For Milestone Two, which is due in Module Five, you will create pro forma financial statements, notes to the financial statements, and develop a report for management explaining the impact of pro forma financial statements on the company’s expansion plans, implications of inventory costing, contingent liabilities, and revenue recognition. In your management analysis brief, you will also identify potential issues in interpreting financial statements.
Prompt
First, review the Final Project Scenario document and the accompanying Final Project Workbook. Follow the instructions below and complete the workbook with the information provided in the scenario. Using your review of the scenario, develop a management analysis brief that addresses the critical elements indicated below. Use information from your accounting workbook to support your claims in the management analysis brief.
Note: Milestone Two is a draft of some critical elements of the final project. Note that the management analysis brief informs the management analysis memo in the final project.
Specifically, the following critical elements must be addressed:
Accounting Workbook: Your accounting workbook must include appropriate calculations and statements:
Create pro forma financial statements for predicting ability to meet future expansion goals. Pro Forma Statements are “what if” statements. If the company opens the second location, what will the budgeted income statement and budgeted balance sheets be?
Notes to the Financial Statements: You will find an example for how to format these notes located in the module resources. Your notes must contain the following:
Create appropriate notes as year-to-year documentation for managing depreciation, supplies, and inventory.
Create appropriate notes for long-term debt.
Management Analysis Brief: Your management analysis brief should explain financial information to management. Provide evidence from your accounting workbook to support your ideas when applicable.
Discuss the impact of the pro forma financial statements for predicting ability to meet future expansion goals.
Describe the implications of inventory costing, contingent liabilities, and revenue recognition.
Identify potential issues in interpretation of financial information, providing examples to support your ideas.
What to Submit