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 merchandiseoBaking supplies: $27,850 ending inventory

?Equipment: Straight line method used for equipment

oMixing machine: $5,000 initial cost, $500 salvage value, 3rd year of use of 7 total

($642.86 per year)

oOvens: $8,000 initial cost, $1,000 salvage value, 3rd year of use of 7 total($1,000 per

year)

oOther depreciable equipment: $4,000 initial cost, $0 salvage value, 1st year of use of 4 total($1,000 per year)

oBakery Leasehold Improvements: $10,000, 2nd year of use($2,000 per year)

oTrademark 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.

o60 employees with a daily pay of $5,700. All receive pay through December 31.?Financing:

o6% interest note payable was made on January 31, 2017, and is due February 1, 2019.o5-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 Trial Balance 2017 Unadjusted trial balance Adjusting entries Adjusted trial balance Account Debit Credit Debit Credit Debit Credit Cash 64,713.72 64,713.72 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 17,000.00 17,000.00 Accumulated Depreciation 3,285.72 3,285.72 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 0.401. 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 464,485.72 464,485.72 464,485.72 464,485.72