ACCT 504

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ACCT 504 ENTIRE COURSE + FINAL EXAM
ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation
ACCT 504 Week 5 Case Study 2 Internal Control LJB Company
ACCT 504 Week 5 Course Project Draft Spreadsheet
ACCT 504 Week 6 Case Study 3 Cash Budgeting LBJ Company
ACCT 504 Week 7 Course Project JCP Kohls
ACCT 504 Final Exam (3 different sets)

+ Discussions
Financial Reporting Environment and GAAP
Details of Financial Statements and Ratios
Accounting EquationAccounting Cycle
Accrual Accounting and Adjusting Entries
Merchandising Operations and Income Statements
Inventory Cost-Flow Assumptions

Understanding Internal Control and Reporting Cash

Accounting for and Reporting Receivables
Plant Assets and Intangibles
Accounting for Liabilities
Accounting for and Reporting Equity
Statement of Cash Flows
Issues in Income Reporting
Different Tools for Financial Analysis

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ACCT 504 FINAL EXAM (3 DIFFERENT FINALS)

1. (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole
proprietorships? (Points : 5)
Reduced legal liability for investors
Harder to transfer ownership
Lower taxes
Most common form of organization

2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)

the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

3. (TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

What did Cerner Company show as total credits? (Points : 5)

$21,500
$21,000
$20,500
$22,000
4. (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred

5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory
costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO

6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of
4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for
the first full year, during which the equipment was used 3,300 hours? (Points : 5)
$48,000
$52,500
$49,500
$43,500

7. (TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal
entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $1,020,000

debit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $1,020,000
credit to Cash for $1,000,000
8. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning
and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of
the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows
is _____. (Points : 5)
$240,000
$250,000
$310,000
$230,000

9. (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)

nonlinear analysis
vertical analysis
trend analysis
common-size analysis

10. (TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)
Industry averages
Intercompany
Intracompany
Interregional

11. (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)
Liquidity
Profitability
Marketability of the product
Solvency

12. (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
solvency
liquidity
marketability
profitability

13. (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)

liquidity
marketability
profitability
solvency

14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate
1. (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole
proprietorships? (Points : 5)

Reduced legal liability for investors

Harder to transfer ownership
Lower taxes
Most common form of organization
2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)

the most common form of distribution is a cash dividend

the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit
3. (TCOs A, B) Below is a partial list of account balances for Cerner Company:

Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500

What did Cerner Company show as total credits? (Points : 5)

$21,500
$21,000
$20,500
$22,000
4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____.
(Points : 5)

sales under $1,000,000

no accountants on staff
insignificant receivables and payables
all sales and purchases on account
5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory
costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)

LIFO will have the highest ending inventory

FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO
6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of
$8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000
salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be
_____. (Points : 5)

$14,160
$11,760
$9,840
$9,600
7. (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The
journal entry to record the issuance will show a _____. (Points : 5)

debit to Cash of $2,000,000

debit to Premium on Bonds Payable for $60,000
credit to Bonds Payable for $2,000,000
credit to Cash for $2,060,000
8. (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning
and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of
the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows
is _____. (Points : 5)

$120,000
$125,000
$155,000
$115,000
9. (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)

nonlinear analysis
vertical analysis
trend analysis
common-size analysis
10. (TCO F) In a common-size balance sheet, the 100% figure is _____. (Points : 5)

total current assets

total property, plant, and equipment
total liabilities
total assets
11. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points :
5)

net sales
salary and wages expense in a previous year

gross profit
net income
12. (TCO F) A common measure of profitability is the _____. (Points : 5)

current ratio
current cash debt coverage ratio
return on common stockholder's equity ratio
debt to total assets
13. (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)

profit margin and debt-to-total-assets ratio

profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow
14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate
1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5)
it has limited life
its owner's personal resources are at stake
its ownership is easily transferable via the sale of shares of stock
it is simple to establish
2. (TCO A) When a corporation distributes a dividend, _____. (Points : 5)
the most common form of distribution is a cash dividend
the Dividends account will be increased with a credit
the Retained Earnings account will be directly increased with a debit
the Dividends account will be decreased with a debit

3. (TCOs A, B) Below is a partial list of account balances for Denton Company:

Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500

What did Denton Company show as total credits? (Points : 5)

