PEYTON APPROVED N TRIAL BALANCE W As of December 31, 2017 Adjusting entries Dr Cr Dr Cr Dr Cr Of UI Cash 1,488,999.34 1,488,999.34 Marketable Securities 5,500,000.00 265,000.00 5,235,000.00 Accounts Receivable 7,092,495.88 7,092,495.88 8 Baking Supplies 1,605,098.52 1,605,098.52 g Merchandise Inventory 128,152.63 128, 152.63 10 Prepaid Rent 71,877.07 71,877.07 11 Prepaid Insurance 207,834.14 207,834.14 12 Misc. Supplies 17,647.42 17,647.42 13 Land 250,000.00 250,000.00 14 Building 1,250,000.00 1,250,000.00 15 Baking Equipment 2,254, 140.00 2,254, 140.0016 17 Accumulated Depreciation 328,282.00 328,282.00 18 Patent 19 Accounts Payable 1,555,212.85 1,555,212.85 20 Wages Payable 250,203.31 250,203.31 21 Interest Payable 21,888.22 21,888.22 22 Current Portion of Bonds Payable 1,000,000.00 1,000,000.00 23 Income Taxes Currently Payable 1,042, 118.16 52,325.25 375.00 990, 167.91 24 Accrued Pension Liability 25 Accrued Employees Health Insurance 26 Lease Liability 27 28 Deferred Tax Liability 52,325.25 52,325.25 29 Bonds Payable 4,000,000.00 4,000,000.00 30 Preferred Stock 500,000.00 500,000.00 31 Common Stock 1,750,000.00 1,750,000.00 32 Beginning Retained earnings 2,213, 122.59 2,213, 122.59 33 Dividends - Preferred 50,000.00 50,000.00 34 Dividends - Common 5,250,000.00 5,250,000.00 35 Bakery Sales 33,881, 157.15 33,881, 157.15 36 Merchandise Sales 124,795.80 124,795.8036 Merchandise Sales 124,795.80 124,795.80 37 Cost of Goods Sold - Bake 10,954,907.36 10,954,907.36 38 Cost of Goods Sold - Merch 88,994.79 88,994.79 39 Rent Expense 1,576,731.95 1,576,731.95 40 Wages Expense 2,604,526.23 2,604,526.23 41 Misc. Supplies Expense 263,224.56 263,224.56 42 Repairs and Maintenance 47,353.05 47,353.05 43 Business License Expense 211,757.65 211,757.65 44 Misc. Expense 141,171.08 141,171.08 45 Depreciation Expense 634,520.00 634,520.00 46 Insurance Expense 112,937.69 112,937.69 47 Advertising Expense 160,413.49 160,413.49 48 Interest Expense 484,703.27 484,703.27 49 Telephone Expense 50,821.34 50,821.34 50 Pension Expense 51 Retired Employees Health Ins. 52 Patent Amortization 53 54 Unrealized Gain/(Loss) on Marketable Securities Held for Sale 265,000.00 265,000.00 55 56 Income Taxes 4, 168,472.62 375.00 4, 168,847.6257 58 59 46,666,780.08 46,666,780.08 317,700.25 317,700.25 46,667,155.08 46,667,155.08 60 61 (1) Recorded unrealized holding losses on marketable securities. milestone 1 62 (2) Recorded the adjustment of income taxes for correct effective rate milestone 1 63 $1,500 Meals x 25% 64 (3) Recorded Deferred taxes for timing distinctions (differences) on t milestone 1 65 66 (4) milestone 2 67 (5) milestone 2 68 (6) 69 milestone 2Comprehensive income items Marketable securities on the balance sheet at a cost of $5,500,000 are available-for-sale Market value at the balance sheet date is $5,235,000 Prepare the adjusting entry to record the unrealized loss and include in comprehensive income Comprehensive income items: I -One adjustment for the unrealized-losses on marketable-securities (See Chapter 13, prior class) 1 *Historical cost of Available-for-Sale-Securities-(Marketable Securities) is-$5,500,000.1 *Current market price, also called-Market value, of-Available-for-Sale-Securities (Marketable. Securities) is-$5,235,000.1 = Current market price (Market value)- Historical purchase price (cost)T = Unrealized-Holding Gain/Loss=$5,235,000---$5,500,0009 =-$265,0009 *-$265,000-is Unrealized Holding Loss I must report the-$265,000-decrease in fair value as an unrealized holding loss in its other comprehensive income for December-31,-2017.T Or, the fair value of the marketable-securities decreased.-Therefore, this change in the-dollar- amount has to be recorded (posted) at market value (price) on an adjusting journal entry and has to be affected against other-comprehensive income."I For this assignment, the adjusting journal entry will be:f Adjusting Journal Entry Datea Account Title & Explanation Post-Ref. Debito Credito Dec. 31, 20170 Unrealized Holding Gain/(Loss) on $265,0000 Marketable Securities Held for Sale (E+).0 Marketable-Securities-(A-). O $265.00008 Recorded unrealized holding loss on marketable securities.OTax information and implications $1,500 in meal and entertainment expenses show as a permanent difference for tax. Prepare the necessary adjusting entry. The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes