How do I interpret this in my attempt to make adjusting entries for the first transaction? The transaction is what you see below in the picture.

Prompt: Specifically, the following critical elements must be addressed: Demonstrate the year-end adjustment process. - A. Prepare the adjusting journal entries in the Adjusting Entries tab in the provided workbook. 4 1. Scenario for adjusting entries: Year end is December 31, 2017. Peyton Baking Company uses the following accounting practices: Inventory: Periodic, FIFO for both baking and merchandise o Baking supplies: $27,850 ending inventory Trial Balance 2017 Unadjusted trial balance Debit Credit 64.713.72 165,250.00 25.750.00 Adjusting entries Debit Credit Account Cash Baking Supplies Merchandise Inventory (FIFO) Adjusted trial balance Debit Credit 64,713.72 165 250.00 25.750.00