Overview: In your final project, you will assume the role of an accountant and complete the year-end adjustment process for your c
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: I. Demonstrate the year-end adjustment process. A. Prepare the adjusting journal entriesin the Adjusting Entries tab in the provided workbook. B. Transfer the values from the Adjusting Entries tab to the proper cells of the Adjusting Entries columns in the Worksheet tab. C. Create the adjusted trial balance by completing the Adjusted Trial Balance columns using the Worksheets tab. D. Close temporary accounts by completing the Closing Entries tab. II. 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 |
Worksheet
| 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 | 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 | ||||
| 2017 | ||||
| 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 | |||
| Dividends | ||||
| – 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 | ||||||||
| Trademark | |||||||||
| 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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