Senior Capstone - Purchase Point Media. Management Coursework

Senior Capstone - Purchase Point Media 500895
CriteriaGrade
Content 80 pts
■ Identifies Form and Substance errors as instructed (worth 30 points)
■ Completes Step 2 – Compute the PPMC break-even point in terms of carts and stores (worth 40 points)
■ Completes Step 3 – Determine the number of grocery stores in the United States (worth 10 points)




Written Communication 10 pts
■ Answers each question in a complete paragraph that includes an introductory sentence, at least four sentences of explanation, and a concluding sentence
■ Uses correct grammar, spelling, punctuation, and sentence structure
■ Provides clear organization by using words like first, however, on the other hand, and so on, consequently, since, next, and when
■ Makes sure the paper contains no typographical errors
* Properly formatted citations – (No Works Cited or incorrectly formatted citations will result in a final grade of 1 for the project due to Plagiarism.)




Format 10 pts
The paper is double-spaced, typed in font size 12, and contains properly formatted Internet research sources. It includes the student’s
■ Name and address
■ Student number, Course title and number, and project number


Retake Total Grade
Senior Capstone: Business BUS 450
Step 1- Form and Substance error
It is a possibility that a report with a good form may lack substance and a report with a poor form can be substantive. Thus, it is important to distinguish between the two types of errors. The form and substance errors identified in Exhibit 1 of the case study are summarised below.
Summary of form error in the PPMC report
1
Location: On the first page of Exhibit 1, the second heading is ‘Projected Statement of Net Income’.
Error: There is no accounting term such as ‘Projected Statement of Net Income’.
Correction: It should be written as ‘Projected Statement of Income’.
2
Location: On the first page of Exhibit 1, the third heading is ‘For the first twelve months of operations’.
Error: The financial statements are prepared for years and not months.
Correction: It should be written as ‘for the year ending on December 31st, 2004’.
3
Location: The first page of Exhibit 1, in the first paragraph it is stated as ‘Safe harbor statement under the private Securities litigation act of 1995. This project statement of….’
Error: There are multiple errors with the above statement- First, the name of the act is wrong. Second, the first letter of each word of the name of the act should be capitalized. Third, the sentence is ambiguous when considered in isolation as well as when considered with the next sentence. Fourth, ‘project’ is the wrong tense here.
Correction: It should be written as ‘The Private Securities Litigation Reform Act of 1995 provides a ‘safe harbor’ for this projected statement of….’
4
Location: The first page of Exhibit 1, the third sentence of the first paragraph- ‘both the Corporate house and Purchase Price Media Corp………’
Error: ‘Corporate house’ is an entity and the name should be capitalized.
Correction: ‘Corporate House’.
5
Location: The first page of Exhibit 1, the fourth sentence of the first paragraph- ‘Changes in assumptions or changes in other factors effecting such statements’.
Error: ‘effecting’ is the wrong verb.
Correction: It should be ‘Changes in assumptions or changes in other factors affecting such statements’.
6
Location: The first page of Exhibit 1, the last sentence of the first paragraph- ‘You should independently investigate and fully understand all risk before making investment decisions’.
Error: ‘Risk’ is used in the singular form.
Correction: It should be ‘Risks’.
7
Location: The first page of Exhibit 1, the report is addressed to Albert Folsom.
Error: The report is addressed to all the interested investors and not just to Mr. Albert Folsom.
Correction: The text ‘Kind Attention: Albert Folsom’ should be removed.
8
Location: The first page of Exhibit 1, the second paragraph starts with ‘We have prepared the attached Projected Statement of Net Income…..’
Error: There are three errors with the above sentence. First, there is no accounting term such as ‘Projected Statement of Net Income’. It is a repetition of form error 1. Second, the ‘Projected statement’ is in italics, while ‘of Net Income…’ is not. Third, the statement is not attached as the above sentence is part of the statement.
Correction: It should be written as ‘We have prepared the Projected Statement of Income……’
9
Location: The first page of Exhibit 1, the second paragraph starts with ‘We have prepared the attached Projected Statement of Net Income for a twelve month period’.
Error: The projected statement has been prepared ‘for a twelve months period’, however, the statements are prepared for years and not months. It is a repetition of form error 2.
Correction: It should be written as ‘……..for the year ended on December 31st, 2004’.
10
Location: The first page of Exhibit 1, the last sentence of the second paragraph- ‘These figures do not include start up and development costs’.
Error: ‘These figures’ is an ambiguous term as there is a lack of clarity to what it is referring to.
Correction: It should be written as ‘The start up and development costs have not been included in preparing the projected statement of income.’