$30,100
$29,400
$28,700
$30,800
4. (TCOs B, E) A small and private company may be able to justify using a cash basis of accounting if it has _____.
(Points : 5)
sales under $1,000,000
no accountants on staff
insignificant receivables and payables
all sales and purchases on account
5. (TCO D) In a period of increasing prices, which inventory cost flow assumption will result in the lowest amount of
income tax expense? (Points : 5)
FIFO
LIFO
The average cost method
Income tax expense for the period will be the same under all assumptions.
6. (TCOs A, E) Equipment was purchased for $60,000. Freight charges amounted to $2,800 and there was a cost of
$8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000
salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be
_____. (Points : 5)

$14,160
$11,760
$9,840
$9,600
7. (TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal
entry to record the issuance will show a _____. (Points : 5)
debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000
8. (TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning
and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of
the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows
is _____. (Points : 5)
$120,000
$125,000
$155,000
$115,000
9. (TCO F) Which one of the following is not a tool in financial statement analysis? (Points : 5)
Horizontal analysis
Circular analysis
Vertical analysis
Ratio analysis
10. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points :
5)
net sales
salary and wages expense in a previous year
gross profit
net income
11. (TCO F) Ratios are most useful in identifying _____. (Points : 5)

trends
differences
causes
relationships among different numbers
12. (TCO F) A common measure of liquidity is _____. (Points : 5)
return on assets
current ratio
profit margin
debt to equity
13. (TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)
profit margin and debt-to-total-assets ratio
profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow
14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)
find out the present value of all of the future cash payments promised by the bond
calculate the present value of the principal only
calculate the present value of the interest only
multiply the bond price by the interest rate

1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.s 2012 Annual Report:
.........................................................................................................................................................................

Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and
provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for
each.
2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection
Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders equity ratio. (Make sure to
show all your work)

2. (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending

January 31, 2013:

................................................................................................................................................................................................
........................
Required:

Using the information provided above:

1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using,
show your calculations, and discuss your findings/results.
3. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2
questions below:
................................................................................................................................................................................................
................
Required:
1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and
explain the major reasons for the increase or decrease for each of these sections.
2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
4. (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies.
Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has
heard from other members of a CEO organization to which she belongs that a companys net income can vary widely
depending on which accounting choices are made from the GAAP menu.

Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios,
and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year.
Include in your answer the effect of the choice on both the income statement and balance sheet.

Required:
a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling.
Which inventory valuation method would you chooseLIFO, FIFO, or average cost? Assume that unit purchases
exceed unit sales.

b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated
packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance
(DDB)?
5. (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012
and address the 2 questions below.
................................................................................................................................................................................................
..................
Required:
1) Please explain the meaning of each of the Pfizer ratios above.
2) Please state which company performed better for each ratio.

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ACCT 504 WEEK 1-7 DISCUSSION QUESTION

