ACC700 Milestone Three Guidelines and Rubric The third milestone

ACC 700 Milestone Three Guidelines and Rubric The third milestone

 

ACC 700 Final Project Guidelines and Rubric
Overview
As the final step in your journey toward earning your Master of Science degree in Accounting, you will complete a capstone that integrates the knowledge and
skills you have developed in previous coursework and over the duration of the term by creating a portfolio that is representative of your growth in the Accounting
program. You will also reflect on your journey through the Accounting program and how you plan to position yourself professionally.
A portfolio can provide you with advantages in both career and academic settings. Whether you are seeking employment or admission to a school or program, a
portfolio can help you verify the claims that you make about yourself and provide tangible evidence that you are qualified for the position or school you are
seeking. A well-done portfolio will help convey the impression that you are strongly motivated, well organized, and accomplished in your field.
In this assignment, you will demonstrate your mastery of the following course outcomes:







Employ discipline-specific research strategies to appraise the effectiveness and limitations of financial accounting and reporting practices in a global
economy
Evaluate and generate complex financial statements for internal and external users including effective compliance with full disclosure and in accordance
with applicable governing rules and regulations
Apply IRS rules for tax planning to minimize the tax liability of individuals and organizations
Analyze, interpret, and communicate to all stakeholders the significance of accounting information as it relates to an organization’s strategic plans
Prepare components of financial statements in accordance with both US GAAP and IFRS reporting requirements
Assess an audit plan for compliance with PCAOB audit standards

Prompt
Imagine that you are a new employee at the fictitious CPA firm Swanson, Nelson, Hamilton, Ulrich, & Co., LLC (S.N.H.U., LLC). In your new role, your supervisor
has made you responsible for three sets of tasks for three different clients.

Client One – Chester, Inc. (Financial Statements and Analysis)
Chester, Inc. is a large, publicly traded client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional report for the board of directors. To do this,
you will use Chester, Inc.’s trial balance to compose comparative financial statements, analyze data, and interpret results. These financial statements must be in
good form in accordance with Generally Accepted Accounting Principles (GAAP). Next, you will assess the performance of Chester, Inc. using the financial
statements you created, along with industry performance data and the financial statements of a competitor. In addition, Chester, Inc. is considering expanding
into the global market. They would like you to highlight key areas of the financial statements you have prepared and identify how they would be reported
differently if composed under International Financial Reporting Standards (IFRS) rather than GAAP.

Chester, Inc. is a large, publicly traded client operating in athletic wear including clothing, shoes, and accessories. Direct competitors include Columbia
Sportswear Company (COLM – NYSE) and Under Armour, Inc. (UA – NYSE). All these companies operate in the textile-apparel clothing industry. Chester Inc.
operates on a calendar year.
Reference the Milestone One Chester Inc. Trial Balance spreadsheet for the past three years’ financials (2013, 2014, and 2015).
Additional information:





Land with the land improvements were sold at book value (no gain or loss) in 2014. (Note: To evaluate the sale, use the following accounts: land, building
and land improvements, and Other Noncurrent Assets)
New equipment purchased with cash for $2,739,067
New storage building purchased with cash for $135,000
No investments have been sold in 2013, 2014, or 2015

There are currently 8,275,000 shares of common stock outstanding. No additional common stock has been sold or repurchased in any of the aforementioned
years.
Client Two – Newham (Sample Audit Program)
General Information:
Newham Company is a publicly traded company operating in the “personal product” industry. Your task is to create a professional audit program based on PCAOB
audit standards. Newham manufactures cosmetic and body-care products. These products are sold to large department chain stores, such as Target and
Walmart, to be sold and distributed to the final consumer. Competitors include Revlon, Inc. (REV – NYSE) and Avon Products, Inc. (AVP - NYSE).
Newham Company has experienced steady growth over the past several years. Recently, there has been a change in executive management including the CEO
and CFO. The change was sparked by questionable bonus payments that were paid to the executive management team based on the company’s performance. In
addition, a recent lawsuit has been filed based on claims that a new product was not properly advertised, leading many customers to experience allergic
reactions.
Sales and Accounts Receivable
A sample of weekly sales invoices shall be analyzed from the sales report by product category. All sales are on account. Sales are classified into four product
categories: cosmetics, skin care, fragrance, and personal care. Charges to customer accounts should be dated with the date of shipment.

