Overview: In this milestone, you will move through the first four steps of Final

Question

Overview: In this milestone, you will move through the first four steps of Final Project I by creating the monthly journal entries and general ledger accounts in your accounting workbook. The monthly journal entries are how businesses input financial activities into their accounting sys tem s. The values from t hese entries are posted to the gener al l edger. Prompt: Your dog, Peyton, has severe allergies and cannot have the usual store -bought dog treats. You have been making homemade treats for him that are all - natural and hypoallergenic. Over the past year, you have been making and selling these t reats out of your home , and you have been quite successful. You now have an opportunity to open your own dog treat bakery. You have decided on a corporate form of business and have named your c ompany “Peyton Approved.” To complete Milestone One, use accep ted accounting principles to follow and record your business transactions for a three -month period. You will find the provided data for your workbook in the a ppendix at the end of this document. The data have been separated from the prompt so that you can more easily view the full scope of the assignment . Links have been provided to help you locate the information you need as you move through each step. Specifically, the following critical elements must be addressed: I. Record financial data that accurately captures business transactions according to accepted accounting principles . A. Step One : Complete the “July Journal Entries” tab in your workbook using the Step One data in the appendix. B. Step Two : Complete the “August Jo urnal Entries” tab in your workbook using the Step Two data in the appendix. C. Step Three : Complete the “September Journal Entries” tab in your workbook using the Step Three data and updated scenario information in the appendix. Note that there was an additional line of products added this month, so you must first complete the “Inventory Valu ation” tab in your workbook and then copy the journal entries from the inventory evaluation page into your journal for this month to ensure the impact of merchandising is reflected in your reporting. The following critical element is not graded: D. Step Four : Transfer posted entries to T accounts. Appendix: Workbook Data for Milestone One Step One Data (Click on the link to return to the prompt. ) The following events occur in July , 2018 : July 1 : You take $10 ,000 from your personal savings account and buy common stock in Peyton Approved. July 1 : Purchase $6 ,500 in baking supplies from vendor, on account. July 3 : Your parent s 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 : Enter into a lease agreement for bakery space. The agreement is for 1 year. The rent is $1,500 per month, and the last month’s rent payment of $1,500 is required at time of lease agreement. The payment was made in cash. Lease period is effective July 1 , 2018, through June 30, 2019. 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 equi pment is currently worth $6 ,000, and you transfer the equipment into the busin ess 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 office supplies. July 15 : Hire part -time helper to be paid $12 per hour. Pay periods are the 1 st through the 15 th and 16 th through the end of the month , with paydays being the 20 th for the first pay period and the 5 th of the following month for the second pay period. ( No entry is required on this date; it is here for inf ormational purposes only .) July 30 : Received telephone bill for July in amount of $75. Payment is due on August 10 . July 31 : Pay $2,400 for a 12 -month insurance policy. Policy effective dates are August 1, 2018 , through July 31 , 2019 . July 31 : Accrue wa ges earned for employee for period of 16 th through 31 st of July ( Wage calculations table provided below). July 31 : Total July bakery sales were $15,000. $5 ,000 of these sales are on accounts receivable .

Explanation / Answer

Peyton Approved Geeral journal for the month of July Date Account Title Debit Credit July.1 Cash 10000 Common Stock 10000 (Cash invested) July.1 Baking supplies 6500 Accounts Payable 6500 (Purchase of baking supplies on account) July.3 Cash 10000 Note payable 10000 (Amount borrowed on note payable) July.7 Prepaid Rent 1500 Cash 1500 (Last month's rent paid under agreement) July.10 Licensing Fee 375 Cash 375 (Payment made for Business License) July.11 Misc.Expense 250 Cash 250 (Purchase of cash register) July.13 Equipment 6000 Common Stock 6000 (Personal equipment brought in by the owner) July.13 Advertising expense 200 Cash 200 (Payment for business cards, flyers etc) July.14 Office Supplies 300 Cash 300 (Payment for office supplies) July.30 Telephone Expense 75 Accounts Payable 75 (Telephone bill for July recorded) July.31 Prepaid Insurance 2400 Cash 2400 (One year insurance policy purchased) July.31 Wages details not provided July.31 Cash 10000 Accounts Receivable 5000 Sales 15000 (Sales during the month of July) Cash Common Stock Date Debit Credit Date Date Debit Credit Date July.1 10000 1500 July.7 10000 July.1 July.3 10000 375 July.10 6000 July.13 July.31 15000 250 July.11 200 July.13 300 July.14 July.31 Baking Supplies Accounts Payable Date Debit Credit Date Date Debit Credit Date July.1 6500 6500 July.1 75 July.30 Note Payable Prepaid Rent Date Debit Credit Date Date Debit Credit Date 10000 July.3 July.7 1500 Licensing Fee Misc.Expenses Date Debit Credit Date Date Debit Credit Date July.10 375 July.11 250 Equipment Advertising Expense Date Debit Credit Date Date Debit Credit Date July.13 6000 July.13 200 Ofice Supplies Telephone Expense Date Debit Credit Date Date Debit Credit Date July.14 300 July.30 75 Prepaid Insrance Sales Date Debit Credit Date Date Debit Credit Date July.31 2400 15000 July.31 Accounts Receivable Date Debit Credit Date July.31 5000

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