Peyton Approved Case Study

Peyton Approved is a bakery that sells dog treats, these treats are all natural treats that any dog would love! Our company specializes in hypoallergenic treats for dogs with allergies that cant have store bought treats. As a company we are growing and would love to expand from out of our home. The purpose of this memo is to take out a loan to further expand Peyton Approved.
Overview of the Company’s Accounting System
The Accrual basis of accounting is used for Peyton Approved. The Accrual basis of accounting records each transaction as it occurs. Revenues are recorded when earned and expenses are recorded when incurred. When using the Accrual basis of accounting a business is able to see a clear picture of its revenues and expenses. It is important that Peyton Approved keeps track of revenue and expenses, especially only when revenue is earned and expenses only when they have been incurred. When transactions are made, such as for baking supplies it is recorded in our ledgers. In an accounting cycle each step is important, if you were to miss a step then each step after will need to be adjusted. For a successful business each step needs to be completed with accuracy. If a

step were to be missed then we would not have full details on the businesses profits or losses.
Accounting Process and Internal Controls for Cash
Peyton Approved uses the accounting cycle made of ten steps.

When a business follows the accounting cycle they are making the correct steps towards a successful business. The accounting cycle makes sure that every transaction is recorded. For three months Peyton approved journalized to track transactions. An accounting cycle has ten steps, in steps 1-4 journal entries and T-accounts are prepared. In steps 5-7 the trial balance and adjusted entries are completed and in the final steps, 8-10 the income statement, a statement of retained earnings, a balance sheet, the closing entries, the post closing trial balance, and reversing entries are completed. Peyton Approved promotes operation efficiency, and it ensures accurate and reliable accounting records by following the Accrual basis of

accounting.
Results of Operations and Strengths and Weaknesses of the Company
After looking at Peyton Approved’s accounting cycle workbook we can draw a conclusion that the company is growing rapidly and that it is time to expand out of our home. Not every company is perfect and it will have strengths and weaknesses, it is important to know the weaknesses so they can be fixed before it further affects the company. When viewing our closing entries you will see we paid $3000.00 in dividends, but this does not hurt us much. Our financial statements say that as a whole we are not losing money. Income for Peyton Approved is directly correlated with sales. Peyton approved has a low debt ratio and a high profit margin. A current ratio measures the company’s ability to pay current liabilities from current assets. A high current ration indicates that the business has sufficient current assets to maintain normal business operations.
Analysis and Opportunities
Peyton Approved is going in the correct direction; our dog treats are seeing much demand. Our company had a net income of $32,184.07 in 3 months. To assure the success of Peyton Approved, the company should expand. If the company expands outside of its home, one day Peyton Approved will be able to have a pet food line on top of the treat line, this would bring in more revenue and would assure a healthy, hypoallergenic treat or meal for any pet.
Peyton Approved is headed in a successful direction and will continue to do so if it expands its workspace and then its product line. Currently our accounting cycle workbook shows that our total revenues are $60,221.00, with a net income of $32,184.07 after total expenses are taken into consideration. We have done a fantastic job at keeping our workbook accurate so that we can reflect the weaknesses and strengths of our company. We hope that you take all this information into consideration when thinking about lending us a loan to expand our growing bakery.