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Use the scenario infromation provided and the information in the tables here to complete the rest of the tables and pro forma.

Overview: You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare the companys financials for the year-end audit. Additionally, the company is interested in expanding its business within the next year. They would like your support in assessing their ability to meet their goals.

Refer to the data below and use the Final Project Workbook that includes the income statement, balance sheet, retained earnings statement and cash flow statement to complete the final project and associated milestones.

Peyton Approved Financial Data: Preliminary Financial Statements have already been prepared (2017 statements in the Final Project Workbook). Final adjusting entries have not yet been made. See table for possible adjustments that indicate what will be recorded at 12/31/17 (fiscal year end). Use the following to complete year-to-year documentation and notes for managing depreciation, inventory, and long-term debt.

A supplier shipped $3,000 of ingredients on 12/29/17. Peyton receives an invoice for the goods, as well as a bill for freight for $175, all dated 12/29/17. Goods were shipped FOB suppliers warehouse.

At 12/31/17, Peyton has $200 worth of merchandise on consignment at Brunos House of Bacon.

On 12/23/17, Peyton received $1,000 deposit from Pet Globe for product to be shipped by Peyton in the second week of January.

On 12/03/2017, a mixer with a cost of $2,000, accumulated depreciation $1,200, was destroyed by a forklift. As of 12/23/17, insurance company has agreed to pay $700 in January, 2018, for accidental destruction.

Note about later borrowing - financials will show loan from parents repaid and use of bank financing.

The company is planning to open another location in 2018. Prepare pro forma financials for 2018 for the new location using the following information:

Cost of leasing commercial space: $1,500 per month.

Cost of new equipment: $15,000, purchased with a long-term note. Use straight line depreciation assuming a seven-year life, no residual value. Use full years depreciation for the first year.

Cost of hiring and training new employees: three at $25,000 each for the first year.

Except as noted below, assets, current liabilities, sales, costs, and expenses are expected to be 80% of the existing store (from preliminary statements) except no stock. Retained earnings = net income.

Cash: $7,000. Accounts receivable amount to 4.0 turns (accounts receivable turnover will be 4.0); inventory amount to show 3.0 turns (inventory turnover will be 3.0). No stock will be issued. Retained earnings are to equal net income. Additional financing of $5,000 will be long-term. Add remaining amount needed to balance into accounts payable.

For notes to the financial statements and Management Analysis Memo, consider the following:

Peyton Approved uses the following accounting practices:

Inventory: Periodic, LIFO for both baking and merchandise

Baking supplies: $27,850 ending inventory

Equipment: Straight line method used for equipment

Business Financing Information: Use this information to calculate interest rates and insurance information, and to assess their impact on the companys financial obligations:

6% interest note payable was made on Jan 31, 2017, and is due Feb 1, 2019.

5-year loan was made on June 1, 2016. Terms are 7.5% annual rate, interest only until due date.

Insurance: Annual policy covers 12 months, purchased in February, covering March 2017 to February 2018. No monthly adjustments have been made.

