Question

Cookie Creations Continuing Problem 3 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, 2020. (Note: This is a continuation of the Cookie Creations from Chapters 1 and 2.) CC3 In November 2020, 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.

Answer 1

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Cookie Creations Inc. Journal Enteries Date Particulars 8.11.2019 Cash a/c To Common Stock (Common stock issued for cash) Debit in $ Credit in $ 500 Dr. 500 95 11.11.2019 Supplies a/c Dr. To Cash (Supplies purchased for cash) 14.11.2019 125 Supplies a/c Dr. To Cash (Supplies purchased for cash) 125 300 15.11.2019 Equipment a/c Dr. To Common Stock (Common stock issued for Equip) 300 Dr. 2000 16.11.2019 Cash a/c To Note Payable (Note Payable issued) 2000 900 17.11.2019 Equipment a/c Dr. To Cash (Equipment purchased) 900 Dr. 25.11.2019 Cash a/c To Unearned Revenue (Cash received in advance from clients) 100 29.11.2019 Cash a/c Dr. To Service Revenue (Service performed for cash) 100 600 30.11.2019 Website a/c Dr. To Accounts Payable (Website created on account) 600 1200 30.11.2019 Prepaid Insurance a/c Dr. To Cash (Annual insuarnce paid in advance) 1200 Dr. 300 30.11.2019 Accounts Receivable a/c To Service Revenue (Services on account) Dr. 50 30.11.2019 Cell Phone expense a/c To Accounts Payable (Expense accrued)

Trial Balance For the month ending 30.11.2019 Unadjusted Debit in $ Credit in $ 340 300 1200 220 1200 600 650 Particulars Cash Accounts Receivable Prepaid Insurance Supplies Equipment Accum. Depre - Equip. Website Accounts Payable Interest Payable Unearned Revenue Note Payable Common Stock Service Revenue Cell Phone Expense Supplies Expense Depreciation Expense Interest Expense Utility Expense Totals 60 2000 800 400 50 3910 3910

Unearned Revenue Cash 95 60 Common Stock Note Payable Unearned Revenue Service Revenue Cash 500 Supplies 2000 Supplies 60 Equipment 100 Prepaid Insurance Bal 2660 125 900 1200 340 2660 2000 Note Payable Cash 2000 2000 Bal Accounts Receivable 2000 Service Revenue 300 300 Bal 300 300 Common Stock Cash 800 Equipment 800 Bal 500 300 800 Supplies Cash Cash Service Revenue 125 Bal 220 220 220 Cash Bal 400 Accounts Receivable 400 100 300 400 Cash Prepaid Insurance 1200 Bal 1200 1200 1200 Accounts Payable Cell Phone Expense 50 Bal 50 Common Stock Cash Equipment 300 900 Bal 1200 1200 1200 600 Accounts Payable Website 650 Cell Phone Expense 650 Bal 650