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ACC 201 Final Project Peyton Approved Instructions
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 1 st through the 15th
and 16th through the end of the month with paydays being the 20 th 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 10 th
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 16 th 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 1 st 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 16 th 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 1 st 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 16 th 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 30 th. 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 30 th 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
31-Jul
15-Aug
31-Aug
15-Sep
30-Sep Hours
10
40
35
38
40 Rate
12
12
12
12
12 Pay
120
480
420
456
480
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