CHAPTER 2

COOKIE CREATIONS

(Note: This is a continuation of the Cookie Creations from Chapter 1.)

CC2After 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 2021, the following activities take place.

Nov.8Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.

8She opens a bank account under the name Cookie Creations and transfers $500 from her personal account to the new account.

11Natalie pays $65 for advertising.

13She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. (Hint: Use Supplies account.)

14Natalie 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.

16Natalie 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.)

17She buys more baking equipment for $900 cash.

20She teaches her first class and collects $125 cash.

25Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down payment.

30Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2022.

Instructions

(a)Prepare journal entries to record the November transactions.

(b)Post the journal entries to general ledger accounts.

(c)Prepare a trial balance at November 30.

8 COOKIE CREATIONS (Note: This is a continuation of the Cookie Creations from Chapter 1.) CC2After researching the different forms of business organization. Natalie Kocbel decides to operate "Cookie Creations" as a proprietorship. She then starts the process of getting the business running. In November 2021, the following activities take place. Nov. 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. Il Natalie pays S65 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 S900 cash. 20 She teaches her first class and collects $125 cash. 25 Natalie books a second class for December 4 for S150. She receives $30 cash in advance as a down payment. 30 Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2022. Instructions (a) Prepare journal entries to record the November transactions Post the journal entries to general ledger accounts. (c) Prepare a trial balance at November 30. (b)