Sales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company’s
computer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon
preparing sales invoices, the accounts receivable clerk verifies that the first invoice number of batch is consistent with the last invoice number of the previous
batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are compared
to the items billed for proper quantity, price, and other sales order terms.
The accounting department supervisor compares and reconciles a copy of the daily sales invoice batch report to the daily accounts posting report indicating the
individual accounts. The daily account posting report is prepared and sent by the accounts receivable department. Discrepancies are investigated and resolved
to help assure that the customer subsidiary accounts are posted for the same total amount posted to the control account.
At the end of each month, the total of the trial balance of customer account balances (prepared by the accounts receivable department) are reconciled to the
general ledger control account by the accounting department supervisor.
Sales invoice batches are dated with the date of shipment, and totals of each batches are accumulated each month and recorded in the accounts receivable
control and sales revenue accounts. The accounting department supervisor approves all monthly summary entries before posting to the general ledger.
The controller approves all cash refunds and allowance credit memos for sales returns, after initiation by customer service.
Cash Management
The monthly bank statements are mailed to the controller’s office. Duplicate deposit slips are retained and used when bank deposits are made, the cash receipts
journal listing, and the cash disbursements listing to reconcile the general bank accounts. The payroll bank account is also reconciled, utilizing the payroll register
retained by the controller’s office.
The assistant controller oversees all cash management and activity, including the performance of the bank account reconciliation for each bank account held by
the company. The assistant controller compares the cash receipts journal and daily deposit records with the bank deposits and duplicate deposit slips during the
bank account reconciliation.
Internal auditors will randomly review the bank account reconciliations.

Cash Receipts and Accounts Receivable Processing
All cash receipts from customers related to sales are credited to accounts receivable individual and control accounts. Cash receipts are received by mail and
opened by the office secretary. The office secretary prepares the cash receipt listing and daily deposit. A copy of the cash receipt listing and duplicate deposit
slip is sent to the controller’s office. Another copy of the cash receipt listing and the remittance advice are sent to the accounts receivable clerk for posting.
The accounts receivable department posts credits to individual customer accounts, dating the entries with the date of the remittance advice and cash receipt
listing received.
Statements of accounts receivable balances are mailed to customers each month by the accounts receivable accounting department. Customers’ reports of
disputes or differences shall be handled by customer service.

Cash Disbursements
All disbursements are made by check, signed by the controller.

Client Three – Ms. Emma Shire (Tax Memo)
Ms. Emma Shire is a client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional tax memo and appendix for her by analyzing business and
individual tax situations. Ms. Shire has questions and concerns about her personal income taxes, as well as taxes as they relate to her role in a partnership with
Marlene Anderson. She also works at Clifford Co., a large organization set up as a corporation, and has questions about their tax preparation. You will work with
Ms. Emma Shire to provide her with guidance on her questions related to personal, partnership, and corporate tax situations. You will need to apply income tax
regulations in solving problems and recommending courses of action that will comply with regulations and, at the same time, result in the best economic solution
for Ms. Emma Shire.
Throughout the term, you will build a series of artifacts for the three clients described above at S.N.H.U., LLC. These artifacts will be organized into a professional
portfolio that is designed to increase your employability and be used as a tool in your job search and future academic endeavors. You will build your portfolio one
piece at a time, completing three artifacts in component one and refining your work with feedback from your instructor as you move through the term.
Following the development of the artifacts for your professional portfolio, you will create a professional self-assessment. To do this, you will reflect on what you
have learned and the importance of professional integrity and ethics in accounting. Your professional self-assessment will eventually become the introduction to
your portfolio.

Capstone Component One: Portfolio
For the first of two capstone components, you will develop a comprehensive, professional portfolio by creating three artifacts: financial statements and analysis,
a sample audit program, and a tax memo. These artifacts that you create for your clients at S.H.N.U., LLC will demonstrate your mastery of accounting concepts.
This professional portfolio will provide tangible evidence of your knowledge, skills, and expertise in the field of accounting by displaying examples of your work.
This portfolio should be representative of your growth, achievement, and professional attributes developed throughout your time in the Master of Science in
Accounting program. Effectively showcasing your professional knowledge and skills in the field of accounting serves a very practical purpose: to assist you in
seeking and sustaining employment.
Before submitting your final version in the portfolio, make sure to incorporate the feedback from your instructor. Remember that you want this portfolio to
demonstrate your strengths as an accountant and your mastery in the field of accounting.
The following artifacts should be included in your portfolio:
Artifact One: Financial Statements and Analysis
The first artifact that you will include in your portfolio is the comprehensive, professional report that you create for the board of directors of Chester, Inc.—a large
publicly traded client at S.N.H.U., LLC. The report should contain your findings with the financial statements package as an appendix (Excel attachment).
Incorporate the feedback that you receive from your instructor and peers during the development of this artifact.
Appendix: These sections should be completed first, before you write your report. Use the proper format for each section in accordance with Generally Accepted
Accounting Principles (GAAP) and noting and explaining differences under International Financial Reporting Standards (IFRS) where appropriate:








Income statement
Balance sheet
Statement of retained earnings
Statement of cash flows
Ratio analysis
o Liquidity – minimum of three key ratios with supporting calculations with a minimum of three years of data
o Profitability – minimum of three key ratios with supporting calculations with a minimum of three years of data
o Solvency – minimum of three key ratios with supporting calculations with a minimum of three years of data
Vertical and horizontal analysis
o Both vertical and horizontal for the income statement with a minimum of three years of data
o Both vertical and horizontal for the balance sheet with a minimum of three years of data

