Question

I need the adjusting entries tab filled out on the worksheet provided given the scenario attached.

	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
			-	-

Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the following accounting practices:

 Inventory: Periodic, FIFO for both baking and merchandise o Baking supplies: $27,850 ending inventory  Equipment: Straight line method used for equipment o Mixing machine: $5,000 initial cost, $500 salvage value, 3rd year of use of 7 total ($642.86 per year) o Ovens: $8,000 initial cost, $1,000 salvage value, 3rd year of use of 7 total ($1,000 per year) o Other depreciable equipment: $4,000 initial cost, $0 salvage value, 1st year of use of 4 total ($1,000 per year) o Bakery Leasehold Improvements: $10,000, 2nd year of use ($2,000 per year) o Trademark for company name: Initial cost, $2,300, 3rd year of use  Office supplies: Periodic, FIFO. Ending balance is $250.  Pay period is every 2 weeks. Last pay period ended December 27. o 60 employees with a daily pay of $5,700. All receive pay through December 31.  Financing: o 6% interest note payable was made on January 31, 2017, and is due February 1, 2019. o 5-year loan was made on June 1, 2017. Terms are 7.5% annual rate, interest only until due date.  Insurance: Annual policy covers 12 months, purchased in February, covering March 2017– February 2018. No monthly adjustments have been made.

Other information: An employee slipped and fell in the baking area and has filed a lawsuit. The company lawyer indicates that it is probable that the company will be found liable. No additional information is available.

Answer 1

Peyton Approved
	Adjusting Journal Entries
	2017
	Date	Accounts	Debit	Credit
	31-Dec	Depreciation Expense	2642.86
		Accumulated depreciation		2642.86
		(642.86+1000+1000)
	31-Dec	Amortization Expense	2000
		Accumulated Amortization		2000
		(Amortization on leasehold asset)
	31-Dec	Interest Expense	1468.75
		Interest Payable		1468.75
		(6% on $10000 for 11 months + 7.5% on $21000 for 7 months)
	31-Dec	Insurance Expense	2000
		Prepaid Insurance		2000
		($2400 x 10/12)
	31-Dec	Baking Cost of Goods Sold	137400
		Baking Supplies		137400
		($165250 -$27850)
	31-Dec	Office Supplies Expense	1350
		Office Supplies		1350
		($1600 - $250)
	31-Dec	Wages Expense	22800
		Wages Payable		22800
		(5700 x 4 days)