The following events occur in July

,

2018

:

July 1

:

You take $10

,000 from your personal savings account and buy common stock in Peyton Approved.

July 1

:

Purchase $6

,

500 in baking supplies from vendor, on account.

July 3

:

Your parent

s lend the company $10,000 cash

in exchange for a two

-

year, 6% note payable. Interest and the principal are repayable at maturity.

July 7

:

Enter into a lease agreement for ba

kery space. The agreement is for 1 year. The rent is $1,500 per month,

and the

last months rent payment of

$1,500 is required at time of lease agreement. The payment was made in cash. Lease period is effective July 1

,

2018

,

through June 30,

2019

.

July 10

:

Pay $375 to the county for a business license.

July 11

:

Purchase a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment

use misc. exp.).

July 13

:

You have baking equipment, including an oven and mixer, which you have been using for your home

-

based business and will now start using in

the bakery. You estimate that the equi

pment is currently worth $6

,000, and you transfer the equipment into the busin

ess in exchange for additional

common stock. The equipment has a 5

-

year useful life.

July 13

:

Pay $200 for business cards/flyers/posters/ads to use for advertising.

July 14

:

Pay $300 for office supplies.

July 15

:

Hire part

-

time helper to be paid $12 per

hour. Pay periods are the 1

st

through the 15

th

and 16

th

through the end of the month

,

with paydays

being the 20

th

for the first pay period and the 5

th

of the following month for the second pay period. (

No entry

is

required on this date;

it is here

for

inf

ormational purposes only

.

)

July 30

:

Received telephone bill for July in amount of $75. Payment is due on August 10

.

July 31

:

Pay $2,4

00 for a 12

-

month insurance policy. Policy effective dates

are

August 1,

2018

,

through July 31

,

2019

.

July 31

:

Accrue wa

ges earned for employee for period of 16

th

through 31

st

of July (

Wage calculations table

provided below).

July 31

:

Total July bakery sales were $15,000. $5

,

000 of these sales

are

on accounts receivable

.

Step Two Data

(Click on the link to return to the prompt.)

The following events occur in August

,

2018

:

August 5

:

Paid employee for period ending 7/31.

August 8

:

Receive payments from customers towards accounts rece

ivable in amount of $3

,

800.

August 10

:

P

aid July telephone bill.

August 15

:

Purchase additional baking supplies in amount of $5

,

000 from vendor, on account.

August 15

:

Accrue wages earned for employee from period of 1

st

through 15

th

of August (

Wage calculations table

provided below).

August 15

:

Pay rent on bakery space.

August 18

:

Receive payments from customers towards accounts receivable in am

ount of $3

,

000

.

August 20

:

Paid $8

,

500 toward baking supplies vendor

payable

.

August 20

:

Pay employee for period ending 8/15

.

August 22

:

$300 in office supplies purchased

.

August 31

:

Received telephone bill for August in amount of $75. Payment is due on September 10.

August 31

:

Accrue wages earned for employee for period of August 16

th

through August 31

st

(

Wage calculations table

provided below).

August 31

:

August bakery sales total $20,000. $7,500 of this total

is

on accounts receivable.

Step Three

(Click on the link to return to the prompt.)

Updated Scenario:

Many customers

have been asking for more hypo

allergenic products, so in September you start carrying

a line of hypo

allergenic shampoos on

a trial basis. The following information relates to the purchase and sales of the shampoo:

?

You use the perpetual inventory method.

Although you could use the following

valuation method

s

FIFO

,

LIFO

, or

weighted average

,

you

choose to use

the FIFO method.

Data:

The following events occur in September

,

2018

:

September 1

:

Paid divi

dends to self in amount of $10,

000.

September 5

:

Pay employee for period ending 8/31.

September 7

:

Purchase merchandise for resale. See Inventory Valuation tab for details.

September 8

:

Receive payments from customers toward accounts receivable in amount of $4

,

000.

September 10

:

Pay August telephone bill.

September 11

:

Purchase b

aking supplies in amount of $

7,000 from vendor on account.

September 13

:

Paid on supplies vendo

r account in amount of $5

,

000.

September 15

:

Accrue employee wages for period of September 1 through September 15

.

September 15

:

Pay rent on bakery space

:

$1

,

500.

September 15

:

Record merchandise sales transaction. See Inventory Valuation tab for details.

September 15

:

Record impact of sales transaction on COGS and the inventory asset. See Inventory Valuation tab for details.

September 20

:

Pay employee for period ending 9/

15.

September 20

:

Purchase merchandise inventory for resale to customers. See Inventory Valuation tab for details.

September 24

:

Record sales of merchandise to customers. See Inventory Valuation tab for details.

September 24

:

Record impact of sales

transaction on COGS and the inventory asset. See Inventory Valuation tab for details.

September 30

:

Purchase merchandise inventory for resale to customers. See Inventory Valuation tab for details.

September 30

:

Accrue employee wages for period of Sep

tember 16

th

through September 30

th

September 30

:

Total September bakery sales

are

$20

,000. $6,000 of these sales

are

on accounts receivable.

Wage calculation data:

Month

Hours

Rate

Pay

31

Jul

.

10

12

120

15

Aug

.

40

12

480

31

Aug

.

35

12

420

1

5

Sep

.

38

12

456

30

Sep

.

40

12

480