Report of Findings and Recommendations: The report is the key section of this artifact and will be written after you complete the analysis in the sections in the
appendix above. The report will demonstrate your understanding of financial statements, what they contain, what they mean, and how they are used in strategic
decision making.
As you know, numbers are useless if we do not know what they mean and how to use them. The financial statements, ratios, and vertical/horizontal analysis
should be analyzed and interpreted in order to assess and explain the performance of the organization. In your report, you must:



Address all three key ratios in each ratio category. Include what each ratio indicates and how the organization performed against its key competitor and
industry averages.
Address all key findings in the vertical and horizontal analysis of the income statement and balance sheet. As a general rule, anything over 10% warrants
addressing.

Guidelines for Submission: Each portfolio artifact should be submitted as an organized package in a business context, written in APA format and including a title
page or table of contents where appropriate. The title page, reference page, or any graphs, charts, or illustrations do not count towards the total page count. The
financial statements and analysis must contain completed financial statements in an Excel spreadsheet. The report of findings and recommendations must be 8–
10 pages in length. Use double spacing, 12-point Times New Roman font, and one-inch margins. Include at least five references cited in APA format.
Artifact Two: Sample Audit Program
Your second portfolio artifact will be the comprehensive, professional audit program based on PCAOB audit standards that you create for Newham, an influential
client at S.N.H.U, LLC. Make sure to incorporate the feedback you receive from your instructor and peers while developing this audit program. The following
sections should be included:


Business Risk Analysis: Identifying risk in an organization and the environment in which it operates is the first step in approaching a potential audit and
designing an effective audit program. To analyze business risk, you must:







Gain an understanding of Newham
Investigate the industry in which Newham operates
Analyze and assess the risk, including fraud, involved in the company and industry
Identify the relevant PCAOB audit standards and address their relevance to the Newham audit risk assessment

Sample Audit Program: An audit program involves compiling a list (program) of procedures for the auditors to perform in order to obtain evidence and
reasonable assurance that internal controls are operating properly and thus producing accurate financial statements. To compile a sample audit program,
you have been provided with tests of control in revenue and inventory.

You must identify the relevant PCAOB audit standards and address their relevance to the Newham audit program. Include other elements as applicable to
Newham.


Report of Recommendations: Based on an auditor’s experiences and knowledge of accounting, finance, and common errors or pitfalls, it is common for
an auditor to provide recommendations. The sample audit program addressed here is merely a small sample, not a comprehensive program. Thus,
recommendations for further risk analysis, sample methods, and other concerns should be offered. In your report of recommendations to the head of
the new audit team, include the following sections:





Explanation of findings in the risk analysis
Sarbanes–Oxley concerns or requirements
Recommendations on appropriate sampling methods
Recommendations for preparation and success in the external audit

Guidelines for Submission: Your sample audit program must be four to five pages in length. Each portfolio artifact should be submitted as an organized package
in a business context, written in APA format and including a title page or table of contents where appropriate. Use double spacing, 12-point Times New Roman
font, and one-inch margins. Include at least seven references cited in APA format.
Artifact Three: Tax Memo I
Ms. Shire has provided you the following information to prepare her personal income tax return for 2014.
Emma Shire lives at 5258 Mountain Skies Road, College Park, MD 20742. She is a human resource manager at Clifford Company, 896 Western Avenue, College
Park, MD 20742 (employer identification number XX-1111111). She also is a 50/50 partner in a local clothing boutique. Ms. Shire is divorced and has two small
children, Kelly Shire (DOB 2/3/2012) and Jordan Shire (DOB 5/19/2006).
Ms. Shire was born on January 14, 1976, and her Social Security number is 123-45-6789. She does not want to contribute $3 to the Presidential Election
Campaign Fund.

The following information is shown on Ms. Shire’s 2014 Wage and Tax Statement (Form W–2):
Line
1
2
3
4
5
6
15
16
17

Description
Wages, tips, other compensation
Federal income tax withheld
Social Security wages
Social Security tax withheld
Medicare wages and tips
Medicare tax withheld
State: Maryland
State wages, tips, etc.
State income tax withheld

Amount
$65,000.00
10,500.00
65,000.00
4,030.00
65,000.00
942.50
65,000.00
1,650.00

Additional Information:












Received interest of $1,750 from Maryland Federal Savings and Loan Association and $250 from Maryland State Bank. Each financial institution reported
the interest income on a Form 1099–INT.
Received qualified dividends of $600 from Blue Corporation, $750 from Green Corporation, and $368 from Orange Corporation. Each corporation
reported dividend payments on a Form 1099–DIV.
Received child support of $15,000 during the year.
Received a $900 income tax refund from the state of Maryland on April 29, 2014.
Reported total itemized deductions of $10,200 on 2013 Federal income tax return, which included $2,200 of state income tax withheld by her employer.
Received K-1 indicating her share of the clothing boutique’s ordinary business income (loss) – Line 1 is $23,580. No guaranteed payments were made or
dividends were received by the partnership.
Acquired 100 shares of Ace Corporation common stock for $30 a share on January 12, 2014. She sold the stock on December 19 for $55 a share.
Paid $1,300 for prescription medicines and $1,875 in physician and hospital bills. Medical insurance premiums were paid by her employer.
Paid real property taxes of $1,675 on her personal residence and interest on her home mortgage was $4,285, and interest paid to credit card companies
totaled $360.
Contributed $25 each week to her church and $15 each week to United Way.
Paid $1,500 in estimated Federal income taxes throughout the year.

