Milestone One: Partial workbook

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Overview: In your final project, you will assume the role of an accountant and complete the year-end adjustment process for your company using a provided workbook. This workbook is the first deliverable (Part I) of your final project. In Part II, you will analyze the provided financials of the same company and create a report documenting your findings.

For your first milestone, you will complete certain portions of the final project workbook as described in the prompt below. You will complete the entire workbook for your next milestone, due in Module Five.

Prompt: Specifically, the following critical elements must be addressed:

  1. Demonstrate the year-end adjustment process.
    1. Prepare the adjusting journal entries in the Adjusting Entries tab in the provided workbook.
    2. Transfer the values from the Adjusting Entries tab to the proper cells of the Adjusting Entries columns in the Worksheet tab.
    3. Create the adjusted trial balance by completing the Adjusted Trial Balance columns using the Worksheets tab.
    4. Close temporary accounts by completing the Closing Entries tab.
  2. Prepare an income statement for your company by completing the Income Statement tab in the provided workbook.

Chart of Accounts

Asset Accounts Liability Accounts Equity Accounts
Acct # Acct # Acct #
Cash 101 Notes Payable 201 Common Stock 301
Baking Supplies 102 Accounts Payable 202 Dividends 302
Prepaid Rent 103 Wages Payable 203
Prepaid Insurance 104 Interest Payable 204
Baking Equipment 105 Loans Payable 205
Office Supplies 106
Accounts Receivable 107
Accumulated Depreciation 108
Trademark 109
Leasehold Improvements 110
Accumulated Amortization 111
Revenue Accounts
This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you. Acct #
Bakery Sales 401
Merchandise Sales 402
Expense Accounts
Acct #
Baking Cost of Goods Sold 501
Merchandise Cost of Goods Sold (FIFO) 502
Rent Expense 503
Insurance Expense 504
Misc. Expense 505
Business License Expense 506
Advertising Expense 507
Wages Expense 508
Telephone Expense 509
Interest Expense 510
Depreciation Expense 511
Amortization Expense 512
Office Supplies Expense 513


Peyton Approved
Trial Balance
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 30,401.00
Notes Payable 10,000.00 10,000.00
Interest Payable – 0
Accounts Payable 27,325.00 27,325.00
Wages Payable – 0
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 – 0
Rent Expense 90,000.00 90,000.00
Interest Expense – 0
Insurance Expense – 0
Depreciation Expense – 0
Amortization Expense – 0
Misc. Expense 2,780.00 2,780.00
Office Supplies Expense – 0
Business License Expense 375.00 375.00
Advertising Expense 5,200.00 5,200.00
Wages Expense – 0
Telephone Expense 3,456.00 3,456.00
Merchandise COGS (FIFO) 15,760.00 15,760.00
Total 464,485.72 464,485.72 – 0 – 0 464,485.72 464,485.72

Adjusting Entries

Peyton Approved
Adjusting Journal Entries
Date Accounts Debit Credit
31-Dec Depreciation Expense
Accumulated depreciation
31-Dec Amortization Expense
Accumulated Amortization
31-Dec Interest Expense
Interest Payable
31-Dec Insurance Expense
Prepaid Insurance
31-Dec Baking Cost of Goods Sold
Baking Supplies
31-Dec Office Supplies Expense
Office Supplies
31-Dec Wages Expense
Wages Payable
– 0 – 0

Income Statement

Peyton Approved
Income Statement
For Year Ending 12/31/2017
Bakery Sales
Merchandise Sales
Total Revenues – 0
Merchandise Cost of Goods Sold (FIFO)
Baking Cost of Goods Sold
Gross Profit – 0
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: – 0
Net Income – 0

Closing Entries

Peyton Approved
Closing Entries
For Year Ending 12/31/2017
Date Accounts Debit Credit
31-Dec Bakery Sales
Merchandise Sales
Income Summary – 0
31-Dec Income Summary – 0
Baking Cost of Goods Sold
Rent Expense
Interest Expense
Insurance Expense
Depreciation Expense
Amortization Expense
Misc. Expense
Office Supplies Expense
Business License Expense
Advertising Expense
Wages Expense
Telephone Expense
Merchandise Cost of Goods Sold (FIFO)
31-Dec Income Summary – 0
Retained Earnings – 0
31-Dec Retained Earnings
– 0 – 0

Statement of Retained Earnings

Peyton Approved
Statement of Retained Earnings
For Year Ending 12/31/2017
Beginning Balance: – 0
plus Net Income
less Dividends:
Ending Balance: – 0

Balance Sheet

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets Liabilities and Owners’ Equity
Current Assets: Current Liabilities:
Cash Accounts Payable
Baking Supplies Wages Payable
Merchandise Inventory (FIFO) Interest Payable
Prepaid Rent Total Current Liabilities – 0
Prepaid Insurance
Office Supplies Long Term Liabilities:
Accounts Receivable Notes Payable
Total Current Assets – 0 Loans Payable
Total Long Term Liabilities: – 0
Total Liabilities: – 0
Long Term/Fixed Assets:
Baking Equipment Common Stock
Accumulated Depreciation Retained Earnings
– 0
Leasehold Improvements Total Equity – 0
Accumulated Amortization – 0
Total Assets: – 0 Total Liabilities & Equity – 0

Financial Analysis

2017 2016 2015 Industry Standard
Quick Ratio 2.2 2.8 1.75
Gross Margin 0.55 0.7 0.7
Net Margin 0.22 0.32 0.24
Return on Equity 0.9 0.78 0.8

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