Final Project Peyton Approved Data

| October 3, 2018

Final Project Peyton Approved
Data

You will prepare financial
statements that will allow you to assess how profitable the business is.

Below you will find the data
required to make entries in your accounting workbook. Remember that you are
following the business transactions for a six-month period from the initial
stage of analysis and recording, through the reporting process. These transactions
will include:

·
the initial setup of the business

·
sales

·
purchases

·
making payments to vendors

·
paying store employees

·
managing debt

It will help you to print this
document as you are making your entries in your workbook. Your textbook
prepares you and can be used as a reference to assist you in completing this
assignment. You should begin this project in Module Two.

Step 1:

Complete the following in the
“July Journal Entries” in your workbook (be sure to look for the July Journal
Entries tab at the bottom of the Peyton Approved Student Workbook).

The following events occur in
July 2014:

July 1 – Open a bank account
for Peyton Approved.This has been done for you in the
July Journal Entries tab.

July 1 – You take $15,000 from
your personal savings account and buy common stock in Peyton Approved. This has been done for you in the July Journal Entries tab.

July 3 – Your parents lend the
company $10,000 cash, in exchange for a two-year, 6% note payable. Interest
and the principal are repayable at maturity.

July 7 – Sign a lease agreement
for retail/bakery space. The agreement is for 1 year, with the option to
extend the lease on a month-to-month basis after 1 year. The rent is $1,500
per month. The lease period starts on July 15, first and last month’s rent
due at that time. Subsequent rents are due on the 15th day of each month.

July 10 – Pay $375 to the
county for a business license.

July 11 – Purchase a cash
register for $250 (deemed to be not material enough to qualify as depreciable
equipment—use misc. exp.).

July 13 – You have baking
equipment, including an oven and mixer, that you have been using for your
home-based business and will now start using in the bakery. You estimate that
the equipment is currently worth $5,000, and you transfer the equipment into
the business in exchange for additional common stock. The equipment has a
5-year useful life.

July 13 – Pay $200 for business
cards/flyers/posters/ads to use for advertising.

July 14 – Pay $1,000 for baking
ingredients (use baking supplies account).

July 14 – Pay $300 for
miscellaneous (use misc. supplies).

July 15 – Hire part-time helper
to be paid $12 per hour. Pay periods are the 1st through the 15th and 16th through the end of the month with paydays being the 20th for the first pay
period and the 5th of the following month for the second pay period.

July 15 – Pay first and last
month’s rent.

July 16 – Open the doors of the
bakery.

July 31 – Pay $1,200 for a
12-month insurance policy.

Step 2:

Enter the Bakery Sales totals
(below) in the appropriate Journal Entries month tab, as indicated
below. See sample in the August Journal Entries tab.

The following events occur
during the next 6 months:

Bakery sales are recorded on
the last day of the month. The following sales occurred:

July – $5,000

August – $20,000 (cell B28)

September – $22,500

October – $27,000

November – $25,000

December– $30,000

Step 3:

Enter the baking supply
purchases (below) in the appropriate Journal Entries month tab, as indicated
below. See sample in the
September Journal Entries Tab.

The following baking supplies
purchases are made on credit:

August 8 –
$8,500, net 30 – paid 8/30

September 10 – $9,000, net 30 –
paid 10/1 (cell B10)

October 12 – $10,000, net 30 –
paid 11/1

November 10 – $10,000, net 30 –
paid 12/1

December 4 – $12,000, net 30 –
paid 1/2

Step 4:

Enter the miscellaneous
supplies purchased (below) in the appropriate Journal Entries month tab, as
indicated below. See sample in
the October Journal Entries Tab.

The following misc. supplies
were purchased:

August 25 –
$300

September 19 – $325

October 14 – $310 (cell B19)

November 11 – $300

December 8 – $300

Step 5:

Enter payroll (below) in the
appropriate Journal Entries month tab, as indicated below. See sample in the November Journal
Entries Tab.

Through December 31, the
part-time employee worked the following hours: (ignore payroll taxes)

(see table to right)

Step 6:

Enter the following monthly
bills received and paid (below) in the appropriate Journal Entries month tab,
as indicated below. See sample
in the December Journal Entries tab (sample in cells B22, B28, and B57).