Artifact Three: Tax Memo II Corporation Issue
Clifford Company has encountered the following issue:
The company would like to make a property distribution (dividend) of the three machines that it uses in its business. It no longer needs two of these machines.
All three machines have a fair market value of $20,000 each. The basis of each machine is as follows: Machine A, $27,000; Machine B, $20,000; and Machine C,
$12,000. The corporation has asked you for advice. What do you recommend?
Prompt: Tax Memo
Your final portfolio artifact is the comprehensive, professional tax memo and appendix that you develop for Ms. Emma Shire, another client at S.N.H.U., LLC. As
you did with the previous two artifacts, make sure to incorporate the feedback that you receive from your instructor and peers.
Memo: You will justify recommendations and explain potential issues and future decisions relating to Ms. Shire’s tax situations. Given that Ms. Shire is not well
versed in accounting, make sure that your memo addresses her concerns in language that she can understand.





Address Ms. Shire’s questions pertaining to personal tax planning. Based on her given information, what actions can Ms. Shire take throughout the
year to effectively reduce her tax liability? Provide specific recommendations, defend them with tax regulations, and explain the tax consequences or
savings in conceptual and dollar value terms.
Address Ms. Shire’s questions pertaining to her partnership income. Based on the given information, what actions can Ms. Shire take throughout the
year to effectively reduce her tax liability from the partnership? What are the tax consequences to Ms. Shire if she and her partner choose to change
their business to a corporation? Provide specific recommendations, defend them with tax regulations, and explain the tax consequences or savings in
conceptual and dollar value terms.
Address Ms. Shire’s questions pertaining to Clifford Co.’s tax preparation. Provide specific recommendations, defend them with tax regulations, and
explain the tax consequences or savings in conceptual and dollar value terms.

Supporting documents should include, but are not limited to: a completed tax return, tax schedules, and tax forms.
Guidelines for Submission: Tax Memo I must be two to three pages in length. Tax Memo II must be one to two pages in length. Each portfolio artifact should be
submitted as an organized package in a business context, written in APA format and including a title page or table of contents where appropriate. Use double
spacing, 12-point Times New Roman font, and one-inch margins. Include at least three to four credible sources, formatted as a tax memo, not as a report/paper.
Capstone Component Two: Professional Self-Assessment
Now that you have completed the three sets of tasks for S.N.H.U., LLC, you will write a professional self-assessment for the final component of your capstone. In
this professional self-assessment, you will reflect on the capstone and your experience in the MS Accounting program as a whole. The professional self-

assessment will serve as the formal introduction to your portfolio. This means that you should use the self-assessment as an opportunity to emphasize your
strengths and employability. In addition, the professional self-assessment is an opportunity to explain how the portfolio artifacts that you developed showcase
your superior accounting knowledge, skills, and expertise.
Remember that when prospective employers or admissions counselors view your portfolio, the professional self-assessment is the first thing they will see. It
should be well organized, thoughtful, and effectively communicate your strengths in the field of accounting.
Some of the issues that you could address in the final component of this capstone may include:






Ethics are a crucial component of the accounting profession. How can you relate ethics to your capstone and MS Accounting program experience? How
can you maintain ethical principles in your future accounting career?
What have you learned throughout the MS Accounting program and the capstone experience that prepares you for a job in an accounting firm or for
further education?
How did you apply accounting best practices in your capstone experience?
How will you apply what you have learned in the capstone and in the program to your future academic and/or professional life? In other words, how
does this capstone fit into the big picture of your academic and/or professional goals?
What unforeseen problems or obstacles did you encounter during your capstone experience? What challenges did you face? How did you address these
problems?

There are no milestones for Capstone Component Two: Professional Self-Assessment. However, you are strongly encouraged to post any questions or concerns
for your instructor to the General Questions discussion forum.
Guidelines for Submission: Your professional self-assessment should be one to two pages in length and should be included as the introduction to your portfol...