Location: The first page of Exhibit 1, the first sentence of the third paragraph- ‘We have made basic assumptions in compiling the information…’
Error: The assumptions need to be disclosed as they impact the projections and the investment decision.
Correction: It should be written as ‘We have made basic assumptions (economic entity, going concern, periodicity and monetary unit) in compiling the information…’

Location: The first page of Exhibit 1, the first sentence of the third paragraph- “……..revenue will commence to be generated once the Company’s patented displays have been installed”.
Error: The revenue cannot be recognized like this as it lacks an accounting basis. It needs to be recognized on the accrual basis. In addition, the sentence needs to be rephrased as the sentence is ambiguous.
Correction: It should be written as ‘……..revenue will be generated once the Company’s patented displays are used at the stores’.

Location: The first page of Exhibit 1, the fourth paragraph starts with ‘The Projected Statement of Net Income…..’
Error: There are two errors with the above sentence. First, there is no accounting term such as ‘Projected Statement of Net Income’. It is a repetition of form error 1. Second, the ‘Projected statement’ is in italics, while ‘…… of Net Income…’ is not.
Correction: It should be written as ‘The Projected Statement of Income……’

Location: The first page of Exhibit 1, the letter ends with ‘Yours very truly’.
Error: It is a grammatical error as the phrase is wrong
Correction: It should be written as ‘Very Truly Yours’.

Location: The signatory to the letter in Exhibit 1.
Error: Corporate House cannot be a signatory as it is an entity and the signatory needs to be a representative of the entity.
Correction: The signatory should be Richard T. Hethey who is the Director of Corporate House.

Location: The third page of Exhibit 1, the sixth sentence of the second paragraph under note 2- ‘For conservative purposes, amortization of the display panels is taken over a two-year period rather than a five-year period.’
Error: There are two errors in the above sentence. First, ‘conservative purpose’ is a wrong word in the context. The expense is being recognized when there is a certainty of the outcome i.e. in the first and the second year. Second, amortization is applicable for intangible assets, while panels are tangible assets, so depreciation is applicable.
Correction: It should be ‘As per conservatism principle, depreciation of the display panels is taken over a two-year period rather than a five-year period.’

Location: The third page of Exhibit 1, the fifth sentence of the first paragraph under note 3- ‘The figure of $0.11 is conservative based on quotes received by management….’
Error: The above sentence needs to be rephrased as it is ambiguous.
Correction: It should be- ‘The cost figure of $0.11 is conservatively estimated based on the quotes received by management….’

Location: The third page of Exhibit 1, the table under note 3.
Error: The ‘$’ is missing from the quarterly cost of printing.
Correction: The ‘$’ sign should be placed before the cost.

Location: The third page of Exhibit 1, the first sentence of the first paragraph under note 4- ‘Replacement due to vandalism Regardless of the security precautions….’
Error: ‘Replacement due to vandalism’ is the heading for the note 4 and needs to be in bold.
Correction: It should be written as ‘Replacement due to vandalism Regardless of the security precautions….’

Location: The third page of Exhibit 1, the third sentence of the first paragraph under note 4- ‘Management is currently seeking insurance, which will lessen this expense’.
Error: ‘Lessen’ is a wrong grammatical word.
Correction: It should be written as ‘Management is currently seeking insurance to reduce this expense’.

