Need workbook completed and paper written
WOT1: Task 1: Yellow LeafYellow Leaf Fashion Inc. Yellow Leaf Fashion Inc. Yellow Leaf Fashion Inc. You are a newly hired accountant for Yellow Leaf Fashion Inc., a local women’s apparel retailing company. The current accounting system provides an unadjusted trial balance as of December 31, 2014, and additional information necessary to prepare the financial statements. The president of the company wants you to prepare a balance sheet, income statement, and statement of cash flows for the year, and a basic financial statement analysis that can facilitate the assessment of its performance and financial position at the store managers’ meeting. Yellow Leaf Fashion Inc. was incorporated on December 31, 2011, with 100,000 shares of $1 par value common stock authorized. Eighty thousand shares were issued at $6 per share on December 31, 2011. An additional 8,000 common shares were issued at $8 per share on June 30, 2013. The company's accounting period ends on December 31 of each year. Additional Information for Adjusting Journal Entries: 1. The company uses the firstin, firstout method on a periodic basis. Physical counts are conducted at the end of the year to determine the quantity and value of merchandise inventory on hand and cost of goods sold. As the result of a physical count, year-end merchandise inventory was determined to be $546,300. 2. All store equipment was purchased at the beginning of 2012. Yellow Leaf Fashion Inc. expects that the equipment has an estimated useful life of six years, with a residual (salvage) value of $20,000. For financial reporting purposes, it uses the straight-line method for depreciation. 3. The company leased the store with an initial term of 10 years and a five-year extension term. Under the current lease contract, it pays a fixed annual rent of $60,000 and additional rent based on a percentage of sales over the designated level; when sales are over one million dollars, the company pays 5% of the excess sales as additional rent. Additional rent is paid three months after the fiscal year-end of the base year. 4. On September 30, 2013, the company borrowed $80,000 through a three-year note bearing interest at 6% annually. The interest is paid semi-annually. 5. The company uses the percentage of receivables method to estimate bad debt expense. At year-end the company estimates 4% of receivables will be uncollectible. 6. On January 1, 2014, the board of directors of the company authorized the grant of 10,000 stock options to its employees to supplement their salary. Each stock option permits the purchase of one share of common stock of the company at a price of $9 per share; the market price of the stock on January 1, 2014, was also $9 per share. The options vest, or become exercisable, beginning on January 1, 2017, and only if the employees stay with the company for the entire three years’ vesting period. The options expire on December 31, 2017. On December 31, 2014, the company estimated a grant value of $6 for each of the employee stock options using an option-pricing model. 7. On December 31, 2014, the company gathered the following information to recognize income tax expenses, income tax payable, and deferred tax assets and liabilities. a. The salaries and wages expense for 2014 includes $3,200 of life insurance premium paid for store managers, and the beneficiary is Yellow Leaf Fashion Inc. b. For store equipment, depreciation deduction for tax reporting is as follows: Year Depreciation tax deduction 2012 $110,000 2013 $90,000 2014 $70,000 2015 $60,000 2016 $20,000 2017 $10,000 Total $360,000 c. Additional rental expense is not tax deductible for the year in which the company recognizes it. It will be deductible for income tax when the company pays the accrued rent liability for the next year. d. Stock-based compensation expense is also not tax deductible for the year in which the company recognizes it. It will be deductible for income tax when the stock option is exercised. e. Assume that the federal enacted income tax rate is 35% in 2014 and all subsequent periods. 8. The balance sheet, income statement, and statement of cash flows for the two previous years (2012 and 2013) and unadjusted trial balance as of December 31, 2014, are provided. PAGE 2 The graduate integrates and synthesizes competencies from across the degree program and thereby demonstrates the ability to participate in and contribute value to the chosen professional field. Task 1: Yellow Leaf Introduction: For this task, you will be analyzing various business transactions for a merchandising company called Yellow Leaf Fashion Inc. using the attached “Yellow Leaf Scenario.” You will prepare financial statements, including a balance sheet, income statement, and a statement of cash flows in accordance with GAAP. You will also assess the performance and financial position of the company. Requirements: You must use the rubric to direct the creation of your submission because it provides detailed criteria that will be used to evaluate your work. Each requirement below may be evaluated by more than one rubric aspect. The rubric aspect titles may contain hyperlinks to relevant portions of the course. Use the attached “Yellow Leaf Scenario” and “Yellow Leaf Workbook” to complete this task for 2014 data in accordance with GAAP. A. Prepare the adjusted trial balance in the attached “Yellow Leaf Workbook,” including the workpapers and the general journal adjusting entries. B. Prepare the multistep income statement for Yellow Leaf Fashion Inc. in the attached “Yellow Leaf Workbook.” 