1 – Open a bank account for Peyton Approved.
1 – You take $15,000 from your personal savings account and buy common stock in Peyton Approved.
3 – Your parents lend the company $10,000 cash, in exchange for a two-year, 6% note payable. Interest and the principal are repayable at maturity.
7 – Sign a lease agreement for retail/bakery space. The agreement is for 1 year, with the option to extend the lease on a month-to-month basis after 1 year. The rent is $1,500 per month. The lease period starts on July 1, 2019, first and last month’s rent due at that time. Subsequent rents are due on the 15th day of each month. (no entry- record this transaction on July 15th, see below)
10 – Pay $375 to the county for a business license.
11 – Purchase a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment—use misc. exp.).
13 – You have baking equipment, including an oven and mixer, that you have been using for your home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $5,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a 5-year useful life.
13 – Pay $200 for business cards/flyers/posters/ads to use for advertising.
14 – Pay $1,000 for baking ingredients (use baking supplies account).
14 – Pay $300 for miscellaneous (use misc. supplies).
15 – Hire part-time helper to be paid $12 per hour. Pay periods are the 1st through the 15th and 16th through the end of the month with paydays being the 20th for the first pay period and the 5th of the following month for the second pay period.
15 – Pay first and last month’s rent in cash. (1,500 January rent; January 2020 rent 1,500)
16 – Open the doors of the bakery.
31 – Pay $1,200 for a 12-month insurance policy beginning February 1, 2019
31- Record sales $5,000; $2,500 paid in cash remainder paid later
31- Received telephone bill, $45, will pay on 8/5 accrue invoice
The following events occur during the next 6 months:
August
August 5 – pay accrued telephone bill
August 8 – purchase Baking Supplies on credit $8,500
August 15 – accrue Salary 40 hours @ 12.00/per hour – will be paid on 8/20
August 15 – customer paid $2,500 invoice from previous month
August 15 – Pay in cash August Rent $1,500
August 20 – Pay employees for August 1-15 accrued on 8/15
August 25 – purchase for cash $300 miscellaneous supplies
August 31st – record August sales $20,000 paid to Peyton in cash
August 20th – Record payment to employee
August 31st – Accrue Salary 40 hours @ 12/per hour – will be paid 9/5
August 31st – Record telephone bill for $45, to be paid on 9/10
September 2019
September 5 – Record payment to employee wages accrued on 8/31
September 10 – Record payment of telephone bill accrued 8/31
September 10th – Record purchase of baking supplies on credit, $9,000
September 15th – Record rent payment
September 15th- Accrue w.e. 9/15 wages 38 hours @ 12.00/per hour
September 15th – Record payment of baking supplies purchased on 8/8
September 19th – Record cash paid for miscellaneous supplies $325
September 20th – Record payment of employee wages accrued on 9/15
September 30th – Record telephone bill received $45, not paid until 10/5
September 30th – Record sales $27,000 from customers paid to Peyton in cash
September 30th – Accrue w.e. 9/30 wages 40 hours @ 12/hr (pay to employees 10/5)
October 2019
October 5th – Pay telephone bill accrued 9/30
October 10th – Pay employees wages accrued 9/30
October 12th – Purchase on credit $10,000 baking supplies
October 11th- Record payment of baking supplies purchased on 9/10
October 14th – Record purchase of miscellaneous supplies $310 for cash
October 15th – Accrue wages for w.e. 10/15
October 15th – Pay in cash rent for October
October 20th – Pay employee wages accrued on 10/15
October 30th – Record bakery sales paid to Peyton in cash, $27,000
October 30th – Accrue wages 40 hours @ 12.00/hr
October 30th – Record receipt of telephone bill, $45, not paid until 11/5
October 30th – Record dividend payment $4,500
November 2019
November 5th – Pay telephone bill accrue 10/30
November 10th – Pay employee wages accrued on 10/30
November 10th – Pay baking supplies purchased on credit 10/12
November 10th – Purchase baking supplies on credit $10,000 due next month
November 15th – Accrue wages for week ended 11/15 @ 35 hours 12.00/per hour
November 15th – Purchase for cash $300 miscellaneous supplies
November 15th – Paid November rent, $1,500 in cash
November 15th – Purchase 10 bottles (merchandise inventory) @ 6.00 each
November 20th – Sold 8 bottles $8.50 (record transaction assuming FIFO) for cash
November 20th – Purchase 20 bottles @ 6.05 each for cash
November 20th – Pay employees accrued on 11/15
November 30th – Sold 18 bottles @ $8.50 each for cash
November 30th – Record telephone bill $45, paid 12/5
November 30th – Accrue wages w.e. 11/30 30 hours @ 12.00/hour
November 30th – Record November sales $25,000 received by Peyton in cash
November 30th – Pay owner dividends in cash $2.500
December 2019
December 1st – Purchased 25 bottles @ $6.05 each for cash
December 4th – Purchase on credit $12,000 baking supplies
December 5th – Pay employees accrue wages 11/30
December 10th – Pay telephone bill accrued on 11/30
December 10th – Record payment of baking supplies purchased on 11/10
December 15th – Accrue employee wages 45 hours (straight time) @12.00/hour
December 15th – Pay monthly rent in cash
December 15th – purchase miscellaneous supplies for cash $300
December 15th – Purchase for cash 30 bottles @ 6.00 each
December 15th – Sold 22 bottles @ $8.50 for cash ( use FIFO for inventory)
December 20th – Purchase for cash 20 bottles @ $6.08 each
December 20th – Pay employee wages accrued 12/15
December 30th – Sold 22 bottles @ 8$8.50 each (use FIFO)
December 30th – Record telephone bill $45 (due and paid next month)
December 30th – Record December bakery sales paid to Peyton in cash, $30,000
December 31st – Accrue employee wages for w.e. 12/31 @ 40 hours /12.00 hour
December 31st – Pay in cash $2,500 dividends to owner10/31
On December 31, the following adjustments must be made: (use the adjusting entry tab to record transactions – then transfer the entries to the trial balance adjusting entries column)
Depreciation of baking equipment transferred to company on 7/13. Assume ½ month of depreciation in July using the straight-line method.
Accrue interest for note payable (Assume a full month of interest for July).
Record insurance used for the year.
An inventory of baking supplies shows $1,100 of supplies are remaining.
An inventory of misc. supplies shows $50 remaining.
Once the entries are recorded, using the specific tabs, complete the following tasks:
Complete the T-accounts (transfer the transactions to the appropriate accounts
Record the closing entries
Prepare the trial balance (unadjusted)
Complete the trial balance, with adjusting entries and the adjusted
Prepare the Income Statement
Prepare the Statement of Owner’s equity
Prepare the Balance Sheet
Part 2: Written Report – Accounting Cycle Report (2-3 pages double spaced 12/ft times roman – Submit in the appropriate dropbox folder
Draft a paper answering the following questions)
Provide an overview of the company’s accounting system. What basis of accounting is used? Why?
What strategies is the business using to ensure responsible accounting practices? Why have these strategies been selected?
Describe the steps in the accounting cycle.
Define internal controls and discuss 1-2 controls and how they are relevant to the Peyton company
Analyze the results of operations based on the financial statements. What do these results tell a business? e) What do the statements themselves tell about the strengths and weaknesses of the company’s financial position?
Discuss the changes in operations that might need to be made to make the company more profitable. Justify why each change may be necessary.
What are the company’s financial strengths and weaknesses? What specific changes can be made to alleviate the weaknesses?
What opportunities can the company explore because of its strengths? How would these be beneficial?