Question

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Cookle Creations 13 Natalie's friend, Curtis Lesperance, decides to meet with Natalie after hearing that her discussions about a possible business partnership with her friend Katy Peterson have failed. (Natalie had decided that forming a partnership with Katy, a high school friend, would hurt their friendship. Natalie had also concluded that she and Katy were not compatible to operate a business venture together.) Because Natalie has been so successful with Continuing Cookie Chronicde and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other's business expertise. Curtis and Natalie next evaluate the different types of business organization. Because of the advantage of limited personal liability, they decide to form a corporation Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie's business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents to give her cooking-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff to bake the cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel time going from one place to another. Another advantage is that the coffee shop will have one central location for selling the mxers. The current market values of the assets of both businesses are as follows. Curtis's Coffee Continuing Cookle Chronicle $12,000 Cash $7,130 Accounts receivable 100 800 Inventory 450 1,200 Equipment 2,500 1,000 Continuing Cookie Chronicle decided not to buy the delivery van considered in Chapter 10. Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture. Curtis and Natalie then meet with a lawyer and form a corporation on November 1, 2017, called Cookie & Coffee Creations Inc. The articles of incorporation state that there will be two classes of shares that the corporation is authorized to issue: common shares and preferred shares. They authorize 100,000 no-par shares of common stock, and 10,000 no par shares of preferred stock with a $0.50 noncumulative dividend.

Answer 1

А B C D Debit Credit 71301 1001 2 Date Account Title 3 01-Nov Cash Accounts Receivables Inventory Equipment Common Stock (Issue of shares to Curtis for the assets brought) 450 2500 Cash Accounts Receivables Inventory Equipment Common Stock (Issue of shares to Natalie for the assets brought) 12000 8001 1200 1000 15000 18 19 Debit Credit 10000 10000 Date Account Title 20 01-Nov Cash 21 Preferred stock 22 (issue fo 20000 preferred stock shares of $ 0.50 each) 23 24 01-Nov Legal expenses on incorporation/ Preliminary Expenses 25 Common Stock 26 (Issue of $ 1 common stock shares to the lawyer) 27 750

A 1 Assets Amount liabilities 2 Inventory 1650 Common Stock 3 Equipment 3500 Preffered Shares 4 Cash 29130 Retained Earnings 5 Accounts Receivable 900 Amount 25930 10000 -750 6 7 Total Assets 1 33530 Total Liabilities & Equity 9250

B A 1 Assets Amount liabilities 2 Inventory =450+1200 Common Stock 3 Equipment =2500+1000 Preffered Shares 4 Cash =12000+7130+10000 Retained Earnings 5 Accounts Receivable =100+800 Amount =15000+10180+750 =20000*0.5 -750 6 =SUM(B3:B6) Total Liabilities & Equity =SUM(D3:06) 7 Total Assets 8