alerting students to the foundational skills they need for future coursework. The practice set is half traditional accounting cycle basics (journal entries and adjusting entries) in a more authentic setting than typical textbook practice sets, and then extends beyond the introductory level to have students study the resulting financial data and give the client advice about the financial status of their small plumbing business.
REQUIREMENTS
Complete Journal Entries -
Get the client data already loaded for you in the spreadsheet project file (Microsoft Excel) from your instructor. Create and post summary journal entries (amounts can be rounded to whole dollars) to record all the transactions for 2015 (add formulas to increase or decrease based on debits and credits in the journal entry columns). Prepare the adjusted trial balance (you are NOT required to do closing entries).
All of this activity should be posted to the trial balance worksheet in the Excel project (tab Appendix A) using the client's existing chart of accounts (do not move rows or columns). Use formulas to link journal entries to source documents or client data (don't just type in the amounts) so that if the client updates or corrects their assumptions or source document amounts, the journal entries and related financial reports automatically update.
Create Financial Statements -
Prepare financial statements: Income Statement (either multiple or single step), Balance Sheet (add income to retained earnings) and Cash Flow Statement (either direct or indirect method). Present them in good form on the separate "Financial Statement" worksheet tab in the excel project file. Format your statements to look professional - e.g. margins even, centered on the page, appropriate title on top of page, everything labeled nicely and linked to the appropriate trial balances (link amounts to trial balances, no hard coding), so that if the client changes any amounts, the financial statements automatically update.
Analyze the Business and Communicate Your Findings -
Review the client's financial results for 2015. Analyze the profitability of the company using the profitability ratios of the DuPont formula (use ending values of total assets and total equity instead of annual averages). Analyze the liquidity of the company by computing the current ratio and the quick ratio.
In a separate Microsoft Word file, write the client a short memo (300 word maximum) giving them clear and concise feedback on the profitability and liquidity analysis that you performed. Exhibits do not count in the word limit. The memo should support your analysis with observations and explanations that help the client understand your findings. Be specific but short. You can use charts or exhibits to show financial relationships that help illustrate your thoughts. Jag and Elk are busy and not interested in sweet talking or bragging about how hard you worked. Get right to the point-mention all the important matters in the first sentences and then explain these matters in the coming paragraphs. Avoid off-topic comments and do not mention ideas or balances that do not support the important issues you are drawing to the client's attention. Stick to everyday language. Your client is a novice with no need or interest in learning technical terms.
Attachment:- Assignment Files.rar