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 o Mixing machine: $5,000 initial cost, $500 salvage value, 3rd year of use of 7 total ($642.86 per year) o Ovens: $8,000 initial cost, $1,000 salvage value, 3rd year of use of 7 total ($1,000 per year) o 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. o 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
Income Statement
For Year Ending 12/31/2017
	Bakery Sales
	Merchandise Sales
	Total Revenues		-
	Cost of Goods Sold (FIFO)
	Baking Cost of Goods Sold
	Gross Profit (FIFO)		-
	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 (FIFO)		-

Peyton Approved

Trial Balance

2017

Unadjusted trial balance

Adjusting entries

Adjusted trial balance

Account

Debit

Credit

Debit

Credit

Debit

Credit

Cash

55,428.00

55,428.00

Baking Supplies

165,250.00

165,250.00

Merchandise Inventory (FIFO)

25,750.00

25,750.00

Prepaid Rent

7,500.00

7,500.00

Prepaid Insurance

2,400.00

2,400.00

Baking Equipment

26,000.00

26,000.00

Accumulated Depreciation

3,000.00

3,000.00

Leasehold Improvements

10,000.00

10,000.00

Accumulated Amortization

2,000.00

2,000.00

Trademark

2,300.00

2,300.00

Office Supplies

1,600.00

1,600.00

Accounts Receivable

30,401.00

30,401.00

Notes Payable

10,000.00

10,000.00

Interest Payable

-

Accounts Payable

27,325.00

27,325.00

Wages Payable

-

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

-

Rent Expense

90,000.00

90,000.00

Interest Expense

-

Insurance Expense

-

Depreciation Expense

-

Amortization Expense

-

Misc. Expense

2,780.00

2,780.00

Office Supplies Expense

-

Business License Expense

375.00

375.00

Advertising Expense

5,200.00

5,200.00

Wages Expense

-

Telephone Expense

3,456.00

3,456.00

Merchandise COGS (FIFO)

15,760.00

15,760.00

Total: (FIFO)

464,200.00

464,200.00

-

-

464,200.00

464,200.00

Prepare an income statement for your company by completing the Income Statement tab in the provided workbook.