 

 

ACC 700 Milestone One Guidelines and Rubric
The first milestone is a rough draft of the first artifact for your professional portfolio, financial statements and analysis. You will complete a set of financials as
described in the appendix section of the prompt below for a fictitious company called Chester Inc. You will then submit a report of your findings and
recommendations. This will be graded using the rubric at the end of this document and is an opportunity for you to organize your thoughts and receive feedback
from your instructor for the final submission. You should note that the submission guidelines for this milestone are less demanding than those for the final
submission. Once you have submitted this milestone and received feedback from your instructor, it is up to you to incorporate this feedback and complete the
artifact by meeting the submission guidelines found in the Final Project Guidelines and Rubric document.
Client One – Chester, Inc. (Financial Statements and Analysis)
Chester, Inc. is a large, publicly traded client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional report for the board of directors. To do this,
you will use Chester, Inc.’s trial balance to compose comparative financial statements, analyze data, and interpret results. These financial statements must be in
good form in accordance with Generally Accepted Accounting Principles (GAAP). Next, you will assess the performance of Chester, Inc. using the financial
statements that you created, along with industry performance data and the financial statements of a competitor. In addition, Chester, Inc. is considering
expanding into the global market. They would like you to highlight key areas of the financial statements you have prepared and identify how they would be
reported differently if composed under International Financial Reporting Standards (IFRS) rather than GAAP.
Background and Financial Information
Chester, Inc. is a large, publicly traded client operating in athletic wear including clothing, shoes, and accessories. Direct competitors include Columbia
Sportswear Company (COLM – NYSE) and Under Armour, Inc. (UA – NYSE). All of these companies operate in the textile-apparel clothing industry. Chester Inc.
operates on a calendar year.
Reference the Milestone One Chester Inc. Trial Balance spreadsheet for the past three years’ financials (2013, 2014, and 2015).
Additional information:





Land with the land improvements were sold at book value (no gain or loss) in 2014. (Note: To evaluate the sale, use the following accounts: land,
building and land improvements, and Other Noncurrent Assets)
New equipment purchased with cash for $2,739,067 in 2014
New storage building purchased with cash for $135,000 in 2015
No investments have been sold or purchased in 2014 or 2015

There are currently 8,275,000 shares of common stock outstanding. No additional common stock has been sold or repurchased in any of the aforementioned
years.

Artifact One: Financial Statements and Analysis
The first artifact that you will include in your portfolio is the comprehensive, professional report that you create for the board of directors of Chester, Inc.—a large
publicly traded client at S.N.H.U., LLC. The report should contain your findings with the financial statements package as an appendix (Excel attachment).
Incorporate the feedback that you receive from your instructor during the development of this artifact.
Appendix: These sections should be completed first, before you write your report. Use the proper format for each section in accordance with Generally Accepted
Accounting Principles (GAAP) and note and explain differences under International Financial Reporting Standards (IFRS) where appropriate:








Income statement
Balance sheet
Statement of retained earnings
Statement of cash flows (indirect method)
Ratio analysis
o Liquidity – minimum of three key ratios with supporting calculations with a minimum of three years of data
o Profitability – minimum of three key ratios with supporting calculations with a minimum of three years of data
o Solvency – minimum of three key ratios with supporting calculations with a minimum of three years of data
Vertical and horizontal analysis
o Both vertical and horizontal for the income statement with a minimum of three years of data
o Both vertical and horizontal for the balance sheet with a minimum of three years of data

Report of Findings and Recommendations: The report is the key section of this artifact and will be written after you complete the analysis in the sections in the
appendix above. The report will demonstrate your understanding of financial statements, what they contain, what they mean, and how they are used in strategic
decision making.
As you know, numbers are useless if we do not know what they mean and how to use them. The financial statements, ratios, and vertical/horizontal analysis
should be analyzed and interpreted in order to assess and explain the performance of the organization. In your report, you must:



Address all three key ratios in each ratio category. Include what each ratio indicates and how the organization performed against its key competitor and
industry averages.
Address all key findings in the vertical and horizontal analysis of the income statement and balance sheet. As a general rule, anything over 10% warrants
addressing.

Guidelines for Submission: All financial calculations should be complete. Your paper must be submitted as a four- to five-page Microsoft Word document with
double spacing, 12-point Times New Roman font, one-inch margins, and two to three sources cited in APA format. Round all answers up to the nearest dollar
value in any calculations.

Note that this milestone is a rough draft and the submission guidelines are different for the final project. The final paper will be 8–10 pages in length with at least
five sources. Refer to the guidelines for submission in the Final Project Guidelines and Rubric document.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.
Critical Elements
Income Statement

