Continuing Cookie Chronicle 1
Continuing Cookie Chronicle
CCC1 Natalie Koebel spent much of her childhood learning the art of cookie-making
from her grandmother. They spent many happy hours mastering every type of cookie
imaginable and later devised new recipes that were both healthy and delicious. Now
at the start of her second year in college, Natalie is investigating possibilities for
starting her own business as part of the entrepreneurship program in which she is
enrolled.
A long-time friend insists that Natalie has to include cookies in her business plan.
After a series of brainstorming sessions, Natalie settles on the idea of operating a
cookie-making school. She will start on a part-time basis and offer her services in
people’s homes. Now that she has started thinking about it, the possibilities seem
endless. During the fall, she will concentrate on holiday cookies. She will offer group
sessions (which will probably be more entertainment than education) and individual
lessons. Natalie also decides to include children in her target market. The first
difficult decision is coming up with the perfect name for her business. She settles on
“Cookie Creations,” and then moves on to more important issues.
Instructions
(a) What form of business organization—proprietorship, partnership, or
corporation— do you recommend that Natalie use for her business? Discuss
the benefits and weaknesses of each form that Natalie might consider.
(b) Will Natalie need accounting information? If yes, what information will she
need and why? How often will she need this information?
(c) Identify specific asset, liability, revenue, and expense accounts that Cookie
Creations will likely use to record its business transactions.
(d) Should Natalie open a separate bank account for the business? Why or why
not?
(e) Natalie expects she will have to use her car to drive to people’s homes and to
pick up supplies, but she also needs to use her car for personal reasons. She
recalls from her first-year accounting course something about keeping
business and personal assets separate. She wonders what she should do for
accounting purposes. What do you recommend?
(a) Natalie has a choice between a sole proprietorship and a corporation.
A partnership is not an option since she is the sole owner of the
business.
(b) Yes, Natalie will need accounting information to help her operate her
business. She will need information concerning her cash balance on
a daily or weekly basis to help her determine if she can pay her bills.
(c) Assets: Cash, Accounts Receivable, Supplies, Equipment, Prepaid
Insurance
