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.
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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:
- Demonstrate the year-end adjustment process.
Prepare the adjusting journal entries in the Adjusting Entries tab in the provided workbook.
Transfer the values from the Adjusting Entries tab to the proper cells of the Adjusting Entries columns in the Worksheet tab.
Create the adjusted trial balance by completing the Adjusted Trial Balance columns using the Worksheets tab.
Close temporary accounts by completing the Closing Entries tab.
- Prepare an income statement for your company by completing the Income Statement tab in the provided workbook.
Chart of
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Asset
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| Accounts |
Liability Accounts |
Equity Accounts |
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| Acct # |
Acct #
Acct #
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| Cash |
101 |
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| Notes Payable |
201 |
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| Common Stock |
301 |
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| Baking Supplies |
102 |
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| Accounts Payable |
202 |
| Dividends |
302 |
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| Prepaid Rent |
103 |
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| Wages Payable |
203 |
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| Prepaid Insurance |
104 |
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| Interest Payable |
204 |
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| Baking Equipment |
105 |
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| Loans Payable |
205 |
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| Office Supplies |
106 |
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| Accounts Receivable |
107 |
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| Accumulated Depreciation |
108 |
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| Trademark |
109 |
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| Leasehold Improvements |
110 |
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| 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 #
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| Bakery Sales |
401 |
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| Merchandise Sales |
402 |
| Expense Accounts |
Acct #
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| Baking Cost of Goods Sold |
501 |
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| Merchandise Cost of Goods Sold (FIFO) |
502 |
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| Rent Expense |
503 |
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| Insurance Expense |
504 |
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| Misc. Expense |
505 |
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| Business License Expense |
506 |
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| Advertising Expense |
507 |
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| Wages Expense |
508 |
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| Telephone Expense |
509 |
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| Interest Expense |
510 |
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| Depreciation Expense |
511 |
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| Amortization Expense |
512 |
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| Office Supplies Expense |
513 |
Worksheet
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| Peyton Approved |
| Trial Balance |
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| 2017 |
| Unadjusted trial balance |
Adjusting entries |
Adjusted trial balance |
Account
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| Debit |
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| 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
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| 10,000.00 |
10,000.00
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| 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 |
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| – 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
| 3
|
| 5,200.00 |
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 |
|
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| 464,485.72 |
464,485.72
– 0
– 0
464,485.72
464,485.72
Adjusting Entries
Peyton Approved
| Adjusting Journal Entries |
2017
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| Date |
Accounts
Debit
Credit
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| 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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