Balance Sheet

Statement of
Retained Earnings

Statement of Cash
Flows

Ratio Analysis

Vertical and
Horizontal Analysis

Proficient (100%)
Completes the income statement using the proper format for each
section in accordance with Generally Accepted Accounting
Principles (GAAP) and notes and explains differences under
International Financial Reporting Standards (IFRS) where
appropriate
Completes the balance sheet using the proper format for each
section in accordance with Generally Accepted Accounting
Principles (GAAP) and notes and explains differences under
International Financial Reporting Standards (IFRS) where
appropriate
Completes the statement of retained earnings using the proper
format for each section in accordance with Generally Accepted
Accounting Principles (GAAP) and notes and explains differences
under International Financial Reporting Standards (IFRS) where
appropriate
Completes the statement of cash flows using the proper format for
each section in accordance with Generally Accepted Accounting
Principles (GAAP) and notes and explains differences under
International Financial Reporting Standards (IFRS) where
appropriate
Performs a ratio analysis for liquidity, profitability, and solvency
with a minimum of three years of data using the proper format for
each section in accordance with Generally Accepted Accounting
Principles (GAAP) and notes and explains differences under
International Financial Reporting Standards (IFRS) where
appropriate
Performs a vertical and horizontal analysis of the income
statement and balance sheet using the proper format for each
section in accordance with Generally Accepted Accounting
Principles (GAAP) and notes and explains differences under
International Financial Reporting Standards (IFRS) where
appropriate

Not Proficient (0%)
Does not complete the income statement using the proper format
for each section in accordance with Generally Accepted Accounting
Principles (GAAP); differences under International Financial
Reporting Standards (IFRS) are not noted or explained

Value
5

Does not complete the balance sheet using the proper format for
each section in accordance with Generally Accepted Accounting
Principles (GAAP); differences under International Financial
Reporting Standards (IFRS) are not noted or explained

10

Does not complete the statement of retained earnings using the
proper format for each section in accordance with Generally
Accepted Accounting Principles (GAAP); differences under
International Financial Reporting Standards (IFRS) are not noted or
explained
Does not complete the statement of cash flows using the proper
format for each section in accordance with Generally Accepted
Accounting Principles (GAAP); differences under International
Financial Reporting Standards (IFRS) are not noted or explained

10

Does not perform a ratio analysis for liquidity, profitability, and
solvency with a minimum of three years of data using the proper
format for each section in accordance with Generally Accepted
Accounting Principles (GAAP); differences under International
Financial Reporting Standards (IFRS) are not noted or explained

10

Does not perform a vertical and horizontal analysis of the income
statement and balance sheet using the proper format for each
section in accordance with Generally Accepted Accounting
Principles (GAAP); differences under International Financial
Reporting Standards (IFRS) are not noted or explained

10

10

Key Ratios

Vertical and
Horizontal Analysis
Articulation of
Response

Addresses all three key ratios in each ratio category; includes what
each ratio indicates and how the organization performed against
its key competitor and industry averages
Addresses all key findings in the vertical and horizontal analysis of
the income statement and balance sheet
Submission has no major errors related to citations, grammar,
spelling, syntax, or organization

Does not address all three key ratios in each ratio category or
include what each ratio indicates and how the organization
performed against its key competitor and industry averages
Does not address all key findings in the vertical and horizontal
analysis of the income statement and balance sheet
Submission has critical errors related to citations, grammar,
spelling, syntax, or organization that prevent understanding of
ideas
Earned Total

20

20
5

100%
 

 

 

Chester, Inc.
Trial Balances for years ending December 31, 2013, 2014, and 2015
Account Description
Cash on Hand
Regular Checking Account
Savings Account
Accounts Receivable
Other Receivables
Allowance for Doubtful Accounts
Inventory
Reserve for Inventory Obsolescence
Prepaid Insurance
Prepaid Rent
Office Supplies
Land
Buildings and Land Improvements
Machinery, Equipment, Office Furniture
Accum. Depreciation
Investments
Other Noncurrent Assets
Taxes Receivable/payable
Accounts Payable
Wages Payable
FICA Employee Withholding
Medicare Withholding
Federal Payroll Taxes Payable
State Payroll Taxes Payable
FICA Employer Withholding
Medicare Employer Withholding
Line of Credit
Current Portion Long-Term Debt
Interest payable
Bonuses payable
Dividend payable
Common Stock
Paid-in Capital
Retained Earnings
Dividends
Sales
Sale Returns
Warranty Expense
Income from Investments
Interest Income
Cost of Goods Sold
Freight
Advertising Expense
Auto Expenses
Research and Development
Depreciation Expense
Warehouse Salaries
Property Tax Expense
Legal and Professional Expense
Bad Debt Expense
Insurance Expense
Maintenance Expense
Utilities
Phone
Postal
Miscellaneous Office Expense
Payroll Tax Exp
Pension/Profit-Sharing Plan Ex
Rent or Lease Expense
Administrative Wages Expense
Bonus expense
Interest Expense
Income Tax Expense - Federal
Income Tax Expense - State
Loss on Legal Settlement

2013
$

2,484 $
247,646
3,806,198
20,513,628
(1,578,525)
23,531,507
(3,765,000)
929,143
250,000
9,259
146,250
779,882
541,521
(205,000)
715,864
67,301
(5,791,398)
(36,838)
(1,648)
(730)
(7,541)
(3,519)
(1,648)
(730)
(12,500,000)
(6,000,000)
(10,131,250)
(9,278,750)
(2,773,901)
6,000,000
(307,716,148)
5,621,979
1,375,352
(255,379)
176,961,527
5,378,689
1,121,425
261,218
39,015,418
166,250
5,791,730
100,619
4,506,417
2,028,032
1,067,428
76,420
169,554
95,467
160,042
21,279
1,938,736
3,750,000
3,254,357
21,094,132
1,093,750
2,956,250
536,250
23,965,000

