| Course | AC499 Bachelor's Capstone in Accounting |
|---|---|
| Unit | Unit 3 |
| Paper type | Statement rebuild package |
| Length | About 690 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC499 Unit 3
Five Corrections Before Any Statement: A Unit 3 Capstone Statement Rebuild for a Barrel Sauna Maker
[Student Name]
Purdue University Global
AC499: Bachelor's Capstone in Accounting
Unit 3 Statement Rebuild Package
[Instructor Name]
[Date]
Kettle Hollow Sauna Works and every figure are composite; the standards updates and textbook cited are real.
Adjustments Schedule
Adjustment 1: Shipping cutoff. Fourteen saunas left the plant on September 29 under destination terms and reached the dealer on October 2. Under the revenue standard, control passes when the customer obtains it, which under destination terms is on delivery (Financial Accounting Standards Board, 2014). The sale belongs in the next year. Entry: debit sales $50,400 and credit accounts receivable $50,400; debit inventory $29,960 and credit cost of goods sold $29,960. Pretax effect: a reduction of $20,440. Support: the bill of lading, the carrier's delivery confirmation and the dealer's invoice.
Adjustment 2: Discontinued model write-down. Forty-six saunas of the discontinued Cube model sit in finished goods at a standard cost of $2,390 each. In September the company offered them to dealers at a closeout price of $1,840, and selling each one will cost $120 of freight and commission, so net realizable value is $1,720. Because the company uses FIFO, its inventory may not sit on the books above what the goods will fetch less selling costs (Financial Accounting Standards Board, 2015). The write-down is $670 a unit, or $30,820. Entry: debit cost of goods sold $30,820 and credit inventory $30,820. Support: the closeout price list and the freight schedule.
Adjustment 3: Warranty reserve. The trial balance carries a reserve of $42,000. Claims history over three years averages 0.85 percent of sales, which on adjusted sales of $11,469,600 requires a reserve of $97,500. Entry: debit warranty expense $55,500 and credit the reserve $55,500. Support: the claims log and the computation.
Adjustment 4: Depreciation on a new panel saw. A computer-controlled panel saw costing $162,000 was placed in service on June 1 and never depreciated. Spread straight-line over nine years with nothing left at the end, the saw costs $18,000 a year, so June through September comes to $6,000. Entry: debit depreciation expense $6,000 and credit accumulated depreciation $6,000. Support: the invoice and the installation sign-off.
Adjustment 5: Production and sales bonus. The bonus plan pays when annual shipments exceed 3,000 saunas, which they did. The $78,000 bonus was paid on November 13 and never accrued. Entry: debit compensation expense $78,000 and credit accrued liabilities $78,000. Support: the plan document and the payroll register.
The five corrections total $190,760.
Each correction carries its own entry and its own support, so a reader can accept or dispute one adjustment without reopening the other four, and the restated statements below are only the sum of what this schedule has already shown.
Worksheet Summary
The trial balance moves through the five adjustments in one worksheet. Sales fall from $11,520,000 to $11,469,600. Cost of goods sold moves from $7,150,000 to $7,150,860: down $29,960 for the cutoff and up $30,820 for the write-down. Gross profit is $4,318,740, a gross margin of 37.7 percent. Operating expenses rise by the $55,500 warranty increase, the $6,000 of depreciation and the $78,000 bonus.
Restated Income Statement
Sales: $11,469,600. Cost of goods sold: $7,150,860. Gross profit: $4,318,740. Selling, general and administrative expenses after adjustments: $2,941,000. Interest expense: $206,500. Pretax income: $1,171,240. Income tax: a placeholder pending the Unit 5 tax brief, which owns that figure under the scoping plan.
Restated Balance Sheet Lines
Five lines change, each marked on the restated balance sheet. Accounts receivable falls by $50,400. Inventory rises by $29,960 for the cutoff and falls by $30,820 for the write-down, a net reduction of $860, to $2,379,140. Accumulated depreciation rises by $6,000. Accrued liabilities rise by $78,000, and the warranty reserve by $55,500. Retained earnings absorb the pretax total until tax is set.
Effect on the Covenant
The bank's fixed-charge coverage covenant is tested on reported results. A lower pretax figure narrows the margin, so the Unit 9 report will restate the covenant calculation on corrected numbers. Inventory and revenue judgments of this kind are the areas where restatements most often begin (Kieso et al., 2019).
