ACC 201 Final Project Peyton Approved
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For this deliverable, you
will complete the accounting cycle and prepare financial statements that will
provide the result you need to assess the success of business operations.
Below you will find the data
required to make entries in your accounting workbook. Remember that you are
following the business transactions for a three-month period from the initial
stage of analysis and recording, through the reporting process. These
transactions will include:
·
the initial setup of the business
·
cash and credit sales
·
making payments to vendors
·
paying store employees
·
managing debt
It will help you to print
this document as you are making your entries in your workbook. Your textbook
prepares you and can be used as a reference to assist you in completing this
assignment. You should begin this project in Module Two.
There will be two
checkpoints, along the way, at which time you will submit your progress in this
workbook to your instructor for review and feedback toward correction and
successful demonstration of this accounting cycle as a whole. Your first check point will cover steps 1
through 4 of this workbook. The first checkpoint is in Module 3.
The second checkpoint will
have you submit your workbook completed through step 7 in Module 4. You will
integrate the feedback, suggestions, and guidance your instructor provides on
these steps in the cycle to ensure your success with completion of this cycle.
The following steps are included:
Step 1:
Complete the following in the “July Journal Entries” tab in your workbook
(be sure to look for the July Journal Entries tab at the bottom of the Peyton
Approved Student Workbook).
The following events occur
in July 2014:
July 1 – You take $15,000
from your personal savings account and buy common stock in Peyton
Approved.
July 1-Purchase $8500 in
baking supplies from vendor, on account
July 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.
July 7 – Pay $3000 toward lease agreement for bakery space. The agreement
is for 1 year. The rent is $1,500 per month, last month’s rent was required at
time of lease agreement. Lease period is effective July 1st 2014
through June 30th, 2015.
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 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.
July 13 – Pay $200 for business cards/flyers/posters/ads to use for
advertising.
July 14 – Pay $300 for miscellaneous (use misc. supplies).
July 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.
(No entry required on this date; for informational
purposes only)
July 30- Received telephone bill for July in amount of $45. Payment is due
on August 10th
July 31 – Pay $1,200 for a 12-month insurance policy. Policy effective
dates August 1, 2014 through July 31st, 2015
July 31- Accrue wages earned for employee for period of 16th
through 31st of July
(Wage calculations
table is provided for you, below)
Total July bakery sales were $15,000. $5000 of these sales on accounts
receivable
Step 2:
Complete the following
transactions in the August Journal Entries tab in your workbook
August 5- paid employee for period ending 7/31
August 8-Receive payments from customers towards accounts receivable in
amount of $3200.
August 10 – paid July telephone bill
August 15- Purchase additional baking supplies in amount of $5000 from
vendor, on account.
August 15 – Accrue wages earned for employee from period of 1st
through 15th of August
(Wage
calculations table provided below)
August 15-Pay rent on bakery space $1500
August 18-Receive payments from customers towards accounts receivable in
amount of $1000
August 20- paid $8500 toward baking supplies vendor payable
August 20- pay employee for period ending 8/15
August 22- $300 in misc. supplies purchased
August 31- received telephone bill for August in amount of $45. Payment is
due on September 10th.
August 31- Accrue wages earned for employee for period of August 16th
through August 31st
(Wage
calculations table provided below)
August bakery sales total $20,000.
$7,500 of this total on accounts receivable.
Step 3:
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. You are uncertain as to which valuation method to use—FIFO,
LIFO, or weighted average, so you calculate inventory using all
three and then decide which one you would like to choose.
Please see the Inventory Valuation tab in your workbook, to review
application of costs using the FIFO, LIFO, and average methods based on
purchase and sales information. You will choose the method you feel most
appropriate, and bring the journal entries from the inventory valuation page into
your journal for the month of September, to ensure the impact of merchandising
is reflected in your reporting.
Complete the following
transactions in the September Journal Entries tab in your workbook.
September 1- paid dividends to self in amount of $3000
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
$4000
September 10- pay August telephone bill
September 11-purchase baking supplies in amount of $ 7,000 from vendor on
account.
September 13- Paid on supplies vendor account in amount of $5000
September 15- Accrue employee wages for period of September 1st
through September 15th
September 15- Pay rent on bakery space $1500
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 September 16th
through September 30th
Total September bakery sales $25,000. $6,000 of these sales on accounts
receivable.
Step 4: Post entries to t
accounts.
Use the t accounts page in
your workbook to post all journal entries to the appropriate ledger account and
calculate account balances as of September 30th.
Step 5: Prepare the
Unadjusted Trial Balance
Use the t account balances
completed in the previous step to prepare the unadjusted trial balance portion
of the Trial Balance tab in your workbook.
Step 6:
You will use the “Adjusting
Entries” tab in your workbook to complete the following entries. See sample
for Depreciation of Baking Equipment.
Take the adjusting entries from this worksheet and enter them into the
trial balance on the Steps 5 and 7 Trial Balance tab.
On September 30, the
following adjustments must be made:
·
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.
(6% annual interest on $10,000 loan from parents.
·
Record insurance used for the year.
·
Actual baking supplies on-hand as of September 30th is $1100.
·
Misc. supplies on-hand as of September 30th is $50.
Step 7:
Apply adjusting entries to
the trial balance to create the adjusted trial balance.
Adjusting entries from Step
6 will apply to affected accounts in the unadjusted trial balance to arrive at
the adjusted trial balance.
Step 8:
Prepare the financial
statements
Use your adjusted trial
balance to prepare the income statement, statement of owner’s equity, and
balance sheet. You must complete these statements in this order, as there are
interdependencies among them.
Step 9:
You will use the “Closing
Entries” tab in your workbook to do the following:
Close all temporary income
statement accounts and create closing entries.
Step 10
You will use the Post
Closing Trial Balance tab in your workbook to do the following:
Prepare the post-closing trial balance for the next accounting period.
Step 11”
You will use the “Reversing
Entries” tab in your workbook to do the following:
Prepare reversing entries.
This completes your
workbook!
Wage calculation data:
|
Month
|
Hours
|
Rate
|
Pay
|
|
31-Jul
|
10
|
12
|
120
|
|
15-Aug
|
40
|
12
|
480
|
|
31-Aug
|
35
|
12
|
420
|
|
15-Sep
|
38
|
12
|
456
|
|
30-Sep
|
40
|
12
|
480
|
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