ACC 307 Final Project Scenario I
Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the
following accounting practices:
ï‚· Inventory: Periodic, FIFO for both baking and merchandise
o Baking supplies: $27,850 ending inventory
ï‚· 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
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
ï‚· Office supplies: Periodic, FIFO. Ending balance is $250.
ï‚· 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.
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
ï‚· Insurance: Annual policy covers 12 months, purchased in February, covering March 2017â€“
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