Question

Continuing Cookie Creations 05 b-g 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 $550, and Natalie would sell each one for $1,100. 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 method of accounting for inventory, and the following transactions happen during the month of January. Jan. 4 6 7 8 12 13 14 14 17 18 20 28 She buys five deluxe mixers on account from Kzinski Supply Co. for $2,750, terms n/30. She pays $100 freight on the January 4 purchase. 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. She collects the amount due from the neighborhood community center that was accrued at the end of December 2020. She sells three deluxe mixers on account for $3,300, FOB destination, terms n/30. The mixers cost $570 each (including freight). Natalie pays her cell phone bill previously accrued in the December adjusting journal entries. She pays $75 of delivery charges for the three mixers that were sold on January 12. She buys four deluxe mixers on account from Kzinski Supply Co. for $2,200, terms n/30. 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. She pays $80 freight on the January 14 purchase. She sells two deluxe mixers for $2,200 cash. Natalie issues a check to her assistant. Her assistant worked 20 hours in January and is also paid for the amount accrued at December 31, 2020. Recall that Natalie's assistant earns $8 an hour. Natalie collects amounts due from customers from the January 12 transaction. She pays Kzinski all amounts due. Cash dividends of $750 are paid. 28 31 31 The adjusted trial balance from December is presented below.

Answer 1

Unadjusted

Cookie Creations Journal entries Date Account 4-Jan Inventory Accounts Payable Credit Debit 2,750 Calculation 5 mixers bought 2,750 100 6-Jan Inventory Cash 100 570 7-Jan Accounts Payable Inventory =2,750/5+20 570 1 mixer returned 450 8-Jan Cash Accounts Receivable 450 3,300 3 mixers sold 12-Jan Accounts Receivable Sales Revenue 3,300 1,710 =(550+20)*3 12-Jan Cost of goods sold Inventory 1,710 75 13-Jan Accounts Payable Cash 75 75 14-Jan Freight-out Cash 75 2,200 4 mixers bought 14-Jan Inventory Accounts Payable 2,200 1,000 17-Jan Cash Common Stock 1,000 80 18-Jan Inventory Cash 80 2,200 2 mixers sold 20-Jan Cash Sales Revenue 2,200 1,140 =(550+20)*2 20-Jan Cost of goods sold Inventory 1,140 160 =20*8 28-Jan Salaries and wages expense Salaries and wages Payable Cash 56 216 3,300 28-Jan Cash Accounts Receivable 3,300 31-Jan Accounts Payable Cash 4,380 =2,750-570+2,200 4,380 750 31-Jan Dividends Cash 750

Date Credit Debit Date Prepaid Insurance $ 1,100 Op bal Cookie Creations T Accounts Date Debit Date Credit Date Debit Date Credit Cash Accounts Receivable Op bal $ 1,340 6-Jan $ 100 Op bal $ 1,450 8-Jan $ 450 8-Jan $ 450 13-Jan $ 75 12-Jan $ 3,300 28-Jan $ 3,300 17-Jan $ 1,000 14-Jan $ 75 20-Jan $ 2,200 18-Jan $ 80 28-Jan $ 3,300 28-Jan $ 216 31-Jan $ 4,380 31-Jans 750 Date Debit Date Credit Inventory Op bal $ 4-Jan $ 2,750 6-Jan $ 100 7-Jan $ 570 14-Jan $ 2,200 12-Jan $ 1,710 18-Jan $ 80 20-Jan $ 1,140 Bal. $ 1,100 Supplies 400 Op bal $ Bal. Bal. $ 2,614 Equipment $ 1,200 $ 1,000 Website $ 575 Bal. $ 1,710 Accumulated Depreciation Equipment Op bal $ 40 Op bal Op bal Bal. $ 400 Accounts Payable Op bal $ 75 7-Jan $ 570 4-Jan $ 2,750 13-Jan $ 75 14-Jan $ 2,200 31-Jan $ 4,380 Bal. 40 $ Bal. $ 1,200 Salaries and wages Payable 28-Jan $ 56 Op bal $ $ 575 Interest Payable Op bal Bal. $ Unearned Service Revenue Op bal $ Bal. Notes Payable Op bal 56 23 360 $ 2,000 23 $ 360 Bal. $ 2,000 Bal. $ Common Stock Op bal $ 800 17-Jan $ 1,000 Bal. Retained Earnings Op bal Bal. Dividends 750 2,712 31-Jan $ Bal. $ 1,800 Sales Revenue 12-Jan $ 3,300 20-Jan $ 2,200 Bal. Cost of goods sold 12-Jan $ 1,710 20-Jan $ 1,140 $ 2,712 Bal. $ 750 Salaries and wages expense 28-Jan $ 160 Freight-out 14-Jan $ 75 Bal. $ 5,500 Bal. $ 2,850 Bal. $ 160 Bal. $ 75

Unadjusted TB Debit Credit 2,614 1,000 1,710 400 1,100 1,200 40 575 Cookie Creations Account Names Cash Accounts Receivable Inventory Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Website Accounts Payable Interest Payable Salaries and wages Payable Unearned Service Revenue Notes Payable Common Stock Retained Earnings Dividends Sales Revenue Cost of goods sold Salaries and wages expense Freight-out Totals 23 360 2,000 1,800 2,712 750 5,500 2,850 160 75 12,434 12,434