Acc280 Financial Accounting: Continuing Cookie Chronicles 2 (CCC2) - as proprietorship

Continuing Cookie Chronicles 2 (CCC2)

After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a proprietorship. She then starts the process of getting the business running. In November 2009, the following activities take place.

November Transactions
Nov. 8  Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
8  She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account.
11  Natalie pays $165 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Supplies.)
13  She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
14  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 $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business.
16  Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months.As a result,the note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)
17  She buys more baking equipment for $900 cash.
20  She teaches her first class and collects $125 cash.
25  Natalie books a second class for December 4 for $150. She receives $30 cash in advance
as a down payment.
30  Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2010.

Instructions

(a) Use the journal template provided and prepare journal entries to record the November transactions. Remember to use correct journal entry formatting.

(b) Post the journal entries to general ledger accounts. Remember to use correct posting references. Also, note that we do not use descriptions in the ledger account "description" column for regular journal entry postings.

(c) Prepare a trial balance at November 30. Be sure to total the columns of your trial balance. Do NOT include accounts that do not have a ledger balance.

BUY:  Continuing Cookie Chronicles 2 (CCC2)

Acc280 Financial Accounting: Continuing Cookie Chronicles 2 (CCC2) - as proprietorship

Continuing Cookie Chronicles 2 (CCC2)

After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a proprietorship. She then starts the process of getting the business running. In November 2009, the following activities take place.

November Transactions
Nov. 8  Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
8  She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account.
11  Natalie pays $165 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Supplies.)
13  She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
14  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 $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business.
16  Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months.As a result,the note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)
17  She buys more baking equipment for $900 cash.
20  She teaches her first class and collects $125 cash.
25  Natalie books a second class for December 4 for $150. She receives $30 cash in advance
as a down payment.
30  Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2010.

Instructions

(a) Use the journal template provided and prepare journal entries to record the November transactions. Remember to use correct journal entry formatting.

(b) Post the journal entries to general ledger accounts. Remember to use correct posting references. Also, note that we do not use descriptions in the ledger account "description" column for regular journal entry postings.

(c) Prepare a trial balance at November 30. Be sure to total the columns of your trial balance. Do NOT include accounts that do not have a ledger balance.

Tutorial:  Continuing Cookie Chronicles 2 (CCC2)

Acc280 Financial Accounting: Continuing Cookie Chronicles 2 (CCC2) - as proprietorship

Continuing Cookie Chronicles 2 (CCC2)

After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a proprietorship. She then starts the process of getting the business running. In November 2009, the following activities take place.

November Transactions
Nov. 8  Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.
8  She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account.
11  Natalie pays $165 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Supplies.)
13  She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.
14  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 $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business.
16  Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months.As a result,the note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)
17  She buys more baking equipment for $900 cash.
20  She teaches her first class and collects $125 cash.
25  Natalie books a second class for December 4 for $150. She receives $30 cash in advance
as a down payment.
30  Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2010.

Instructions

(a) Use the journal template provided and prepare journal entries to record the November transactions. Remember to use correct journal entry formatting.

(b) Post the journal entries to general ledger accounts. Remember to use correct posting references. Also, note that we do not use descriptions in the ledger account "description" column for regular journal entry postings.

(c) Prepare a trial balance at November 30. Be sure to total the columns of your trial balance. Do NOT include accounts that do not have a ledger balance.

Tutorial:  Continuing Cookie Chronicles 2 (CCC2)

Acc280 Financial Accounting: Continuing Cookie Chronicle 3 (CCC3) - as proprietorship

Chapter 3 - Continuing Cookie Chronicles 3 (CCC3)

Note: For transaction 3, round depreciation to the nearest dollar.

It is the end of November and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if she has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations’ income, she must first make adjustments.

Natalie puts together the following additional information.

1. A count reveals that $60 of brochures and posters remain at the end of November.

2. A count reveals that $35 of baking supplies were used during November.

3. Natalie estimates that all of her baking equipment will have a useful life of 5 years or 60 months. (Assume Natalie decides to record a full month’s worth of depreciation, regardless of when the equipment was obtained by the business.)

4. Natalie’s grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)

5. On November 30, a friend of Natalie’s asks her to teach a class at the neighborhood school. Natalie agrees and teaches a group of 35 first-grade students how to make Santa Claus cookies. The next day, Natalie prepares an invoice for $300 and leaves it with the school prin­cipal. The principal says that he will pass the invoice along to the head office, and it will be paid sometime in December.

6. Natalie receives a cellphone bill for $45. She uses her cellphone only for business. The bill is for services provided during November and is due December 15.