1. Prepare the vertical analysis of the income statement with revenue as a base in the attached “Yellow Leaf Workbook.” C. Prepare the schedule for income taxes in the attached “Yellow Leaf Workbook.” D. Prepare the statement of retained earnings for Yellow Leaf Fashion Inc. in the attached “Yellow Leaf Workbook.” E. Prepare the classified balance sheet for Yellow Leaf Fashion Inc. in the attached “Yellow Leaf Workbook.” 1. Prepare the vertical analysis of the balance sheet with total assets as a base in the attached “Yellow Leaf Workbook.” F. Prepare the statement of cash flows for Yellow Leaf Fashion Inc. in the attached “Yellow Leaf Workbook.” G. Complete the following calculations in the “Ratios” tab of the attached “Yellow Leaf Workbook”: 1. Calculate two financial ratios to assess liquidity. 2. Calculate two financial ratios to assess activity. 3. Calculate two financial ratios to assess profitability. 4. Calculate two financial ratios to assess coverage. Note: You are only responsible for calculating two ratios within each category, even if a category contains more than two options. H. Prepare a report (suggested length of 6–8 pages) that analyzes the financial position and performance of Yellow Leaf Fashion Inc. by doing the following: 1. Explain what each of the two liquidity ratios calculated in part G1 indicates about the company’s financial position and performance. 2. Explain what each of the two activity ratios calculated in part G2 indicates about the company’s financial position and performance. 3. Explain what each of the two profitability ratios calculated in part G3 indicates about the company’s financial position and performance. 4. Explain what each of the two coverage ratios calculated in part G4 indicates about the company’s financial position and performance. 5. Evaluate the overall financial position and performance of the company by analyzing the combined effect of the calculated ratios from parts G1 through G4. 6. Describe two examples of financial areas specific to Yellow Leaf Fashion Inc. (e.g., particular accounts, individual accounting cycles, sections of the financial statement) that could be improved by the president and store managers to benefit the overall future financial position and performance of the company. a. Justify how improvement of each of the two example financial areas from part H6 will benefit the overall future financial position and performance of the company. I. Acknowledge sources, using APA-formatted in-text citations and references, for content that is quoted, paraphrased, or summarized. J. Demonstrate professional communication in the content and presentation of your submission. WOT Task 1 (0617) Not Evident Approaching Competence Competent Score/Level A. Adjusted Trial Balance The adjusted trial balance, workpapers, or general journal adjusting entries are incomplete or not provided in the “Yellow Leaf Workbook” attachment. The adjusted trial balance, workpapers, and general journal adjusting entries are complete and included in the “Yellow Leaf Workbook” attachment but include inaccuracies. The adjusted trial balance, workpapers, and general journal adjusting entries are complete, accurate, and included in the “Yellow Leaf Workbook” attachment. B. Multistep Income Statement The multistep income statement is incomplete or not provided in the “Yellow Leaf Workbook” attachment. The multistep income statement is complete and included in the “Yellow Leaf Workbook” attachment but includes inaccuracies. The multistep income statement is complete, accurate for Yellow Leaf Fashion Inc., and included in the “Yellow Leaf Workbook” attachment. B1. Vertical Analysis: Income Statement The vertical analysis of the income statement is incomplete or not provided in the “Yellow Leaf Workbook” attachment. The vertical analysis of the income statement is complete and included in the “Yellow Leaf Workbook” attachment but includes inaccuracies or does not use revenue as a base. The vertical analysis of the income statement is complete, uses revenue as a base, is accurate for Yellow Leaf Fashion Inc., and is included in the “Yellow Leaf Workbook” attachment. C. Income Tax Schedule The schedule for income taxes is incomplete or not provided in the “Yellow Leaf Workbook” attachment. The schedule for income taxes is complete and included in the “Yellow Leaf Workbook” attachment but includes inaccuracies. The schedule for income taxes is complete, accurate for Yellow Leaf Fashion Inc., and included in the “Yellow Leaf Workbook” attachment. D. Retained Earnings The statement of retained earnings is incomplete or not provided in the “Yellow Leaf Workbook” attachment. The statement of retained earnings is complete and included in the “Yellow Leaf Workbook” attachment but includes inaccuracies. The statement of retained earnings is complete, accurate for Yellow Leaf Fashion Inc., and included in the “Yellow Leaf Workbook” attachment. E. Classified Balance Sheet The classified balance sheet is incomplete or not provided in the “Yellow Leaf Workbook” attachment. The classified balance sheet is complete and included in the “Yellow Leaf Workbook” attachment but includes inaccuracies. The classified balance sheet is complete, accurate for Yellow Leaf Fashion Inc., and included in the “Yellow Leaf Workbook” attachment. E1. Vertical Analysis: Balance Sheet The vertical analysis of the balance sheet is incomplete or not provided in the “Yellow Leaf Workbook” attachment.