After researching the different forms of business organization, Natalie Koebel d
ID: 2342497 • Letter: A
Question
After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a proprietorship. She then starts the process of getting the business running. In November 2019, the following activities take place.
*******************PLEASE USE THE SAME FORMAT AND NUMBER OF BOXES TO MAKE IT EASY TO TRANSFER**************
Cookie Creations 03 a1-c After researching the different forms of business organization, Natalie Koebel decides to operate "Cookie Creations" as a proprietorship. She then starts the process of getting the business running. In November 2019, the following activities take place Nov. 8 Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name "Cookie Creations" and transfers $500 from her personal account to the new account. 11 Natalie pays $65 for advertising 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. (Hint: Use Supplies account.) 14 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 $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business 16 Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months. As a result, the note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.) 17 She buys more baking equipment for $900 cash 20 She teaches her first class and collects $125 cash 25 Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down payment. 30 Natalie pays $1320 for a one-year insurance policy that will expire on December 1, 2019 It is the end of November and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if she has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations' income, she must first make adjustments Natalie puts together the following additional informationExplanation / Answer
Cash
Date
Debit
Credit
Balance
Nov-08
500
500
Nov-11
65
435
Nov-13
125
310
Nov-16
2000
2310
Nov-17
900
1410
Nov-20
125
1535
Nov-25
30
1565
Nov-30
1320
245
End. Bal
245
Account receivable
Date
Debit
Credit
Balance
Nov-30
300
300
End. Bal
300
Supplies
Date
Debit
Credit
Balance
Nov-13
125
125
Nov-30
35
90
End. Bal
90
Prepaid insurance
Date
Debit
Credit
Balance
Nov-30
1320
1320
End. Bal
1320
Depreciation expense
Date
Debit
Credit
Balance
Beg. Bal
20
20
End. Bal
20
Equipment
Date
Debit
Credit
Balance
Nov-14
300
300
Nov-17
900
1200
End. Bal
1200
Utility expense
Date
Debit
Credit
Balance
Nov-30
45
45
End. Bal
45
Advertising expense
Date
Debit
Credit
Balance
Nov-11
65
65
End. Bal
65
Supplies expense
Date
Debit
Credit
Balance
Nov-30
35
35
End. Bal
35
Interest expense
Date
Debit
Credit
Balance
Beg. Bal
5
5
End. Bal
5
Accumulated depreciation
Date
Debit
Credit
Balance
Nov-30
20
20
End. Bal
20
Account payable
Date
Debit
Credit
Balance
Nov-30
45
45
End. Bal
45
Interest payable
Date
Debit
Credit
Balance
Nov-30
5
5
End. Bal
5
Unearned service revenue
Date
Debit
Credit
Balance
Nov-25
30
30
End. Bal
30
Notes payable
Date
Debit
Credit
Balance
Nov-16
2000
2000
End. Bal
2000
Owners capital
Date
Debit
Credit
Balance
Nov-08
500
500
Nov-14
300
800
End. Bal
800
Service revenue
Date
Debit
Credit
Balance
Nov-20
125
125
Nov-30
300
425
End. Bal
425
Adjustment entries
NO
Date
Account title & explanation
Debit
Credit
1
Nov-30
Supplies expense
35
Supplies
35
(To record supply used.)
2
Nov-30
Depreciation expense (1200/60)
20
Accumulated depreciation - equipment
20
(To record depreciation expense.)
3
Nov-30
Interest expense (2000*6%*0.5/12)
5
Interest payable
5
(To record accrued interest on notes payable.)
4
Nov-30
Account receivable
300
Service revenue
300
(To record service revenue on account.)
5
Nov-30
Utility expense
45
Utility payable
45
(To record utility bill to be paid in next month.)
Cookie creation
Adjusted trial balance sheet
Account title
Debit
Credit
Remarks
Cash
245
Account receivable
300
Supplies
95
Prepaid insurance
1320
Equipment
1200
Accumulated depreciation - Equipment
20
Account payable
45
Interest payable
5
Unearned service revenue
30
Notes payable
2000
Common stock
800
Service revenue
425
Supplies expense
35
Utilities Expense
45
Advertising Expense
65
Depreciation expense - equipment
20
3325
3325
Cookie creation
Income statement
Service revenue
425
Less:
Supplies expense
35
Utilities Expense
45
Advertising Expense
65
Depreciation expense - equipment
20
165
Net income
260
Cash
Date
Debit
Credit
Balance
Nov-08
500
500
Nov-11
65
435
Nov-13
125
310
Nov-16
2000
2310
Nov-17
900
1410
Nov-20
125
1535
Nov-25
30
1565
Nov-30
1320
245
End. Bal
245
Account receivable
Date
Debit
Credit
Balance
Nov-30
300
300
End. Bal
300
Supplies
Date
Debit
Credit
Balance
Nov-13
125
125
Nov-30
35
90
End. Bal
90
Prepaid insurance
Date
Debit
Credit
Balance
Nov-30
1320
1320
End. Bal
1320
Depreciation expense
Date
Debit
Credit
Balance
Beg. Bal
20
20
End. Bal
20
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