Reference no: EM13846111

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 and 2.)

CCC3 In November 2014, 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.

8 Natalie purchases $500 of Cookie Creations' common stock.

11 Cookie Creations purchases paper and other office supplies for $95. (Use Supplies.)

14 Cookie Creations pays $125 to purchase baking supplies, such as flour, sugar, butter, and chocolate chips. (Use Supplies.)

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 called Website.)

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 the 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

(b) Post the journal entries to the general ledger accounts.

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 3.)

CCC4 Cookie Creations is gearing up for the winter holiday season. During the month of December 2014, the following transactions occur.

Dec. 1  Natalie hires an assistant at an hourly wage of $8 to help with cookie making and some administrative duties.

5 Natalie teaches the class that was booked on November 25. The balance outstanding is received.

8 Cookie Creations receives a check for the amount due from the neighborhood school for the class given on November 30.

9 Cookie Creations receives $750 in advance from the local school board for five classes that the company will give during December and January.

15 Pays the cell phone invoice outstanding at November 30.

16 Issues a check to Natalie's brother for the amount owed for the design of the website.

19 Receives a deposit of $60 on a cookie class scheduled for early January.

23 Additional revenue during the month for cookie-making classes amounts to $4,000. (Natalie has not had time to account for each class individually.) $3,000 in cash has been collected and $1,000 is still outstanding. (This is in addition to the December 5 and December 9 transactions.)

23 Additional baking supplies purchased during the month for sugar, flour, and chocolate chips amount to $1,250 cash.

23 Issues a check to Natalie's assistant for $800. Her assistant worked approximately 100 hours from the time in which she was hired until December 23.

28   Pays a dividend of $500 to the common shareholder (Natalie).

As of December 31, Cookie Creations' year-end, the following adjusting entry data are provided.

1. A count reveals that $45 of brochures and posters were used.

2. Depreciation is recorded on the baking equipment purchased in November. The baking equipment has a useful life of 5 years. Assume that 2 months' worth of depreciation is required.

3. Amortization (which is similar to depreciation) is recorded on the website. (Credit the Website account directly for the amount of the amortization.) The website is amortized over a useful life of 2 years and was available for use on December 1.

4. Interest on the note payable is accrued. (Assume that 1.5 months of interest accrued during November and December.) Round to nearest dollar.

5. One month's worth of insurance has expired.

6. Natalie is unexpectedly telephoned on December 28 to give a cookie class at the neighborhood community center on December 31. In early January Cookie Creations sends an invoice for $450 to the community center.

7. A count reveals that $1,025 of baking supplies were used.

8. A cell phone invoice is received for $75. The invoice is for services provided during the month of December and is due on January 15.

9. Because the cookie-making class occurred unexpectedly on December 31 and is for such a large group of children, Natalie's assistant helps out. Her assistant worked 7 hours at a rate of $8 per hour.

10. An analysis of the unearned revenue account reveals that two of the five classes paid for by the local school board on December 9 still have not been taught by the end of December. The $60 deposit received on December 19 for another class also remains unearned.

Instructions

Using the information that you have gathered and the general ledger accounts that you have prepared through Chapter 3, plus the new information above, do the following.

(a) Journalize the above transactions.

(b) Post the December transactions. (Use the general ledger accounts prepared in Chapter 3.)

(c) Totals $8,160

(c) Prepare a trial balance at December 31, 2014.

(d) Prepare and post adjusting journal entries for the month of December.

(e) Prepare an adjusted trial balance as of December 31, 2014.

(f ) Prepare an income statement and a retained earnings statement for the 2-month period ending December 31, 2014, and a classified balance sheet as of December 31, 2014.

(g) Prepare and post closing entries as of December 31, 2014.

(h) Prepare a post-closing trial balance.

(c) Totals                          $8,160

(e) Totals                          $8,804

(f) Net income                  $3,211

(h) Totals                          $6,065

Next Part

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 12.)

CCC13 The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2018 for the years 2018 and 2017, and the income statements for the years ended October 31, 2017 and 2018, are presented below.

COOKIE & COFFEE CREATIONS INC.

Balance Sheet

October 31

Assets		2018		2017
Cash		$  22,324		$  5,550
Accounts receivable		3,250		2,710
Inventory		7,897		7,450
Prepaid expenses		5,800		6,050
Equipment		102,000		75,500
Accumulated depreciation		(25,200)		(9,100)
Total assets		$116,071		$88,160
Liabilities and Stockholders' Equity
Accounts payable		$    1,150		$  2,450
Income taxes payable		9,251		7,200
Dividends payable		27,000		27,000
Salaries and wages payable		7,250		1,280
Interest payable		188		0
Note payable-current portion		4,000		0
Note payable-long-term portion		6,000		0
Preferred stock, no par, $6 cumulative-
3,000 and 2,800 shares issued,
respectively		15,000		14,000
Common stock, $1 par-25,180
shares issued		25,180		25,180
Additional paid in capital-treasury stock		250		250
Retained earnings		20,802		10,800
Total liabilities and stockholders' equity		$116,071		$88,160

COOKIE & COFFEE CREATIONS INC.

Income Statement

Year Ended October 31

	2018		2017
Sales	$485,625		$462,500
Cost of goods sold	222,694		208,125
Gross profit	262,931		254,375
Operating expenses    Salaries and wages expense	147,979		146,350
Depreciation expense	17,600		9,100
Other operating expenses	48,186		42,925
Total operating expenses	213,765		198,375
Income from operations	49,166		56,000
Other expenses    Interest expense	413		0
Loss on disposal of plant assets	2,500		0
Total other expenses	2,913		0
Income before income tax	46,253		56,000
Income tax expense	9,251		14,000
Net income	$  37,002		$  42,000

Additional information:

Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more kitchen equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance.

Instructions

(a) Calculate the following ratios for 2017 and 2018.

1. Current ratio

2. Debt to total assets

3. Gross profit rate

4. Profit margin

5. Return on assets (Total assets at November 1, 2016, were $33,180.)

6. Return on common stockholders' equity (Total common stockholders' equity at November 1, 2016, was $23,180. Dividends on preferred stock were $16,800 in 2017 and $18,000 in 2018).

(b) Prepare a horizontal analysis of the income statement for Cookie & Coffee Creations Inc. using 2017 as a base year.

Attachment:- Finalaccounting.xlsx