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)

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)