Financial Reporting Environment and GAAP

Details of Financial Statements and Ratios

Accounting EquationAccounting Cycle

Accrual Accounting and Adjusting Entries

Merchandising Operations and Income Statements

Inventory Cost-Flow Assumptions

Understanding Internal Control and Reporting Cash

Accounting for and Reporting Receivables

Plant Assets and Intangibles

Accounting for Liabilities

Accounting for and Reporting Equity

Statement of Cash Flows

Issues in Income Reporting

Different Tools for Financial Analysis

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ACCT 504 WEEK 3 CASE STUDY 1 FLOWER LANDSCAPING CORPORATION

CASE STUDY 1 -THE COMPLETE ACCOUNTING CYCLE The Entire Case Study is due Sunday at Midnight Mountain
time at the end of Week 3. This Case Study is worth 100 points or 10% of your final course grade. This Case Study
relates to TCO's D and E and Chapters 3 and 4. MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE
LISTED BELOW. There are 10 Sheets in the Workbook including this one. All of the Information you need for the
Project is located in this Workbook. Requirements Sheet in Workbook Requirement 1 - Prepare the Journal Entries in
the General Journal Journal Entries Requirement 2 - Post Journal Entries to the General Ledger General Ledger
Requirement 3 - Prepare a Trial Balance Trial Balance Requirement 4 - Prepare the Adjusting Entries Adjusting
Entries Requirement 5 - Post Adjusting Entries to the General Ledger General Ledger Requirement 6 - Prepare an
Adjusted Trial Balance Adjusted TB Requirement 7 - Prepare the Financial Statements Financial Statements
Requirement 8 - Prepare the Closing Entries Closing Entries Requirement 9 - Post Closing Entries to the General
Ledger General Ledger Requirement 10 - Prepare the Post Closing Trial Balance Post Closing TB Hint for success:
review the Week 2 Lecture prior to starting this project. There are also hints contained within certain cells on some of
the worksheet tabs. You can hover over the red pointer at the top right-hand corner of the cell to read the hint. Hints
are provided for the following balances: 1) The debits for the journal entries on the Journal Entries tab 2) The credits
for the journal entries on the Journal Entries tab 3) The cash balance on the General Ledger tab 4) The debits for the
trial balance on the Trial Balance tab 5) The credits for the trial balance on the Trial Balance tab 6) The debits for the
adjusted trial balance on the Adjusted Trial Balance tab 7) The credits for the adjusted trial balance on the Adjusted
Trial Balance tab 8) Net Income for the Income Statement on the Financial Statements tab 9) Retained earnings as of
March 31 on the Financial Statements tab 10) Total assets for the Balance Sheet on the Financial Statements tab 11)
Total liabilities and shareholders' equity for the Balance Sheet on the Financial Statements tab 12) The debits for the
post-closing trial balance on the Post-Closing Trial Balance tab 13) The credits for the post-closing trial balance on the
Post-Closing Trial Balance tab REQUIREMENT #1: During its first month of operation, the Flower Landscaping
Corporation, which specializes in residential landscaping, completed the following transactions: March 1 Began
business by making a deposit in a company bank account of $72,000, in exchange for 7,200 shares of $10 par value
common stock. March 1 Paid the current month's rent, $4,500. March 1 Paid the premium on a one-year insurance
policy, $3,300. March 7 Purchased supplies on account from Parkview Company, $900. March 10 Paid employee
salaries, $2,200. March 14 Purchased equipment from Hammond Company, $9,000. Paid $1,500 down and the

balance was placed on account. Payments will be $375.00 per month for twenty months. The first payment is due 4/1.
Note: Use Accounts Payable for the Balance Due. March 15 Received cash for landscaping revenue for the first half of
March, $4,896. March 19 Made payment on account to Parkview Company, $450. March 31 Received cash for
landscaping revenue for the last half of March, $5,304. March 31 Declared and paid cash dividend of $1,000.

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ACCT 504 WEEK 5 CASE STUDY 2 INTERNAL CONTROL LJB COMPANY

Case Study 2 - Internal Control- Due by Sunday of week 5
LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls
because they are planning to go public in the future. The President wants to be aware of any new regulations required
of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the
company explained the current system of internal controls to your colleague. Your colleague has since been promoted
to a tax position so she has passed on the information below so you can generate recommendations for the partner at
your accounting firm to share with the President of LJB Company.
Since LJB Company is a relatively lean organization, they have a lot of faith in their long-term employees. They have
one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role,
he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly
bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees
have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash.
The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print
their checks. The President is waiting to hear from you if this is a necessary purchase before authorizing.
On payday, the checks are picked up by the accountant and left in his office for pick-up. Before he leaves for the
weekend, he will move the checks into a safe in his office.
The President is still quite embarrassed because he had to fire one of his employees for viewing pornography on a
company computer. He later found out this individual was a convicted felon who served time for molesting children.
The company had a hard time getting the employee to admit it was him because the company does not assign

individual passwords. The President expressed his frustration because both he and the accountant both interview and
approve all of the new hires.
Required:
Based on the above information, prepare a Word document to address the following:
Inform the President of any new internal control requirements if the company decides to go public. (7 points) Advise
the President of what the company is doing right (they are doing some things well) and also recommend to the
President whether or not they should buy the indelible ink machine. When you advise the President, please be sure to
reference the applicable internal control principle that applies. (13 points) Advise the President of what the company
is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal control principle
that is being violated along with a recommendation for improvement. (20 points)
You must prepare a formal report for the partner to distribute to the President so no abbreviations or short-hand
answers. You also must cite your references. At a minimum, your textbook should be cited.
Below is a grading rubric for this assignment.
Category
Points
Description
Understanding
10
Demonstrate a strong grasp of the problem at hand. Demonstrate understanding of how the course concepts apply to
the problem.
Analysis
30
Apply original thought to solving the business problem. Apply concepts from the course material correctly toward
solving the business problem.
Execution

10
Write your answer clearly and succinctly using strong organization and proper grammar. Use citations correctly.
Total
50
A quality paper will meet or exceed all of the above requirements.
Best Practices
The following are best practices in preparing this paper.
Cover Page: Include whom you prepared the paper for, who prepared it, and the date. Table of Contents: List the main
ideas and sections of the paper and the pages where they are located. Illustrations should be included separately.
Introduction: Use a header on your paper. This will indicate that you are introducing the paper.

