Your dog, Peyton, has severe allergies and cannot have the usualstore-bought dog treats. You have been making homemade treats forhim that are allnatural and hypoallergenic. Over the past year, youhave been making and selling these treats out of your home, and youhave been quite successful. You now have an opportunity to openyour own dog treat bakery. You have decided on a corporate form ofbusiness and have named your company “Peyton Approved.” To completeMilestone One, use accepted accounting principles to follow andrecord your business transactions for a three-month period. Youwill find the provided data for your workbook in the appendix atthe end of this document. The data have been separated from theprompt so that you can more easily view the full scope of theassignment. Links have been provided to help you locate theinformation you need as you move through each step. Specifically,the following critical elements must be addressed: I. Recordfinancial data that accurately captures business transactionsaccording to accepted accounting principles. A. Step One: Completethe “July Journal Entries” tab in your workbook using the Step Onedata in the appendix. B. Step Two: Complete the “August JournalEntries” tab in your workbook using the Step Two data in theappendix. C. Step Three: Complete the “September Journal Entries”tab in your workbook using the Step Three data and updated scenarioinformation in the appendix. Note that there was an additional lineof products added this month, so you must first complete the“Inventory Valuation” tab in your workbook and then copy thejournal entries from the inventory evaluation page into yourjournal for this month to ensure the impact of merchandising isreflected in your reporting.The following events occur in July,2018: July 1: You take $10,000 from your personal savings accountand buy common stock in Peyton Approved. July 1: Purchase $6,500 inbaking supplies from vendor, on account. July 3: Your parents lendthe company $10,000 cash in exchange for a two-year, 6% notepayable. Interest and the principal are repayable at maturity. July7: Enter into a lease agreement for bakery space. The agreement isfor 1 year. The rent is $1,500 per month, and the last month’s rentpayment of $1,500 is required at time of lease agreement. Thepayment was made in cash. Lease period is effective July 1, 2018,through June 30, 2019. July 10: Pay $375 to the county for abusiness license. July 11: Purchase a cash register for $250(deemed to be not material enough to qualify as depreciableequipment—use misc. exp.). July 13: You have baking equipment,including an oven and mixer, which you have been using for yourhome-based business and will now start using in the bakery. Youestimate that the equipment is currently worth $6,000, and youtransfer the equipment into the business in exchange for additionalcommon 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-timehelper to be paid $12 per hour. Pay periods are the 1st through the15th and 16th through the end of the month, with paydays being the20th for the first pay period and the 5th of the following monthfor the second pay period. (No entry is required on this date; itis here for informational purposes only.) July 30: Receivedtelephone bill for July in amount of $75. Payment is due on August10. July 31: Pay $2,400 for a 12-month insurance policy. Policyeffective dates are August 1, 2018, through July 31, 2019. July 31:Accrue wages earned for employee for period of 16th through 31st ofJuly (Wage calculations table provided below). July 31: Total Julybakery sales were $15,000. $5,000 of these sales are on accountsreceivable. Step Two Data (Click on the link to return to theprompt.) The following events occur in August, 2018: August 5: Paidemployee for period ending 7/31. August 8: Receive payments fromcustomers towards accounts receivable in amount of $3,800. August10: Paid July telephone bill. August 15: Purchase additional bakingsupplies in amount of $5,000 from vendor, on account. August 15:Accrue wages earned for employee from period of 1st through 15th ofAugust (Wage calculations table provided below). August 15: Payrent on bakery space. August 18: Receive payments from customerstowards accounts receivable in amount of $3,000. August 20: Paid$8,500 toward baking supplies vendor payable. August 20: Payemployee for period ending 8/15. August 22: $300 in office suppliespurchased. August 31: Received telephone bill for August in amountof $75. Payment is due on September 10. August 31: Accrue wagesearned for employee for period of August 16th through August 31st(Wage calculations table provided below). August 31: August bakerysales total $20,000. $7,500 of this total is on accountsreceivable. Step Three (Click on the link to return to the prompt.)Updated Scenario: Many customers have been asking for morehypoallergenic products, so in September you start carrying a lineof hypoallergenic shampoos on a trial basis. The followinginformation relates to the purchase and sales of the shampoo: ? Youuse the perpetual inventory method. Although you could use thefollowing valuation methods —FIFO, LIFO, or weighted average, youchoose to use the FIFO method. Data: The following events occur inSeptember, 2018: September 1: Paid dividends to self in amount of$10,000. September 5: Pay employee for period ending 8/31.September 7: Purchase merchandise for resale. See “InventoryValuation” tab for details. September 8: Receive payments fromcustomers toward accounts receivable in amount of $4,000. September10: Pay August telephone bill. September 11: Purchase bakingsupplies in amount of $7,000 from vendor on account. September 13:Paid on supplies vendor account in amount of $5,000. September 15:Accrue employee wages for period of September 1 through September15. September 15: Pay rent on bakery space: $1,500. September 15:Record merchandise sales transaction. See “Inventory Valuation” tabfor details. September 15: Record impact of sales transaction onCOGS and the inventory asset. See “Inventory Valuation” tab fordetails. September 20: Pay employee for period ending 9/15.September 20: Purchase merchandise inventory for resale tocustomers. See “Inventory Valuation” tab for details. September 24:Record sales of merchandise to customers. See “Inventory Valuation”tab for details. September 24: Record impact of sales transactionon COGS and the inventory asset. See “Inventory Valuation” tab fordetails. September 30: Purchase merchandise inventory for resale tocustomers. See “Inventory Valuation” tab for details. September 30:Accrue employee wages for period of September 16th throughSeptember 30th September 30: Total September bakery sales are$20,000. $6,000 of these sales are on accounts receivable. Wagecalculation data: Month Hours Rate Pay 31 Jul. 10 12 120 15 Aug. 4012 480 31 Aug. 35 12 420 15 Sep. 38 12 456 30 Sep. 40 12 480