Kimmel, website for Cookie Creations Inc. that

Kimmel, website for Cookie Creations Inc. that

Kimmel, Accounting 5th edition CCC3 CONTINUING COOKIE CHRONICLE SOLUTION Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 and 2. ) CCC3 In November 2009 after having incorporated Cookie Creations Inc. , Natalie begins operations.

She has decided not to pursue the offer to supply cookies to Biscuits. Instead she will focus on offering cooking classes. The following events occur. Nov.

8 Natalie cashes in her U. S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 Natalie opens a bank account for Cookie Creations Inc. Natalie purchases $500 of Cookie Creations’ common stock.

11 Natalie designs a brochure and a poster to advertise the company and the services available. 11 Cookie Creations pays $95 to have the advertising brochures and posters printed. 14 Cookie Creations pays $125 to purchase baking supplies, such as flour, sugar, butter, and chocolate chips.

15 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $550. Natalie decides to start using it only in her new business.

She estimates that the equipment is currently worth $300, and she transfers the equipment into the business in exchange for additional common stock. 16 The company needs more cash to sustain its operations. Natalie’s grandmother lends the company $2,000 cash, in exchange for a two-year, 9% note payable. Interest and the principal are repayable at maturity. 17 Cookie Creations pays $900 for additional baking equipment. 18 Natalie schedules her first class for November 29.

She will receive $100 on the date of the class. 25 Natalie books a second class for December 5 for $150.She receives a $60 cash down payment, in advance.

29 Natalie teaches her first class, booked on November 18, and collects the $100 cash. 30 Natalie’s brother develops a website for Cookie Creations Inc. that the company will use for advertising. He charges the company $600 for his work, payable at the end of December. (Because the website is expected to have a useful life of two years before upgrades are needed, it should be treated as an asset. ) 30 Cookie Creations pays $1,200 for a one-year insurance policy.

30 Natalie teaches a group of elementary school students how to make Santa Claus cookies. At the end of he class, Natalie leaves an invoice for $300 with the school principal. The principal says that he will pass it along to the business office and it will be paid some time in December. 30 Natalie receives a $50 invoice for use of her cell phone. She uses the cell phone exclusively for Cookie Creations Inc. business.

The invoice is for services provided in November, and payment is due on December 15. Instructions (a) Prepare journal entries to record the November transactions. (b) Post the journal entries to the general ledger accounts.

(c) Prepare a trial balance at November 30, 2009. Kimmel, Accounting 5th editionSolution a. General Journal Date Account Titles Nov 8 No journal entry required. 8 8 No journal entry required.

Cash Common Stock No journal entry required. Advertising Supplies Cash Baking Supplies Cash Baking Equipment Common Stock 95 95 125 125 300 300 2000 2000 500 500 Debit Credit 11 11 14 15 16 Cash Notes Payable 17 Baking Equipment Cash No journal entry required. Cash Unearned Revenue 900 900 18 25 60 60 100 100 600 600 1200 1200 300 300 29 Cash Teaching Revenue 30 Website Accounts Payable 30 Prepaid Insurance Cash 30 Accounts Receivable Teaching Revenue Kimmel, Accounting 5th edition 0 Telephone Expense Accounts Payable b. T – Accounts CASH Nov.

8 Nov. 16 Nov. 25 Nov.

29 Nov. 30 Bal: 500 2000 60 100 340 Nov. 11 Nov. 14 Nov. 17 Nov.

30 95 125 900 1200 50 50 Baking Equipment Nov. 15 Nov. 17 Nov 30 Bal: 300 900 1200 Accounts Receivable Nov. 30 Nov. 30 Bal: 300 300 Website Nov. 30 Nov. 30 Bal: 600 600 Advertising Supplies Kimmel, Accounting 5th edition Nov.

11 Nov. 30 Bal: 95 95 Baking Supplies Nov. 14 Nov. 30 Bal: 125 125 Prepaid Insurance Nov.

30 Nov. 30 Bal: 1200 1200 Accounts Payable Nov. 30 Nov. 30 Nov. 30 Bal: 600 50 650 Unearned Revenue Nov. 25 Nov.

30 Bal: 60 60 Notes Payable Nov. 6 Nov. 30 Bal: 2000 2000 Kimmel, Accounting 5th edition Common Stock Nov. 8 Nov. 15 500 300 Nov.

30 Bal: 800 Teaching Revenue Nov. 29 Nov. 30 Nov. 30 Bal: 100 300 400 Telephone Expense Nov. 30 Nov. 30 Bal: c.

Trial Balance COOKIE CREATIONS INC. Trial Balance November 30, 2009 DEBIT Cash Accounts Receivable Advertising Supplies Baking Supplies Prepaid Insurance Baking Equipment Website $340 300 95 125 1200 1200 600 CREDIT 50 50 Kimmel, Accounting 5th edition Accounts Payable Unearned Revenue Notes Payable Common Stock Teaching Revenue Telephone Expense TOTALS: 50 $3910 $3910 650 60 2000 800 400