The purpose of an introduction or opening is to introduce the subject and why the subject is important; preview the
main ideas and the order in which they will be covered; and establish the tone of the document.
Include in the introduction a reason for the audience to read the paper. Also include an overview of what you will
cover and the importance of the material. (This should include or introduce the questions you are asked to answer in
each assignment.)
Body of the Report: Use a header with the name of the case study. An example is, "The Development of Hotel X: A
World Class Resort." Proceed to break out the main ideas: State the main ideas, the major points of each idea, and
provide evidence. Show some type of division, such as separate, labeled sections; separate groups of paragraphs; or
headers. Include the information you found during your research and investigation. Summary and Conclusion:
Summarizing is similar to paraphrasing but presents the gist of the material in fewer words than the original. An
effective summary identifies the main ideas and the major support points from the body of the report; minor details
are left out. Summarize the benefits of the ideas and how they effect the subject. Work Cited: Use the citation format
specified in the Syllabus.

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ACCT 504 WEEK 5 COURSE PROJECT DRAFT SPREADSHEET

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ACCT 504 WEEK 6 CASE STUDY 3 CASH BUDGETING LBJ COMPANY

ACCT504 Case Study 3 on Cash Budgeting

The cash budget was covered during Week 4 when we covered TCO D and you read Chapter 7. There is also a practice
case study to work on. Your Professor will provide the solution to the practice case study at the end of Week 5. This
case study should be uploaded by 11:59PM Mountain time of the Sunday ending Week 6 to the Week 6 Assignment
Dropbox. You are encouraged to use the Excel template file provided in Doc Sharing.
The LBJ Company has budgeted sales revenues as follows:
April May June
Credit sales $94,000 $89,500 $75,000
Cash sales 48,000 75,000 57,000
Total sales $142,000 $164,500 $132,000
Past experience indicates that 30% of the credit sales will be collected in the month of sale and the remaining 70% will
be collected in the following month.
Purchases of inventory are all on credit and 40% is paid in the month of purchase and 60% in the month following
purchase. Budgeted inventory purchases are $195,000 in April, $135,000 in May, and $63,000 in June.
Other budgeted cash receipts: (a) sale of plant assets for $33,000 in May, and (b) sale of new common stock for
$50,000 in June. Other budgeted cash disbursements: (a) operating expenses of $15,000 each month, (b) selling and
administrative expenses of $10,150 each month, (c) purchase of equipment for $19,000 cash in June, and (d)
dividends of $20,000 will be paid in June.

The company has a cash balance of $20,000 at the beginning of May and wishes to maintain a minimum cash balance
of $20,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate
of 10%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all
repayments are made on the last day of the month in which excess cash is available. Also assume that there is no
outstanding financing as of May 1.
Requirements:
1. Use this information to prepare a Cash Budget for the months of May and June, using the template provided in Doc
Sharing.
2. What are the three sections of a Cash Budget, and what is included in each section?
3. Why is a Cash Budget so vital to a company?
4. What are the five basic principles of cash management that a company can follow in order to improve its chances of
having adequate cash?

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ACCT 504 WEEK 7 COURSE PROJECT JCP KOHLS

Your Course Project
Financial Statement Analysis Project -- A Comparative Analysis of Kohls Corporation and J.C. Penney Corporation
Below is the link for the financial statements for Kohls Corporation for the 2010 fiscal year ending January 29, 2011.
Under the term Groupings Filter, change the term All Forms to Annual Filings using the drop-down arrow and press
Search.
You should then scroll down and select the 10k dated 3/18/2011 and choose to download in Word or PDF format.
http://www.kohlscorporation.com/InvestorRelations/sec-filings.htm

Below is the link for the financial statements for J.C. Penney Corporation for the 2010 fiscal year ending January 29,
2011. Under the term Groupings Filter, change the term All Forms to Annual Filings using the drop-down arrow and
press Search.
You should then scroll down and select the 10k dated 3/29/2011 and choose to download in Word format.
http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-sec
A sample Project template is available for download in Doc Sharing. The sample project compares the ratio
performance of Tootsie Roll and Hershey using the 2009 financial statements of Tootsie Roll and Hershey provided
in Appendix A and Appendix B of your textbook.
Description
This course contains a course project where you will be required to submit one draft of the Project at the end of Week
5 and the final completed Project at the end of Week 7. Using the financial statements for Kohls Corporation and J.C.
Penney Corporation, respectively, you will calculate and compare the financial ratios listed further down this
documentfor the fiscal year ending 2010 and prepare your comments about the liquidity, solvency and
profitability of the two companies based on your ratio calculations. The entire project will be graded by the
instructor at the end of the final submission in week 7 and one grade will be assigned for the entire
project.
Overall Requirements
For the Final Submission:
Your final Excel workbook submission should contain the following. You cannot use any other software butExcel to
complete this Project.
1) A completed worksheet title page tab which is really a cover sheet with your name, the course, the date, your
instructors name and the title for the project.
2) A completed worksheet profiles tab which contains a one paragraph description regarding each company with
information about their history, what products they sell, where they are located, etc.
3) All 18 ratios for each company with the supporting calculations and commentary on your worksheet ratio tab.
Supporting calculations must be shown either as a formula or as text typed into a different cell. The ratios are listed
further down this document. Your comments for each ratio should include more than just a definition of the ratio.
You should focus on interpreting each ratio number for each company and support your comments with the numbers
found in the ratios.

