CCC11 CONTINUING COOKIE CHRONICLE
Part 1
(a) 1. One of the major advantages of issuing preferred stock is that
the preferred stockholder does not have voting rights. In this
2. The advantages of offering your family cumulative preferred stock
is that when dividends were declared, the preferred stockholders
would receive dividends both for the current year and for years in
3. It is possible to pay for the $750 legal bill by issuing common stock.
However, the historical cost principle still applies. Cost must
equal the cash equivalent price which is generally the fair value of
the consideration given up. If this amount cannot be determined,
we then look to the fair value of the consideration received to
Preferred Stock ………………………………….
Miscellaneous Expense ………………………………
750
Common Stock …………………………………..
CONTINUING COOKIE CHRONICLE (Continued)
General Journal
Date
Account Titles
Debit
Credit
(b)
2018
Nov. 1
Cash ………………………………………………………….
19,500
Accounts Receivable ………………………………….
600
Inventory ……………………………………………………
1,580
Equipment ………………………………………………….
3,500
Common Stock …………………………………..
(c)
Nov. 1
Cash ………………………………………………………….
10,000
CONTINUING COOKIE CHRONICLE (Continued)
(d) COOKIE & COFFEE CREATIONS INC.
Balance Sheet
November 1, 2018
Assets
Current assets
Cash ……………………………………………………………..
$29,500
Accounts receivable ………………………………………
600
Merchandise inventory …………………………………..
Total current assets …………………………………..
Plant and equipment
Total assets ……………………………………………….
Stockholders’ Equity
Capital stock
Preferred stock, no-par value, $6, cumulative,
10,000 shares authorized, 2,000 shares issued
and outstanding …………………………………………….
$10,000
25,930 shares issued and outstanding ……………
Total capital stock ……………………………………..
Retained earnings (deficit) ……………………………………..
CONTINUING COOKIE CHRONICLE (Continued)
Part 2
(a) General Journal
Date
Account Titles
Debit
Credit
2019
Jan. 1
Cash ……………………………………………………………..
4,000
Preferred Stock …………………………………….
4,000
June 30
Treasury Stock ……………………………………………..
500
Cash …………………………………………………….
500
Oct. 15
Cash Dividends …………………………………………….
Income Taxes Payable …………………………..
(b) General Journal
Date
Account Titles
Debit
Credit
2019
Oct. 31
Revenues ………………………………………………………
472,500
Income Summary ………………………………….
472,500
Income Summary …………………………………………..
427,700
Expenses ……………………………………………..
416,500
Income Tax Expense ……………………………..
Income Summary …………………………………………..
Retained Earnings …………………………………
Retained Earnings …………………………………………
Cash Dividends …………………………………….
CONTINUING COOKIE CHRONICLE (Continued)
(c) COOKIE & COFFEE CREATIONS INC.
Retained Earnings Statement
For the Year Ended October 31, 2019
Balance, November 1, 2018 ………………………………
$ –
Add: Net income …………………………………………….
44,800
Less: Cash dividends—preferred …………………….
$16,800
Cash dividends—common ……………………..
28,000
Balance, October 31, 2019 ……………………………….
$16,800
(d) COOKIE & COFFEE CREATIONS INC.
Partial Balance Sheet
October 31, 2019
Stockholders’ equity
Paid-in capital
Capital stock
Preferred stock, no-par value, $6,
cumulative, 10,000 authorized,
2,800 shares issued and outstanding ………
$14,000
Common stock, $1 par, 50,000 shares
authorized, 25,930 shares issued, and
25,180 outstanding …………………………………
Total paid-in capital……………………………………
Retained earnings ………………………………………………..
Total paid-in capital and retained earnings …………..
Less: Treasury stock (750 common shares) …………
Total stockholders’ equity ………………………………..