Adjusting entries Debit Credit Peyton Approved Trial Balance 2017 Unadjusted trial balance Debit Credit 64,713.72 165,250.00 25,750.00 7,500.00 2,400.00 17,000.00 3,285.72 10,000.00 2,000.00 2,300.00 1,600.00 30,401.00 10,000.00 Adjusted trial balance Debit Credit 64,713.72 165,250.00 25,750.00 7,500.00 2,400.00 17,000.00 3,285.72 10,000.00 2,000.00 2,300.00 1,600.00 30,401.00 10,000.00 27,325.00 27,325.00 Account Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Leasehold Improvements Accumulated Amortization Trademark Office Supplies Accounts Receivable Notes Payable Interest Payable Accounts Payable Wages Payable Loans Payable Common Stock Dividends Bakery Sales Merchandise Sales Baking Cost of Goods Sold Rent Expense Interest Expense Insurance Expense Depreciation Expense Amortization Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense Merchandise COGS (FIFO) 21,000.00 30,000.00 21,000.00 30,000.00 20,000.00 20,000.00 335,675.00 35,200.00 335,675.00 35,200.00 90,000.00 90,000.00 2,780.00 2,780.00 375.00 5,200.00 375.00 5,200.00 3,456.00 15,760.00 3,456.00 15,760.00 Total 464,485.72 464,485.72 464,485.72 464,485.72 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 o 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) o Bakery Leasehold Improvements: $10,000, 2nd year of use ($2,000 per year) o 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: o 6% interest note payable was made on January 31, 2017, and is due February 1, 2019. o 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 Adjusting Journal Entries 2017 Debit Credit Date Accounts 31-Dec Depreciation Expense Accumulated depreciation 31-Dec Amortization Expense Accumulated Amortization 31-Dec Interest Expense Interest Payable 31-Dec Insurance Expense Prepaid Insurance 31-Dec Baking Cost of Goods Sold Baking Supplies 31-Dec Office Supplies Expense Office Supplies 31-Dec Wages Expense Wages Payable Peyton Approved Balance Sheet As of December 31, 2017 Assets Current Assets: Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Office Supplies Accounts Receivable Total Current Assets Liabilities and Owners' Equity Current Liabilities: Accounts Payable Wages Payable Interest Payable Total Current Liabilities Long Term Liabilities: Notes Payable Loans Payable Total Long Term Liabilities: Total Liabilities: Long Term/Fixed Assets: Baking Equipment Accumulated Depreciation Common Stock Retained Earnings Leasehold Improvements Accumulated Amortization Total Equity Trademark Total Assets: Total Liabilities & Equity Peyton Approved Closing Entries For Year Ending 12/31/2017 Debit Credit Date Accounts 31-Dec Bakery Sales Merchandise Sales Income Summary 31-Dec Income Summary Baking Cost of Goods Sold Rent Expense Interest Expense Insurance Expense Depreciation Expense Amortization Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense Merchandise Cost of Goods Sold (FIFO 31-Dec Income Summary Retained Earnings 31-Dec Retained Earnings Dividends Peyton Approved Income Statement For Year Ending 12/31/2017 Bakery Sales Merchandise Sales Total Revenues Merchandise Cost of Goods Sold (FIFO) Baking Cost of Goods Sold Gross Profit Operating Expenses: Rent Expense Interest Expense Insurance Expense Depreciation Expense Amortization Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense Total Operating Expenses: Net Income Peyton Approved Statement of Retained Earnings For Year Ending 12/31/2017 Beginning Balance: plus Net Income less Dividends: Ending Balance