References
Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09). FASB.
Financial Accounting Standards Board. (2015). Inventory (Topic 330): Simplifying the measurement of inventory (Accounting Standards Update No. 2015-11). FASB.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (17th ed.). Wiley.
Reading the AC 499 Unit 3 instructions
The third AC499 unit asks you to correct the case trial balance and restate the statements. Build an adjustments schedule first, one correction per row, each with the facts, the standard that requires it, the journal entry and the documents that support it. Typical corrections include revenue cutoff, inventory measurement, estimated liabilities such as warranties, missed depreciation and unrecorded accruals. Carry the trial balance through the adjustments in a worksheet. Then present a restated income statement and mark every balance sheet line that changed. Leave any figure owned by a later unit, such as income tax, as a placeholder and say why. Note any effect on covenants or other agreements. Cite the revenue and inventory standards and an intermediate accounting text in APA 7.
How the AC 499 Unit 3 example is put together
The sample's schedule starts with fourteen saunas shipped September 29 under destination terms and delivered October 2, removing $50,400 of sales and returning $29,960 to inventory. Forty-six Cube saunas at $2,390 are written down to a $1,720 net realizable value, $30,820. The warranty reserve rises $55,500 to $97,500 on a 0.85 percent claims rate, the panel saw takes $6,000 of depreciation, and the $78,000 bonus is accrued. The highlighted sentence explains why each correction stands alone. A worksheet summary carries sales and cost of goods sold through the changes, the restated income statement ends at $1,171,240 with tax as a placeholder, and five balance sheet lines are marked. A closing note links the corrections to the covenant.
AC499 Unit 3 rubric: what earns full points
AC499 rebuilds are graded on correct corrections, documented support and clean flow into the statements. Points go to schedules that give each adjustment its standard, entry and evidence, so a reader can test one without reopening the others. Graders check the arithmetic from trial balance to restated figures and expect every changed balance sheet line to be identifiable. Revenue cutoff must follow the transfer of control, and inventory measurement must use net realizable value with selling costs deducted. Leaving tax to the unit that owns it shows planning, while estimating it here creates a figure that will later conflict. Statements built before the schedule, or adjustments without entries, lose substantial credit. APA 7 citations to the standards support each correction.
AC499 Unit 3 help: mistakes that cost points
Frequent Unit 3 problems begin with statements prepared first and adjustments explained afterward, which hides the reasoning. Cutoff is decided by ship date instead of shipping terms. Net realizable value is set at the selling price, forgetting freight and commission. Warranty reserves are adjusted to a round number rather than computed from claims history. Depreciation for a mid-year asset is taken for a full year. Bonuses paid after year end are left out even though they were earned during it. Tax is estimated at a flat rate and later contradicts the tax brief. If your section's trial balance holds different errors, our writers can build the schedule and restated statements from your figures.
Get an AC499 Unit 3 example written to your instructions
Attach the case trial balance and any supporting schedules your section released, plus the Unit 3 instructions and rubric. Corrections return computed in view, the statements drawn only from the adjusted column, and tax left open where a later unit owns it. There is no fee for the first sample, typically ready within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC499 Unit 3 questions, answered
Does the package need a cash flow statement?
That depends on your prompt. Many capstone rebuilds ask only for the income statement and balance sheet at this stage and add cash flows to the integrated report. Where a statement of cash flows is required, it is drawn from the same adjusted balances, and the accrued bonus and warranty increase appear as working capital changes in the operating section.
Where can I find a free AC499 Unit 3 sample paper?
This page holds a full AC499 Unit 3 statement rebuild package for Kettle Hollow Sauna Works with five corrections, their entries and support, a worksheet summary, restated statements and APA 7 references.
Why is income tax left as a placeholder?
Because the scoping plan gives that figure to the Unit 5 tax brief. A flat 21 percent here would ignore the nondeductible meals and the deferred tax split, so the brief's total of $248,228 would not match a figure estimated in this package.
How is net realizable value set for the Cube saunas?
From the closeout price offered to dealers, $1,840, less the $120 of freight and commission needed to sell each unit, which gives $1,720. Against a carrying cost of $2,390, each of the forty-six units is written down by $670.
Does the package need a cash flow statement?
Only if your prompt asks for one at this stage. Many capstone rebuilds restate the income statement and balance sheet here and add cash flows in the integrated report, where the corrected figures feed the indirect method.