Question

Question 18 --/1 View Policies Current Attempt in Progress After establishing their company's fiscal year-end to be October 31, Natalie and Curtis begin operating Cookie & Coffee Creations Inc. on November 1, 2020. On that date, after the issuance of shares, the paid-in capital section of the company's balance sheet is as follows. Paid-in capital Preferred stock, $0.50 noncumulative, no par value, 10,000 shares authorized, 2,000 issued Common stock, no par value, 100,000 shares authorized, 25,930 issued $10,000 25,930 Cookie & Coffee Creations then has the following selected transactions during its first year of operations. Dec. 1 Issues an additional 800 preferred shares to Natalie's brother for $4,000. Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1. June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets. Oct. 31 The company has had a very successful first year of operations. It earned revenues of $462,500 and incurred operating expenses of $370,000 (including $750 legal fee, but excluding income tax). 31 Records income tax expense. (The company has a 20% income tax rate.) 31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1.

Answer 1

the the journal entries first year are of as cookie & creations for follows. Date particulars Debit (ah) creditlap DY yooo December 1 cash ale or To preferred stock arc. (To record the stock) 4000 Архіъо 700 cash dividends alo Dr 1 To dividend payable (to cash dividend record 700 alc June ol 700 Dividends payable an der To cash acc to record dividend payable) Too June 30 500 Tresury stock ale or To cash ale I Troscury stock record income tax ac Dr To income tax payable ac (To record income tax) cash dividendo al Dr. October 31 18500 Too october 31 700 To dividends payable of ( To record dividend) 9 The statement year of of retained earnings for inding October 31, 2021. tollowing

The balance balance of the year 2020 November 1 0 Addi Net Income 74ooo (though balang Sheet & P/L ak) 7u00 o ress : Cash & dividends Tuoo October 31, 2021(bai) 72600 The balance sheet as of Oct 312021 stock holders equity paid $0.50 capital non cutoulative [Preferred stock) no par value autorized (10000) The stocks issued (2800) (4000 the autho 2 authorized Shares (100ooo) The issued [ 25930] 251 80 shares outstanding 25930 39930 Total capital paid 72 600 The retaine earnings tained

Total capital paid & the retained earning 112530 dess: Tresury 500 112030 stockholders equity. iv) The closing entries Dato Particulars Amt DY Ant October 4 62500 3 sales Revenue al To income summ 462500 ary (To close revenue a/c) October Income Summary a orl 38850ol To TO to Operating axp al income tax ald close expace) 370000 T 18500 October income summary are or I To retained earnings at 74oool 31 74000 ( To close net income a