Question

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, s0.50 noncumulative, no par value. 10,000 shares authorized, 2,000 issued $10,000 Common stock, no par value, 100,000 shares authorized, 25,930 issued 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. Ap 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. Ot. 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). 3 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 Your answer is partially correct. Try again. Prepare the journal entries to record the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter 0 for the amounts. Record journal entries in the order displayed in the problem statement.) Dae Aerent Ties and Esplamation Drb Dec. 1 Cash 4,000 4,000 Preferred Stock Apr. 30 Cash Dividends 700 700 Dividends Payable Dividends Payable 700 June 30 Cash Cash Dividends 462 500 June 1 462,500 reve come Tax Expense 18.500 Oct. 31 18,500 Income Taxes Payable (To record income tax expense) TCash Dividends Oct. 31 700 7000 Dividends Payable (o record dividend declared) Your answer is partially correct. Try again. Prepare the statement of retained earnings for the year. (List items that increase retained earnings first. If answer is zero, please enter 0, do not leave any field blank.) COOKIE & COFFEE CREATIONS INC. Statement of Retained Earaing Month Ended October 31, 2021 Balance, October 31, 2021 Net Income/(Loss) 74,000 Add 74,000 Cash Dividends-Preferred 1,400 Less 72,600 Balance, October 31, 2021 SHOW LEST OF accoUNTS INK TO TEKT Your answer is partially correct. Try again. Prepare the stockholders' equity section of the balance sheet as of October 31, 2021. (Enter account name only and do not provide descriptive information.) COOKIE & COFFEE CREATIONS INC Partial Balance Sheet Month Ended October 31, 2021 Stockholders' Equity Stockholders' Equity 14,000 39,180 72,600 Retained Earnings Less 5000 Treasury Stock 112,530 Total Stockholders' Equity SHOW LIST OoF ACCOUNTS Your answer is partially correct. Try again. Prepare closing entries. (Use Operating Expenses and Income Tax Expense as the only expense accounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order displayed in the problem statement.) Account Titles and Explanation Date Debit Credit Sales Revenue Oct. 31 462,500 462,500 Income Summary (To close revenue account) Income Summary 370,000 Oct. 31 369,250 Operating Expenses Income Tax Expense 750 (To close expense accounts) Retained Earnings Oct. 31 1,400 Dividends Payable 1,400 (To close net income / (loss)) Open Show Work Click if you would like to Show Work for this question:

Answer 1

Prepare the accounting entries as provided below Account Title and explanation Credit Debit Date $ 4,000 Dec-01 Cash Preferred Stock 4,000 (to record entry for issue of preferred Stocks) Apr-30 Cash Dividends (2,800 shares $.05*1/2) Dividend Payable 700 700 (to recordentry for declaration of dividend) Jun-01 Dividend Payable 700 Cash 700 (to record entry for payment of Dividend Declared) Jun-30 Treasury Stock 500 cash 500 (to record enetry for re-purchase of 750 shares of common stock) Oct-31 Income tax expense $18,500 $18,500 Income tax payable (to record entry for income tax payable)

Oct-31 Cash Dividends (2,800 shares $.05*1/2) Dividend Payable (to record entry for declaration of dividend) 700 700

Cookie and coffee creations Inc. Statement of retained earnings Year Ended October 21, 2021 Balance, October 31, 2020 Net Income/(Loss) $ Add: 74,000 74,000 Less: $ Cash Dividends Preferred 1,400 $ Balance, October 31, 2021 72,600

Cookie and coffee creations Inc. Partial Balance sheet Year Ended October 21, 2021 Stockholders' Equity Paid in Capital $ Preferred Stock 14,000 $ Common Stock Total paid in Capital 25,930 $ 39,930 Retained Earnings $ 72,600 $ 112,530 Total Paid in Capital and Retained earnings Less: Treasury Stock Total Stockholders' Equity 500 $ 112,030

Prepare the closing entries as provided below Date Account Title and explanation Debit Oct-31 Sales Revenue Income Summary (to close revenue account) Credit $462,500 $462,500 Oct-31 Income Summary $388,500 $370,000 Operating Expenses $ 18,500 Income tax expenses |(to close expense account) Oct-31 Income Summary Retained Earnings |to close net income/(losses)) $74,000 74,000