2014
2,548 $
253,960
4,083,071
57,697,091
1,400,000
(1,387,691)
75,851,471
(12,136,103)
2,830,474
9,565
131,040
698,775
3,280,589
(764,692)
2,238,634
(3,205,440)
(22,488,866)
(264,513)
(9,452)
(12,785)
(132,256)
(61,720)
(9,452)
(12,785)
(49,731,360)
(13,440,000)
(470,311)
(504,000)
(15,250,000)
(10,131,250)
(9,278,750)
(2,238,105)
15,250,000
(271,839,067)
12,432,247
1,297,104
(1,227,199)
(147,707)
161,029,981
4,749,095
1,161,276
235,763
592,335
581,012
5,348,208
111,252
10,435,113
5,875,403
1,045,085
96,220
170,855
58,911
87,140
27,879
1,767,149
3,696,000
1,351,363
18,344,399
504,000
3,373,056
14,142,240
2,503,200
-

2015
2,599
243,802
4,205,563
49,042,528
1,200,000
(2,942,552)
65,990,780
(10,558,525)
2,667,722
9,182
131,040
833,775
3,280,589
(1,381,847)
2,070,736
(6,011,540)
(13,850,648)
(198,384)
(7,089)
(9,589)
(99,192)
(46,290)
(7,089)
(9,589)
(44,177,211)
(12,084,720)
(568,429)
(459,000)
(15,000,000)
(10,131,250)
(9,278,750)
(9,185,791)
15,000,000
(288,876,206)
23,110,096
1,444,381
(1,138,905)
(142,168)
179,103,248
4,325,068
1,057,591
214,713
3,080,313
617,155
4,870,689
101,319
9,503,406
13,963,800
951,774
87,629
155,600
53,651
79,360
25,390
1,609,368
3,366,000
2,230,705
19,706,506
459,000
2,842,147
7,269,540
1,258,000
-

Chester, Inc.
Trial Balances for years ending December 31, 2013, 2014, and 2015
2013
Amount $
Sales
Sales Returns

307,716,148
5,621,979

Cost of Goods Sold

176,961,527

2014
Percent

Amount $
1.83%

2015
Percent

Amount $

271,839,067
12,432,247

288,876,206
23,110,096

161,029,981

179,103,248

Percent
1498000
1043000 0.696262

 

