Use the information provided in Problem P3-16 about Cookie Dough, Inc. (Cookie) to do the following:
a. Prepare all necessary journal entries until December 31, 2017. Provide an explanation for each journal entry.
b. Prepare T-accounts and post each journal entry to the appropriate T-accounts.
c. Prepare and post adjusting journal entries to their appropriate T-accounts. Adjusting entries are needed for the equipment, insurance, rent, and interest.
d. Prepare a trial balance as of December 31, 2017.
e. Prepare a balance sheet as of December 31, 2017 and an income statement for the period ended December 31, 2017. Prepare the closing journal entry and post the closing entry to the appropriate T-accounts.
f. Prepare a trial balance as of December 31, 2017, after the closing entry has been prepared.
g. Compare Cookie's net income with the amount of cash that was generated by the business. Which is a better indicator of how Cookie did? Why are they different? (When looking at the cash flow, consider the cash flows after the owners made their initial $20,000 investment.)
h. If Ernest asked you to evaluate Cookie's financial situation using the financial statements, what would you be able to tell him?

  • CreatedFebruary 26, 2015
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