4) The Summary and Conclusions worksheet tab which is an overall comparison of how each company compares in
terms of the major category of ratios (Liquidity, Profitability, and Solvency). A nice way to conclude is to state which
company you think is the better investment and why.
5) The Bibliography worksheet tab must contain at least your textbook as a reference. Any other information you use
to profile the companies should also be cited as a reference.
Required Ratios for Final Project Submission
1) Earnings per Share
2) Current Ratio
3) Gross Profit Rate
4) Profit Margin Ratio
5) Inventory Turnover Ratio
6) Days in Inventory
7) Receivables Turnover Ratio
8) Average Collection Period
9) Asset Turnover Ratio
10) Return on Assets Ratio
11) Debt to Total Assets Ratio
12) Times Interest Earned Ratio
13) Payout ratio
14) Return on Common Stockholders Equity Ratio
15) Free Cash Flow
16) Current Cash Debt Coverage Ratio
17) Cash Debt Coverage Ratio

18) Price/Earnings Ratio [For the purpose of this ratio, for both Kohls and J.C. Penney, use the market price per
share on January 31, 2011]
The Excel files uploaded in the dropboxes should not include any unnecessary numbers or
information (such as previous years' ratios, ratios that were not specifically asked for in the project,
etc.).
Please upload your final submission to the Week 7 Dropbox by the Sunday ending Week 7.
For the Draft:
Create an Excel spreadsheet or use the Project template to show your computations for the first 12 ratios listed above.
The more you can complete regarding the other requirements the closer you will be to completion when Week 7
arrives. Supporting calculations must be shown either as a formula or as text typed into a different cell. If you plan on
creating your own spreadsheet, please follow the format provided in the Tootsie Roll and Hershey template file.
Please upload your draft submission to the Week 5 Dropbox by the Sunday ending Week 5.
Other Helpful information:
If you feel uncomfortable with Excel, you can find many helpful references on Excel by performing a Google search.
The Appendix to Chapter 13 contains ratio calculations and comparison comments related to Kellogg and General
Mills so you will likely find this information helpful.
BigCharts.com provides historical stock quotes.
Either APA or MLA style can be used to complete the references on your Bibliography tab. There is a tutorial for APA
and MLA style within the syllabus.

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ACCT 505 WEEK 7 CAPITAL BUDGETING COURSE PROJECT (DEVRY)

Clark Paints: The production department has been investigating possible ways to trim total production costs. One
possibility currently being examined is to make the paint cans instead of purchasing them. The equipment needed
would cost $200,000 with a disposal value of $40,000 and would be able to produce 5,500,000 cans over the life of
the machinery. The production department estimates that approximately 1,100,000 cans would be needed for each of
the next five years.
The company would hire three new employees. These three individuals would be full-time employees working 2,000
hours per year and earning $12.00 per hour. They would also receive the same benefits as other production
employees, 18% of wages in addition to $2,500 of health benefits.
It is estimated that the raw materials will cost 25 per can and that other variable costs would be 5 per can. Since
there is currently unused space in the factory, no additional fixed costs would be incurred if this proposal is accepted.
It is expected that cans would cost 45 per can if purchased from the current supplier. The company's minimum rate
of return (hurdle rate) has been determined to be 12% for all new projects, and the current tax rate of 35% is
anticipated to remain unchanged. The pricing for a gallon of paint as well as number of units sold will not be affected
by this decision. The unit-of-production depreciation method would be used if the new equipment is purchased.
Required:
1. Based on the above information and using Excel, calculate the following items for this proposed equipment
purchase:
Annual cash flows over the expected life of the equipment Payback period Annual rate of return Net present value
Internal rate of return
2. Would you recommend the acceptance of this proposal? Why or why not. Prepare a short double
spaced Word paper elaborating and supporting your answer.

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