Instructions

Using the information that you have gathered through Chapter 2, and based on the new infor­mation above, do the following.
(a) Prepare and post the adjusting journal entries using the general journal template provided. Again, remember to use correct formatting in both the journal and the ledger.

(b) Prepare an adjusted trial balance using the correct worksheet in your template workbook. Be sure to total the columns of your ATB and include only those accounts that have a balance.

(c) Using the adjusted trial balance, calculate Cookie Creations’ net income or net loss for the month of November. You are not required to prepare an income statement.

Tutorial:  Continuing Cookie Chronicle 3 (CCC3)

Acc280 Financial Accounting: Continuing Cookie Chronicle 4 (CCC4) - as proprietorship

Continuing Cookie Chronicle 4 (CCC4)

Note that this is a rather difficult problem. You are asked to prepare financial statements and prepare and post closing entries, but you were not given the specific transactions for December. Instead, you are given the Adjusted Trial Balance for Dec. 31. I recommend that you take the balances on the ATB and write them in the correct ledger accounts. Just make a note to yourself in each ledger that this is the "Dec. 31 balance." Of course, if we were REALLY doing a set of books, we would have posted the entries for Dec. and this wouldn't be necessary.

Natalie had a very busy December.At the end of the month,after journalizing and post­ing the December transactions and adjusting entries. Natalie prepared the following adjusted trial balance.

COOKIE CREATIONS
Adjusted Trial Balance
December 31, 2009
Debit Credit
Cash $1,180
Accounts Receivable 875
Baking Supplies 350
Prepaid Insurance 1,210
Baking Equipment 1,200
Accumulated Depreciation - Baking Equipment $ 40
Accounts Payable 75
Salaries Payable 56
Interest Payable 15
Unearned Revenue 300
Notes Payable 2,000
N. Koebel, Capital 800
N. Koebel, Drawing 500
Teaching Revenue 4,515
Salaries Expense 1,006
Telephone Expense 125
Advertising Supplies Expense 165
Baking Supplies Expense 1,025
Depreciation Expense 40
Insurance Expense 110
Interest Expense 15
                            $7,801 $7,801

Instructions:

Using the information in the adjusted trial balance, do the following.

(a) Prepare an income statement and a statement of owner’s equity for the 2 months ended December 31, 2009, and a classified balance sheet as at December 31, 2009. The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2011.

(b) Natalie has decided that her year-end will be December 31, 2009. Prepare and post closing entries as of December 31, 2009.

(c) Prepare a post-closing trial balance.

BUY:  Continuing Cookie Chronicle 4 (CCC4)

Chapter 5 - Continuing Cookie Chronicle 5 (CCC5) - as proprietorship

Continuing Cookie Chronicle 5 (CCC5)

Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European mixers. The owner of Kzinski Supply Co. has approached Natalie to become the exclusive distributor of these fine mixers in her state. The current cost of a mixer is approximately $575, and Natalie would sell each one for $1,150. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified. In the end, Natalie decides to use the perpetual inventory system to track her inventory.

The following transactions happen during the month of January.
Date Transaction
Jan 4 Bought five deluxe mixers on account from Kzinski Supply Co. for $2,875, FOB shipping point, terms n/30.
6 Paid $100 freight on the January 4 purchase.
7 Returned one of the mixers to Kzinski because it was damaged during shipping. Kzinski issues Cookie Creations credit for the cost of mixer plus $20 for the cost of freight that was paid on January 6 for one mixer
8 Collected $375 of the accounts receivable from December 2009.
12 Three deluxe mixers are sold on account for $3,450, FOB destination, terns n/30. (Cost of goods sold is $595 per mixer.)
14 Paid the $75 of delivery charges for the three mixers that were sold on January 12.
14 Bought four deluxe mixers on account from Kzinski Supply Co. for $2,300, FOB ship ping point, terms n/30.
17 Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She invests an additional $1,000 cash in Cookie Creations.
18 Paid $80 freight on the January 14 purchase
20 Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is $595 per mixer.)
28 Natalie issued a check to her assistant for all the help the assistant has given her during the month. Her assistant worked 20 hours in January and is also paid the $56 owed at December 31, 2009. (Natalie’s assistant earns $8 an hour.)
28 Collected the amounts due from customers for the January 12 transaction.
30 Paid a $145 cellphone bill ($75 for the December 2009 account payable and $70 for the month of January). (Recall that the cellphone is used only for business purposes.)
31 Paid Kzinski all amounts due.
31 Natalie withdrew $750 cash for personal use.

As of January 31, the following adjusting entry data is available.

1. A count of baking supplies reveals that none were used in January.

2. Another month’s worth of depreciation needs to be recorded on the baking equipment bought in November. (Recall that the baking equipment has a useful life of 5 years or 60 months and no salvage value.)