PEYTON APPROVED
TRIAL BALANCE
As of December 31, 2017
		Unadjusted trial balance					Adjusting entries					Adjusted trial balance
		Dr		Cr		ref	Dr		Cr	ref		Dr		Cr
Cash		67,520.04										67,520.04
Accounts Receivable		68,519.91										68,519.91
Other Receivable - Insurance
Baking Supplies		15,506.70										15,506.70
Merchandise Inventory		1,238.07										1,238.07
Consignment Inventory
Prepaid Rent		2,114.55										2,114.55
Prepaid Insurance		2,114.55										2,114.55
Misc. Supplies		170.49										170.49
Baking Equipment		14,000.00										14,000.00
Accumulated Depreciation				1,606.44										1,606.44
Customer Deposit														-
Accounts Payable				20,262.11										20,262.11
Wages Payable				3,383.28										3,383.28
Interest Payable				211.46										211.46
Notes Payable				5,000.00										5,000.00
Common Stock				20,000.00										20,000.00
Beginning Retained earnings				50,144.84										50,144.84
Dividends		105,000.00										105,000.00
Bakery Sales				327,322.55										327,322.55
Merchandise Sales				1,205.64										1,205.64
Cost of Goods Sold - Baked		105,834.29										105,834.29
Cost of Goods Sold - Merchandise		859.77										859.77
Rent Expense		24,549.19										24,549.19
Wages Expense		10,670.72										10,670.72
Misc. Supplies Expense		3,000.46										3,000.46
Business License Expense		2,045.77										2,045.77
Misc. Expense		1,363.84										1,363.84
Depreciation Expense		677.86										677.86
Insurance Expense		1,091.08										1,091.08
Advertising Expense		1,549.74										1,549.74
Interest Expense		818.31										818.31
Telephone Expense		490.98										490.98
Gain/Loss on disposal of equipment
		429,136.32		429,136.32			-		-			429,136.32		429,136.32

Peyton Approved
Balance Sheet
As of December 31, 2017
Assets					Liabilities and Owners' Equity
	Current Assets:					Current Liabilities:
	Cash	67,520.04				Accounts Payable	20,262.11
	Accounts Receivable	68,519.91				Wages Payable	3,383.28
	Baking Supplies	15,506.70				Interest Payable	211.46
	Merchandise Inventory	1,238.07
	Prepaid Rent	2,114.55
	Prepaid Insurance	2,114.55
	Misc. Supplies	170.49
	Total Current Assets		157,184.31			Total Current Liabilities		23,856.85
						Long Term Liabilities:
	Long Term/Fixed Assets:					Notes Payable	5,000.00
	Baking Equipment	14,000.00				Total Long Term Liabilities:		5,000.00
	Accumulated Depreciation	-1,606.44
	Net Fixed assets		12,393.56			Total Liabilities:		28,856.85
						Common Stock	20,000.00
						Retained Earnings	120,721.02
						Total Equity		140,721.02
	Total Assets:		169,577.87			Total Liabilities & Equity		169,577.87

Peyton Approved
Balance Sheet
As of December 31, 2017

Peyton Approved
Income Statement
For Year Ended 12/31/2017
	Bakery Sales		$ 327,322.55
	Merchandise Sales		1,205.64
	Total Revenues			328,528.19
	Cost of Goods Sold - Baked		105,834.29
	Cost of Goods Sold - Merchandise		859.77
	Total Cost of Goods Sold			106,694.06
	Gross Profit			221,834.13
	Operating Expenses:
	Rent Expense		24,549.19
	Wages Expense		10,670.72
	Misc. Supplies Expense		3,000.46
	Business License Expense		2,045.77
	Misc. Expense		1,363.84
	Depreciation Expense		677.86
	Insurance Expense		1,091.08
	Advertising Expense		1,549.74
	Interest Expense		818.31
	Telephone Expense		490.98
	Total Operating Expenses:			46,257.95
	Net Income			175,576.18

Peyton Approved
Income Statement
For Year Ended 12/31/2017

	Peyton Approved
	Statement of Retained Earnings
	For Year Ended 12/31/2017
		Beginning Balance:		$ 50,144.84
		plus Net Income		175,576.18
		less Dividends:		105,000.00
		Ending Balance		$120,721.02