ACC700 Milestone Three Guidelines and Rubric The third milestone

ACC 700 Milestone Three Guidelines and Rubric The third milestone ACC 700 Final Project Guidelines and Rubric Overview As the final step in your journey toward earning your Master of Science degree in Accounting, you will complete a capstone that integrates the knowledge and skills you have developed in previous coursework and over the duration of the term by creating a portfolio that is representative of your growth in the Accounting program. You will also reflect on your journey through the Accounting program and how you plan to position yourself professionally. A portfolio can provide you with advantages in both career and academic settings. Whether you are seeking employment or admission to a school or program, a portfolio can help you verify the claims that you make about yourself and provide tangible evidence that you are qualified for the position or school you are seeking. A well-done portfolio will help convey the impression that you are strongly motivated, well organized, and accomplished in your field. In this assignment, you will demonstrate your mastery of the following course outcomes: Employ discipline-specific research strategies to appraise the effectiveness and limitations of financial accounting and reporting practices in a global economy Evaluate and generate complex financial statements for internal and external users including effective compliance with full disclosure and in accordance with applicable governing rules and regulations Apply IRS rules for tax planning to minimize the tax liability of individuals and organizations Analyze, interpret, and communicate to all stakeholders the significance of accounting information as it relates to an organization’s strategic plans Prepare components of financial statements in accordance with both US GAAP and IFRS reporting requirements Assess an audit plan for compliance with PCAOB audit standards Prompt Imagine that you are a new employee at the fictitious CPA firm Swanson, Nelson, Hamilton, Ulrich, & Co., LLC (S.N.H.U., LLC). In your new role, your supervisor has made you responsible for three sets of tasks for three different clients. Client One – Chester, Inc. (Financial Statements and Analysis) Chester, Inc. is a large, publicly traded client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional report for the board of directors. To do this, you will use Chester, Inc.’s trial balance to compose comparative financial statements, analyze data, and interpret results. These financial statements must be in good form in accordance with Generally Accepted Accounting Principles (GAAP). Next, you will assess the performance of Chester, Inc. using the financial statements you created, along with industry performance data and the financial statements of a competitor. In addition, Chester, Inc. is considering expanding into the global market. They would like you to highlight key areas of the financial statements you have prepared and identify how they would be reported differently if composed under International Financial Reporting Standards (IFRS) rather than GAAP. Chester, Inc. is a large, publicly traded client operating in athletic wear including clothing, shoes, and accessories. Direct competitors include Columbia Sportswear Company (COLM – NYSE) and Under Armour, Inc. (UA – NYSE). All these companies operate in the textile-apparel clothing industry. Chester Inc. operates on a calendar year. Reference the Milestone One Chester Inc. Trial Balance spreadsheet for the past three years’ financials (2013, 2014, and 2015). Additional information: Land with the land improvements were sold at book value (no gain or loss) in 2014. (Note: To evaluate the sale, use the following accounts: land, building and land improvements, and Other Noncurrent Assets) New equipment purchased with cash for $2,739,067 New storage building purchased with cash for $135,000 No investments have been sold in 2013, 2014, or 2015 There are currently 8,275,000 shares of common stock outstanding. No additional common stock has been sold or repurchased in any of the aforementioned years. Client Two – Newham (Sample Audit Program) General Information: Newham Company is a publicly traded company operating in the “personal product” industry. Your task is to create a professional audit program based on PCAOB audit standards. Newham manufactures cosmetic and body-care products. These products are sold to large department chain stores, such as Target and Walmart, to be sold and distributed to the final consumer. Competitors include Revlon, Inc. (REV – NYSE) and Avon Products, Inc. (AVP - NYSE). Newham Company has experienced steady growth over the past several years. Recently, there has been a change in executive management including the CEO and CFO. The change was sparked by questionable bonus payments that were paid to the executive management team based on the company’s performance. In addition, a recent lawsuit has been filed based on claims that a new product was not properly advertised, leading many customers to experience allergic reactions. Sales and Accounts Receivable A sample of weekly sales invoices shall be analyzed from the sales report by product category. All sales are on account. Sales are classified into four product categories: cosmetics, skin care, fragrance, and personal care. Charges to customer accounts should be dated with the date of shipment. Sales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company’s computer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon preparing sales invoices, the accounts receivable clerk verifies that the first invoice number of batch is consistent with the last invoice number of the previous batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are compared to the items billed for proper quantity, price, and other sales order terms. The accounting department supervisor compares and reconciles a copy of the daily sales invoice batch report to the daily accounts posting report indicating the individual accounts. The daily account posting report is prepared and sent by the accounts receivable department. Discrepancies are investigated and resolved to help assure that the customer subsidiary accounts are posted for the same total amount posted to the control account. At the end of each month, the total of the trial balance of customer account balances (prepared by the accounts receivable department) are reconciled to the general ledger control account by the accounting department supervisor. Sales invoice batches are dated with the date of shipment, and totals of each batches are accumulated each month and recorded in the accounts receivable control and sales revenue accounts. The accounting department supervisor approves all monthly summary entries before posting to the general ledger. The controller approves all cash refunds and allowance credit memos for sales returns, after initiation by customer service. Cash Management The monthly bank statements are mailed to the controller’s office. Duplicate deposit slips are retained and used when bank deposits are made, the cash receipts journal listing, and the cash disbursements listing to reconcile the general bank accounts. The payroll bank account is also reconciled, utilizing the payroll register retained by the controller’s office. The assistant controller oversees all cash management and activity, including the performance of the bank account reconciliation for each bank account held by the company. The assistant controller compares the cash receipts journal and daily deposit records with the bank deposits and duplicate deposit slips during the bank account reconciliation. Internal auditors will randomly review the bank account reconciliations. Cash Receipts and Accounts Receivable Processing All cash receipts from customers related to sales are credited to accounts receivable individual and control accounts. Cash receipts are received by mail and opened by the office secretary. The office secretary prepares the cash receipt listing and daily deposit. A copy of the cash receipt listing and duplicate deposit slip is sent to the controller’s office. Another copy of the cash receipt listing and the remittance advice are sent to the accounts receivable clerk for posting. The accounts receivable department posts credits to individual customer accounts, dating the entries with the date of the remittance advice and cash receipt listing received. Statements of accounts receivable balances are mailed to customers each month by the accounts receivable accounting department. Customers’ reports of disputes or differences shall be handled by customer service. Cash Disbursements All disbursements are made by check, signed by the controller. Client Three – Ms. Emma Shire (Tax Memo) Ms. Emma Shire is a client at S.N.H.U., LLC. Your task is to develop a comprehensive, professional tax memo and appendix for her by analyzing business and individual tax situations. Ms. Shire has questions and concerns about her personal income taxes, as well as taxes as they relate to her role in a partnership with Marlene Anderson. She also works at Clifford Co., a large organization set up as a corporation, and has questions about their tax preparation. You will work with Ms. Emma Shire to provide her with guidance on her questions related to personal, partnership, and corporate tax situations. You will need to apply income tax regulations in solving problems and recommending courses of action that wil...

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