Location: The third page of Exhibit 1, the first sentence of the second paragraph under note 4- ‘It is estimated vandalism will effect 5% of the display panels.’
Error: The verb ‘effect’ is wrong in this context and ‘that’ is missing before vandalism.
Correction: It should be written as ‘It is estimated that vandalism will affect 5% of the display panels’.

Location: The third page of Exhibit 1, the third sentence of the second paragraph under note 4- ‘Vandalism will occur in two different fashions……’
Error: ‘Fashion’ is a wrong word in this context. In addition, ‘will’ needs to be replaced by ‘can’ as the former indicates that vandalism will definitely occur in the two different ways assumed in the note.
Correction: It should be written as ‘Vandalism can occur in two different ways……’

Location: The fourth page of Exhibit 1, the first sentence of the fifth paragraph under note 4- ‘Since there are 2,880,000 panels installed at the end of the first year, this would mean 144,000 would require a replacement panel’.
Error: The unit is missing for 144,000 which makes the sentence ambiguous. In addition ‘at’ is the wrong preposition.
Correction: It should be - ‘Since there are 2,880,000 panels installed by the end of the first year, this would mean that there would be a need to replace 144,000 panels’.

Location: The fourth page of Exhibit 1, table under note 6
Error: The total marketing & advertising expense, total booking advertisers, total 15% commission and the overall total expense needs to be aligned as per the column.
Correction: The alignment need to be taken care of.

Location: The fifth page of Exhibit 1, the first sentence of the fifth paragraph under note 7- ‘It is estimated that advertising will be changed on a quarterly basis’.
Error: ‘Changed’ is the wrong word due to a typing error.
Correction: ‘It is estimated that advertising will be charged on a quarterly basis’.

Location: The sixth page of Exhibit 1, the first sentence of the first paragraph under note 8- ‘Accounting and Audit The accounting functions required are as follows’
Error: ‘Accounting and Audit’ is the heading for note 8 and needs to be in bold.
Correction: It should be written as ‘Accounting and Audit The accounting functions required are as follows’.

Location: The sixth page of Exhibit 1, the seventh sentence of the last paragraph under note 8- ‘In addition, to the estimate of salaries, the will be a cost for the year-end audit to meet the listing requirements of regularity bodies’.
Error: Two grammatical errors- ‘the will’ and ‘regularity’.
Correction: It should be written as ‘In addition, to the estimate of salaries, there will be a cost for the year-end audit to meet the listing requirements of regulatory bodies’.

Location: The sixth page of Exhibit 1, the fourth sentence of the last paragraph under note 8- ‘It is assumed a junior clerk will be hired in the last quarter to assist with filing and other work around the office. This junior clerk might be a part-time accountant initially and later in the second year would be hired full time.’
Error: Junior Clerk is different from a part-time accountant. In addition, the above set of sentences need to be rephrased.
Correction: It should be written as ‘It is assumed an accountant will be hired as a junior clerk in the last quarter to assist with filing and other work around the office. The accountant hired will initially work part-time during the first year and will work full-time in the second year’.

Location: The sixth page of Exhibit 1, the third sentence of the last paragraph under note 9- ‘For simplicity, this cost will be spread evenly over the four quarter’.
Error: There is no accounting basis for simplicity.
Correction: It should be written as ‘As per accrual basis, this cost will be evenly spread over the four quarter’.

Location: The seventh page of Exhibit 1, second and third sentences under note 13- ‘Additional insurance will be carried for protection in the event a malfunction of the display unit causes harm. The chances of this ever happening is extremely remote.’
Error: The above set of sentences is vague as it is unclear what has extremely remote chances of ever happening- malfunction or the additional insurance. Thus, there is a need to rephrase.
Correction: It should be written as ‘Additional insurance will be carried for protection in case of the event a malfunction of the display unit causes harm, despite there being extremely remote chances of ever happening.’

Location: The seventh page of Exhibit 1, first sentence under note 15- ‘Management fee comprises the following individuals’.
Error: The sentence is grammatically incorrect as the fee comprises the remuneration for individuals and not individuals. Thus, there is a need to rephrase.
Correction: It should be written as ‘Management fee comprises the remuneration of the following individuals’.