The following monthly bills are received and paid
(July–December)

Rent – paid each 15th –
$1,500

Phone – received on the 30th of each month, paid on
the following 10th- $45

Step 7:

You pay yourself via the
issuance of dividends.Enter
the dividends (below) in the appropriate Journal Entries month tab, as
indicated below. Seesample in the September Journal Entries tab.

The following dividends were
paid and issued:

9/30 – 2,000 (Cell B32)

10/30 – 2,500

11/30 – 2,500

12/31 – 2,500

Step 8:

Many customers have been asking
for more hypo-allergenic products, so in November you start carrying a line
of hypo-allergenic shampoos on a trial basis. The following information
relates to the purchase and sales of the shampoo:

You use the perpetual inventory
method. You are uncertain as to which valuation method to use—FIFO,LIFO, orweighted average, so you calculate inventory using all three and then decide
which one you would like to choose.

You will use the “Inventory
Valuation” tab in your workbook to complete the following entries. See samples for November for FIFO, LIFO,
and the Weighted Average (wt. avg).

Purchases

11/7: 10 bottles purchased at
$6

11/20: 20 bottles purchased at
$6.10

12/1: 25 bottles purchased at
$6.05

12/14: 30 bottles purchased at
$6.00

12/26: 20 bottles purchases at
$6.08

Sales – selling price, $8.50 a
bottle

11/15: 8 bottles

11/30: 18 bottles

12/15: 22 bottles

12/24: 24 bottles

Step 9:

You will use the “Adjusting
Entries” tab in your workbook to complete the following entries. See sample for Depreciation of Baking
Equipment.

On December 31, the following
adjustments must be made:

Depreciation of baking
equipment transferred to company on 7/13. Assume ½ month of depreciation in
July using the straight-line method. (Cell B6)

Accrue interest for note
payable (Assume a full month of interest for July).

Record insurance used for the
year.

An inventory of baking supplies
shows $1,100 of supplies are remaining.

An inventory of misc. supplies
shows $50 remaining.

Congratulations, you have now
completed Section 1 (all) and parts a & b of Section 2 of the Final
Project Part I. Now you will work on your trial balance sheet, balance sheet,
and financial statements. The information is below as well:

Step 10:

You will use the “T-Accounts”
tab in your workbook to complete the following. See sample in row 3. Complete the rest on your own.

Accumulate the numbers in your
t-accounts using the T-Accounts tab in your workbook.

Step 11:

You will use the “Trial
balance” tab in your workbook to complete the following. See sample in row 7. Complete the rest
on your own. See Exhibit 3-7 on page 62 for more information and use those to
guide you through the following steps.

Using the account balances from
your t-accounts, accurately prepare unadjusted trial balance.

Step 12

Continue using the “Trial
balance” tab in your workbook to complete the following. See sample in row 7. Complete the rest
on your own. See Exhibit 3-7 on page 62 for more information.

Interpret trial balance and
make appropriate end-of-period adjustments.

Step 13

You will use the “Adjusting
Entries” tab in your workbook to complete the following. See Exhibit 3-7 on
page 62 for more information.

Post adjusted entries and
prepare the adjusted trial balance.

Step 14

You will use the “Income
Statement,” “Balance Sheet,” and “Statement of Retained Earnings” tabs in
your workbook to do the following:

Apply adjusted trial balance
and prepare financial statements.

Step 15

You will use the “Closing
Entries” tab in your workbook to do the following:

Close all temporary income
statement accounts and create closing entries.

Step 16

You will use the “Trial
Balance” tab in your workbook to do the following:

Prepare the post-closing trial
balance for the next accounting period.

Step 17

You will use the “Reversing
Entries” tab in your workbook to do the following:

Prepare reversing entries.

Step 18

Almost there!

Finally, after you have
completed your workbook, address the following written
sections in a separate document and submit along
with your workbook.

·
Discuss the financial statements. Determine the
purpose of each statement.

·
What does each financial statement tell you as a
business owner? What decisions/changes in operations will you make based on
the results reported in your statements?

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