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In: Accounting

Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the following...

Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the following accounting practices:

Inventory: Periodic, FIFO for both baking and merchandise

Baking supplies: $27,850 ending inventory

Equipment: Straight line method used for equipment

Mixing machine: $5,000 initial cost, $500 salvage value, 3rd year of use of 7 total ($642.86 per year)

Ovens: $8,000 initial cost, $1,000 salvage value, 3rd year of use of 7 total ($1,000 per year)

Other depreciable equipment: $4,000 initial cost, $0 salvage value, 1st year of use of 4 total ($1,000 per year)

Bakery Leasehold Improvements: $10,000, 2nd year of use ($2,000 per year)

Trademark for company name: Initial cost, $2,300, 3rd year of use

Office supplies: Periodic, FIFO. Ending balance is $250.

Pay period is every 2 weeks. Last pay period ended December 27

60 employees with a daily pay of $5,700. All receive pay through December 31.

Financing:

6% interest note payable was made on January 31, 2017, and is due February 1, 2019.

5-year loan was made on June 1, 2017. Terms are 7.5% annual rate, interest only until due date.

Insurance: Annual policy covers 12 months, purchased in February, covering March 2017– February 2018. No monthly adjustments have been made.

Other information: An employee slipped and fell in the baking area and has filed a lawsuit. The company lawyer indicates that it is probable that the company will be found liable. No additional information is available.

Peyton Approved
Trial Balance
2017

Unadjusted trial balance

Adjusting entries Adjusted trial balance
Account Debit Credit Debit Credit Debit Credit
Cash 64,713.72 64,713.72
Baking Supplies 165,250.00 137,400.00 27,850.00
Merchandise Inventory (FIFO) 25,750.00 25,750.00
Prepaid Rent 7,500.00 7,500.00
Prepaid Insurance 2,400.00 2,000.00 400.00
Baking Equipment 17,000.00 17,000.00
Accumulated Depreciation 3,285.72 2,642.86 5,928.58
Leasehold Improvements 10,000.00 10,000.00
Accumulated Amortization 2,000.00 2,000.00 4,000.00
Trademark 2,300.00 2,300.00
Office Supplies 1,600.00 1,350.00 250.00
Accounts Receivable 30,401.00 30,401.00
Notes Payable 10,000.00 10,000.00
Interest Payable 1,468.75 1,468.75
Accounts Payable 27,325.00 27,325.00
Wages Payable 22,800.00 22,800.00
Loans Payable 21,000.00 21,000.00
Common Stock 30,000.00 30,000.00
Dividends 20,000.00 20,000.00
Bakery Sales 335,675.00 335,675.00
Merchandise Sales 35,200.00 35,200.00
Baking Cost of Goods Sold 137,400.00 137,400.00
Rent Expense 90,000.00 90,000.00
Interest Expense 1,468.75 1,468.75
Insurance Expense 2,000.00 2,000.00
Depreciation Expense 2,642.86 2,642.86
Amortization Expense 2,000.00 2,000.00
Misc. Expense 2,780.00 2,780.00
Office Supplies Expense 1,350.00 1,350.00
Business License Expense 375.00 375.00
Advertising Expense 5,200.00 5,200.00
Wages Expense 22,800.00 22,800.00
Telephone Expense 3,456.00 3,456.00
Merchandise COGS (FIFO) 15,760.00 15,760.00
Total 464,485.72 464,485.72 169,661.61 169,661.61 493,397.33 493,397.33

Please complete the statement of retained earnings:

Peyton Approved
Statement of Retained Earnings
For Year Ending 12/31/2017
Beginning Balance: -
plus Net Income
less Dividends:
Ending Balance: -

Please complete the balance sheet:

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets Liabilities and Owners' Equity
Current Assets: Current Liabilities:
Cash Accounts Payable
Baking Supplies Wages Payable
Merchandise Inventory (FIFO) Interest Payable
Prepaid Rent Total Current Liabilities -
Prepaid Insurance
Office Supplies Long Term Liabilities:
Accounts Receivable Notes Payable
Total Current Assets - Loans Payable
Total Long Term Liabilities: -
Total Liabilities: -
Long Term/Fixed Assets:
Baking Equipment Common Stock
Accumulated Depreciation Retained Earnings
-
Leasehold Improvements Total Equity -
Accumulated Amortization -
Trademark
Total Assets: - Total Liabilities & Equity -

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