Peyton Approved
Statement of Retained Earnings
For Year Ended 12/31/2017

Peyton Approved
Statement of cash Flow
For Year Ended 12/31/2017
Net Income				$175,576.18
Depreciation Expense				677.86
					176,254.04
Increase in Accounts Receivable					(25,886.91)
Increase in Baking Supplies					(8,187.84)
Increase in Merchandise inventory					(443.10)
Increase in Prepaid Rent					(449.55)
Increase in Prepaid Insurance					(1,004.55)
Increase in Misc. Supplies					(114.99)
Increase in Accounts Payable					3,292.11
Increase in Wages Payable					1,850.48
Increase in Interest Payable					44.96
	Operating Cash Flow					145,354.65
Cash Flow from Investments
Equipment Purchases					(6,000.00)
	Cash Flow from Investments					(6,000.00)
Cash Flow from Financing
Repayment of Note Payable					(10,000.00)
Dividends Paid					(105,000.00)
	Cash Flow from Financing					(115,000.00)
	Net Cash Flow					24,354.65
Beginning Cash						43,165.39
Ending Cash						67,520.04

Peyton Approved
Statement of cash Flow
For Year Ended 12/31/2017

Peyton Approved
Balance Sheet
As of December 31, 2015
Assets					Liabilities and Owners' Equity
	Current Assets:					Current Liabilities:
	Cash	31507.58				Accounts Payable	15086.84
	Accounts Receivable	35118.97				Wages Payable	1118.83
	Baking Supplies	8042.23				Interest Payable	121.53
	Merchandise Inventory	580.27
	Prepaid Rent	1215.32
	Prepaid Insurance	810.21
	Misc. Supplies	40.51
	Total Current Assets		77,315.09			Total Current Liabilities		16,327.20
						Long Term Liabilities:
	Long Term/Fixed Assets:					Notes Payable	10,000.00
	Baking Equipment	6000				Total Long Term Liabilities:		10,000.00
	Accumulated Depreciation	-677.79
	Net Fixed assets		5,322.21			Total Liabilities:		26,327.20
						Common Stock	20,000.00
						Retained Earnings	36,310.10
						Total Equity		56,310.10
	Total Assets:		82,637.30			Total Liabilities & Equity		82,637.30

Peyton Approved
Balance Sheet
As of December 31, 2016
Assets					Liabilities and Owners' Equity
	Current Assets:					Current Liabilities:
	Cash	43,165.39				Accounts Payable	16,970.00
	Accounts Receivable	42,633.00				Wages Payable	1,532.80
	Baking Supplies	7,318.86				Interest Payable	166.50
	Merchandise Inventory	794.97
	Prepaid Rent	1,665.00
	Prepaid Insurance	1,110.00
	Misc. Supplies	55.50
	Total Current Assets		96,742.72			Total Current Liabilities		18,669.30
						Long Term Liabilities:
	Long Term/Fixed Assets:					Notes Payable	15,000.00
	Baking Equipment	8,000.00				Total Long Term Liabilities:		15,000.00
	Accumulated Depreciation	-928.58
	Net Fixed assets		7,071.42			Total Liabilities:		33,669.30
						Common Stock	20,000.00
						Retained Earnings	50,144.84
						Total Equity		70,144.84
	Total Assets:		#########			Total Liabilities & Equity		#########

Peyton Approved
Income Statement
For Year Ended 12/31/2016
Bakery Sales		214,256.48
Merchandise Sales		770.76
Total Revenues			215,027.24
Cost of Goods Sold - Baked		73,159.59
Cost of Goods Sold - Merchandise		549.64
Total Cost of Goods Sold			73,709.23
Gross Profit			141,818.01
Operating Expenses:
Rent Expense		15,694.23
Wages Expense		6,821.76
Misc. Supplies Expense		1,668.18
Business License Expense		1,307.85
Misc. Expense		871.9
Depreciation Expense		433.36
Insurance Expense		697.52
Advertising Expense		740.74
Interest Expense		523.14
Telephone Expense		313.88
Total Operating Expenses:			29,072.56
Net Income			112,745.45

		2017		2016
Current Ratio (Working Capital )
Quick Ratio
A/R Turnover
Inventory Turnover
Gross margin
Return on Sales
Return on Equity
Return on Assets

Peyton Approved Second Location
Pro Forma Income Statement
For Year Ending 12/31/2018

Peyton Approved Second Location
Pro Forma Balance Sheet
As of December 31, 2018

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