Location: The seventh page of Exhibit 1, table under note 15- ‘The annual remuneration of Vice President- Marketing and treasurer and controller.’
Error: ‘$’ sign is missing from the salary.
Correction: The ‘$’ sign should be placed before the salary.

Location: The eighth page of Exhibit 1, second sentence under note 18- ‘The offices will not have to be large in space since limited personnel will be required to mange the operations’.
Error: A typing error- ‘mange’, which needs to be corrected.
Correction: It should be written as ‘The offices will not have to be large in space since limited personnel will be required to manage the operations’.

Location: The eighth page of Exhibit 1, second sentence under note 18- ‘The building does not have to be class A rating and can be located outside of the busier section of the city’.
Error: The sentence is grammatically incorrect as no building can be class A rating, it can have a class A rating.
Correction: It should be written as ‘The building need not have a class A rating and can be located outside of the busier section of the city’.

Location: The eighth page of exhibit 1, first sentence under note 19 ‘The accountant’s and assistant accountant’s salaries have been covered under accounting and auditing noted fewer than 8 above’.
Error: The above sentence is wrong as the phrase ‘…. Noted fewer than 8 above’ is ambiguous and requires rephrasing.
Correction: It should be written as ‘The accountant’s and assistant accountant’s salaries have been covered under accounting and auditing notes 8 above’.

Location: The eighth page of Exhibit 1, table under note 19- The salary of 2 Receptionists and 2 Account Representatives.
Error: ‘$’ sign is missing from the salary.
Correction: The ‘$’ should be placed before the salary.

Location: The eighth page of Exhibit 1, the third paragraph under note 19- ‘It is assumed employee benefits will be 20% of the salaries paid.’
Error: The above sentence is grammatically incorrect as there needs to be a ‘that’
Correction: It should be written as ‘It is assumed that employee benefits will be 20% of the salaries paid.’
Summary of errors in the Substance of the PPMC report
1
Location: The third page of Exhibit 1, in the table under note 3.
Error: The total printing cost is mentioned as $2,296,000, which is incorrect due to a calculation error. The calculation is presented below.
First Quarter: $158,400
Second Quarter: $475,200
Third Quarter: $712,800
Fourth Quarter: $950,400
Total: $2,296,800
Correction: It should be $2,296,800 instead of $2,296,000.
2
Location: The third page of Exhibit 1, in the table under note 6.
Error: The second quarter total commission is mentioned as $4,777,000, which is incorrect due to a calculation error. The calculation is presented below.
Marketing & Advertising: $625,000
Booking Advertisers: $500,000
15% Commission: $3,645,000
Total: $4,770,000
Correction: It should be $4,770,000, instead of $4,777,000.
3
Location: The third page of Exhibit 1, in the table under note 6.
Error: The third quarter commission is mentioned as $5,382,000, which is incorrect due to a transposition error. The calculation is presented below.
Third quarter revenue: $38,880,000
15% Commission: $5,832,000
Correction: It should be $5,832,000, instead of $5,382,000.
4
Location: The seventh page of Exhibit 1, table under note 15- The annual remuneration of Vice President- Marketing.
Error: When the monthly remuneration is $7,500, annual remuneration cannot be $9,000
Correction: It should be $90,000 instead of $9,000.
5
Location: The eighth page of Exhibit 1, the table under note 19.
Error: While in the table it is mentioned that there is an Executive Secretary, in the second sentence it is mentioned ‘There are employees other than the aforementioned; being two receptionists, two girl Fridays and two account representatives to sell the advertising ’. This means that the data related to the Executive Summary needs to be ignored from the table. In addition, in the third paragraph under the same note it is mentioned, ‘It is assumed employee benefits will be 20% of the salaries paid. This type of benefits available to the employees will be dental, extended health and life insurance. The company will absorb one half the cost and the employees will be responsible for contributing from their salaries the balance.’
Correction: The salary and employee benefit expense of the executive secretary needs to be removed and the employee benefit payable by the company need to be changed as well, which is done below.