3. An additional month’s worth of interest on her grandmother’s loan needs to be accrued. (The interest rate is 6%.)

4. During the month, $110 of insurance has expired.

5. An analysis of the unearned revenue account reveals that Natalie has not had time to teach any of these lessons this month because she has been so busy selling mixers. As a result, there is no change to the unearned revenue account. Natalie hopes to complete the remaining lessons in February.

6. An inventory count of mixers at the end of January reveals that Natalie has three mixers remaining.

Instructions

Using the information from previous chapters and the new information above, do the following.

(a) Prepare and post the January 2010 transactions.

(b) Prepare a trial balance.

(c) Prepare and post the adjusting journal entries required.

(d) Prepare an adjusted trial balance.

(e) Prepare a multiple-step income statement for the month ended January 31, 2010. 

BUY:  Continuing Cookie Chronicle 5 (CCC5)

Continuing Cookie Chronicle 5 (CCC5) - 2010 New Version

Continuing Cookie Chronicle (New Version - 2010)
(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 4.)

CCC5 Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is to become the exclusive distributor of a line of fine European mixers. The current cost of a mixer is approximately $575, and Natalie would sell each one for $1,150. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified.

Natalie asks you the following questions.
1. “Would you consider these mixers to be inventory? Or, should they be classified as supplies or equipment?”
2. “I’ve learned a little about keeping track of inventory using both the perpetual and the periodic systems of accounting for inventory. Which system do you think is better? Which one would you recommend for the type of inventory that I want to sell?”
3. “How often do I need to count inventory if I maintain it using the perpetual system? Do I need to count inventory at all?”

In the end, Natalie decides to use the perpetual method of accounting for inventory, and the following transactions happen during the month of January.
Jan. 4 She buys five deluxe mixers on account from Kzinski Supply Co. for $2,875, terms n/30.
6 She pays $100 freight on the January 4 purchase.
7 Natalie returns one of the mixers to Kzinski because it was damaged during shipping. Kzinski issues Cookie Creations credit for the cost of the mixer plus $20 for the cost of freight that was paid on January 6 for one mixer.
8 She collects the amount due from the neighborhood community center that was accrued at the end of December 2009.
12 She sells three deluxe mixers on account for $3,450, FOB destination, terms n/30. The mixers cost $595 each (including freight).
13 Natalie pays her cell phone bill previously accrued in the December adjusting journal entries.
14 She pays $75 of delivery charges for the three mixers that were sold on January 12.
14 She buys four deluxe mixers on account from Kzinski Supply Co. for $2,300, terms n/30.
17 Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She issues additional common stock for $1,000.
18 She pays $80 freight on the January 14 purchase.
20 She sells two deluxe mixers for $2,300 cash.
28 Natalie issues a check to her assistant. Her assistant worked 20 hours in January and is also paid for amounts owing at December 31, 2009. Recall that Natalie’s assistant earns $8 an hour.
28 Natalie collects amounts due from customers in the January 12 transaction.
31 She pays Kzinski all amounts due.
31 Cash dividends of $750 are paid.

As of January 31, the following adjusting entry data are available.
1. A count of brochures and posters reveals that none were used in January.
2. A count of baking supplies reveals that none were used in January.
3. Another month’s worth of depreciation needs to be recorded on the baking equipment bought in November. (Recall that the baking equipment has a useful life of 5 years or 60 months.)
4. One month’s worth of amortization (write-off) needs to be recorded on the website.
(Recall that the website has a useful life of 2 years or 24 months.)
5. An additional month’s worth of interest on her grandmother’s loan needs to be accrued.  (The interest rate is 9%.)
6. One month’s worth of insurance has expired.
7. Natalie receives her cell phone bill, $75. The bill is for services provided in January and is due February 15. (Recall that the cell phone is used only for business purposes.)
8. An analysis of the unearned revenue account reveals that Natalie has not had time to teach any of these lessons this month because she has been so busy selling mixers. As a result there is no change to the unearned revenue account. Natalie hopes to book the outstanding lessons in February.
9. An inventory count of mixers at the end of January reveals that Natalie has three mixers remaining.

Instructions

Using the information that you have gathered and the general ledger accounts that you have prepared through Chapter 4, plus the new information above, do the following.
(a) Answer Natalie’s questions.
(b) Prepare and post the January 2010 transactions.
(c) Prepare a trial balance.
(d) Prepare and post the adjusting journal entries required.
(e) Prepare an adjusted trial balance.
(f) Prepare a multiple-step income statement and retained earnings statement for the month ended January 31, 2010.
(g) Prepare a classified balance sheet as of January 31, 2010.

BUY:  Continuing Cookie Chronicle 5 (CCC5)