that could impact the company. Peyton Approved has been a C Corp since the beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state). Tax information and implications 1 -One adjustment for the tax expense/tax payable for-25% of the-$1,500 permanent difference- on meals and entertainment (See - Chapter-18)1 Income tax rate (Tax rate) is-25% 25 100 =-0.251 $1,500 in meal and entertainment expense show as a permanent difference. I =-$1,500-x-0.251 =-$3751$375-is the-Income taxes-currently payable. V$375-is the Income tax expense." For this-assignment, the adjusting journal entry will be:f Adjusting Journal-Entry Datea Account-Title & Explanation Post-Ref.a Debita Credito Dec. -31, 20170 Income Tax-Expense (E+)0 $3750 Income Taxes Currently Payable (L-). D $3750 Recorded the adjustment of income taxes- for correct effective rate to show- permanent distinctions (differences).0Tax information and implications The company uses straight line depreciation for book and MACRS depreciation for the tax return MACRS depreciation was $209,301 higher than book. Prepare the adjusting entry for the deferred tax. There have been recent tax structure changes that could impact the company. Peyton Approved has been a C Corp since the beginning of these changes. Peyton provides for taxes at 25% of pretax income (20% Federal, 5% state). Depreciation - One-adjustment for the-deferred tax-MACRS versus-book as given, the tax effect, 25% (See Chapter-18)T Since depreciation is higher in tax books compared to accounts, it will result in deferred tax. asset.I Straight-line.Depreciation Expense.Formula/MethodT Historical purchase price (cost) - Residual value Estimated Useful/Serviceable Life =-Straight-line-Depreciation ExpenseTHistorical purchase price (cost) - Residual value Estimated Useful/Serviceable Life =.Straight-line Depreciation Expense *Referto page-11-5-and-11-6-Learning Objective-11.2-Calculate-depreciation expense using- various time-based and-activity-based methods. of Chapter-11-Depreciation, Depletion, Impairment, And Disposal **Since there is no mention of residual value, estimated-useful/serviceable life (e.g., years) anywhere in the financial information that make up the Microsoft Word-file called-ACC.309. Final Project.Scenario and/or the Trial-Balance.As of December 31, 2017, there is no way that I can actually use the Straight-line depreciation expense formula that is found on page-11-5-and 11-6-Learning Objective-11.2-Calculate depreciation expense using various time-based-and activity-based methods. of-Chapter-11 Depreciation, Depletion, Impairment, And-Disposal of Intermediate-Accounting Reporting and-Analysis, 2017-Update-2nd edition-by James-Wahlen ISBN-10;-1337116610-Cengage Learning-2016.-And since the second -and third-sentences. containing financial information does not mention what or which plant asset on the Trial Balance. for-2017-is associated with the Modified-Accelerated-Cost-Recovery-System (MACRS) depreciation of-$209,301, there is no way I can use the Straight-line depreciation expense formula. T *Income tax rate (Tax rate) is-25%*Modified-Accelerated-Cost-Recovery-System (MACRS)-depreciation of $209,301.T 25%T 25 100 =-0.25T =.$209,301-x-0.251 =$52,325.251 For this assignment, the adjusting journal entry will-be: Adjusting Journal-EntryO Dated Account-Title & Explanation Post-Ref.a Debito Credita Dec. 31, Income Taxes-Currently Payable (L-)O $52.325.250 20170 Deferred-Tax Liability (Payable) (At)0 0 $52.325.2508 Recorded-Deferred taxes for timing- differentiations on book versus Modified-Accelerated-Cost-Recovery System (MACRS)-depreciation.0Il. Management Brief A. Identify sources of other comprehensive income not included in net income. B. Explain rationale for the inclusion as comprehensive income (as opposed to net income) of nondisclosure within notes. C. Evaluate impacts of company goals and finances for their implications on stockholder equity, using financial information to support claims. D. Evaluate impacts of company goals and finances for their implications on retained earnings per share, using financial information to support claims. E. Explain the impact of issuing preferred stock or debt for determining changes to equity structures. F. Assess the impact of changes to current tax structure for articulating changes relevant to the company