Lucy opened a bakery on February 5. She started with a capital of 700,000. 65% of this is baking equipment, 20% is supplies, 10% is inventory, and the remainder is in cash. She ends her accounting period on December 31. She has an employee that she pays on the 3rd and 18th of every month for 6,000.

Her only piece of equipment depreciates by 50,000 every year until a minimum of 300,000 is reached as the final value of that equipment. Every month, she gets sales of 20,000 where 20% is the average cost out of total sales.

Create the journal entries and the succeeding ledger entries.

Use the following as chart of accounts:

CHART OF ACCOUNTS 100 Assets 110 Cash 111 Notes receivable 112 Accounts receivable 113 Interest receivable 115 Merchandise inventory 116 Office supplies 117 Prepaid insurance 120 Land 123 Store equipment 124 Accumulated depreciation store equipment 125 Office equipment 126 Accumulated depreciation office equipment 200 Liabilities 210 Accounts payable 211 Salaries payable 212 Unearned rent 215 Notes payable 300 Stockholder's equity 310 Capital stock 311 Retained earnings 312 Dividends 313 Income summary 400 Revenues 410 Sales 411 Sales returns and allowances 412 Sales discount 500 Costs and expenses 510 Cost of goods sold 520 Sales salaries expense 521 Advertising expense 522 Depreciation expense store equipment 529 Miscellaneous selling expense 530 Office salaries expense 531 Rent expense 532 Depreciation expense office equipment 533 Insurance expense 534 Office supplies expense 539 Miscellaneous admin. expense 600 Other income 610 Rent income 611 Interest income 700 Other expenses 710 Interest expense