Continuing Cookie Chronicle 1
Continuing Cookie Chronicle
(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 3.)
CCC4 Cookie Creations is gearing up for the winter holiday season. During the month of December
2014, the following transactions occur.
Dec. 1 Natalie hires an assistant at an hourly wage of $8 to help with cookie making and some
administrative duties.
5 Natalie teaches the class that was booked on November 25. The balance outstanding is
received.
8 Cookie Creations receives a check for the amount due from the neighborhood school for
the class given on November 30.
9 Cookie Creations receives $750 in advance from the local school board for five classes
that the company will give during December and January.
15 Pays the cell phone invoice outstanding at November 30.
16 Issues a check to Natalie’s brother for the amount owed for the design of the website.
19 Receives a deposit of $60 on a cookie class scheduled for early January.
23 Additional revenue during the month for cookie-making classes amounts to $4,000.
23 Additional baking supplies purchased during the month for sugar, flour, and chocolate
chips amount to $1,250 cash.
23 Issues a check to Natalie’s assistant for $800. Her assistant worked approximately 100
hours from the time in which she was hired until December 23.
As of December 31, Cookie Creations’ year-end, the following adjusting entry data are provided.
1. A count reveals that $45 of brochures and posters were used.
2. Depreciation is recorded on the baking equipment purchased in November. The baking
equipment has a useful life of 5 years. Assume that 2 months’ worth of depreciation is
required.
5. One month’s worth of insurance has expired.
6. Natalie is unexpectedly telephoned on December 28 to give a cookie class at the
neighborhood community center on December 31. In early January Cookie Creations sends
an invoice for $450 to the community center.
7. A count reveals that $1,025 of baking supplies were used.
10. An analysis of the unearned revenue account reveals that two of the five classes paid for by
the local school board on December 9 still have not been taught by the end of December. The
$60 deposit received on December 19 for another class also remains unearned.
Instructions
Using the information that you have gathered and the general ledger accounts that you have prepared
through Chapter 3, plus the new information above, do the following.
(a) Journalize the above transactions.
(b) Post the December transactions. (Use the general ledger accounts prepared in Chapter 3.)
(c) Totals $8,160
(c) Prepare a trial balance at December 31, 2014.
(a)
General Journal
Date Account Titles Debit Credit
Dec. 1 No journal entry required.
5 Cash ………………………………………………………. 90
Unearned Service Revenue ……………………… 60
Service Revenue ………………………………. 150
(d)
Date Account Titles Debit Credit
(1)
Dec. 31 Supplies Expense …………………………………….. 45
Supplies …………………………………………….. 45
(2)
31 Depreciation Expense
($1,200 ÷ 5 X 2/12) ………………………………….. 40
(7)
31 Supplies Expense …………………………………….. 1,025
Supplies …………………………………………….. 1,025
(8)
31 Utilities Expense ………………………………………. 75
Accounts Payable ………………………………. 75
(b), (d), and (g)
Cash
Dividends
11/30 Bal.
340
12/15
12/28
500
12/31 Bal.
500
12/5
90
12/16
12/31 Bal.
0
12/8
300
12/23
1,250
12/9
750
12/23
800
12/19
60
12/28
500
12/23
12/31
12/31
12/31 Bal.
1,340
12/31
12/31 Bal.
Accounts Receivable
Service Revenue
11/30 Bal.
300
12/8
11/30 Bal.
400
12/23
1,000
12/5
150
12/31
450
12/23
12/31 Bal.
1,450
12/31
450
12/31
12/31
450
12/31 Bal.
Supplies
11/30 Bal.
220
12/31
12/23
1,250
12/31
Utilities Expense
12/31 Bal.
400
11/30 Bal.
50
12/31
12/31
125
12/31 Bal.
0
11/30 Bal.
1,200
12/31
100
12/23
12/31 Bal.
1,100
12/31
56
12/31
856
12/31 Bal.
0
Equipment
Accumulated Depreciation—
Equipment
11/30 Bal.
1,200
12/31
40
12/31 Bal.
12/31 Bal.
Website
Interest Expense
11/30 Bal.
600
12/31
25
12/31
23
12/31
23
12/31 Bal.
575
12/31 Bal.
0
Accounts Payable
Insurance Expense
12/15
50
11/30 Bal.
650
12/31
100
12/31
100
12/16
600
12/31
75
12/31 Bal.
12/31 Bal.
75
Interest Payable
11/30 Bal.
2,000
12/31
23
12/31 Bal.
2,000
12/31 Bal.
23
Common Stock
Salaries and Wages Payable
11/30 Bal.
800
12/31
56
12/31 Bal.
800
12/31 Bal.
56
Retained Earnings
Unearned Service Revenue
12/31
500
12/31 Bal.
3,211
12/5
60
11/30 Bal.
60
12/31 Bal.
2,711
12/9
750
12/31
12/19
60
12/31 Bal.
12/31
25
12/31
25
12/31 Bal.
0
Supplies Expense
12/31
45
12/31
1,070
12/31
1,025
12/31 Bal.
12/31
12/31
40
12/31 Bal.
(c)
COOKIE CREATIONS INC.
Trial Balance
December 31, 2014
Debit Credit
Cash …………………………………………………………… $1,340
Accounts Receivable …………………………………… 1,000
Supplies……………………………………………………… 1,470
(e) COOKIE CREATIONS INC.
Adjusted Trial Balance
December 31, 2014
Debit Credit
Cash …………………………………………………………… $1,340
Accounts Receivable …………………………………… 1,450
Accounts Payable ……………………………………….. 75
Interest Payable ………………………………………….. 23
Salaries and Wages Payable ………………………… 56
Unearned Service Revenue ………………………….. 360
Notes Payable …………………………………………….. 2,000
Common Stock …………………………………………… 800
(e) COOKIE CREATIONS INC.
Income Statement
For the Two Months Ended December 31, 2014
Revenue
Service revenue ………………………………….. $5,450
Operating expenses
Supplies expense ……………………………….. $1,070
Salaries and wages expense ……………….. 856
COOKIE CREATIONS INC.
Retained Earnings Statement
For the Two Months Ended December 31, 2014
Retained earnings, November 1 ……………………………………. $ 0
COOKIE CREATIONS INC.
Balance Sheet
December 31, 2014
Assets
Current Assets
Cash…………………………………………………… $1,340
Accounts receivable ……………………………. 1,450
Supplies …………………………………………….. 400
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………….. $ 75
Unearned service revenue …………………… 360
Salaries and wages payable ………………… 56
Total current liabilities ………………… $ 491
Long-term liabilities
(g) 31 Service Revenue ……………………………………….. 5,450
Income Summary ………………………………. 5,450
31 Income Summary ………………………………………. 2,239
Supplies Expense ……………………………… 1,070
Salaries and Wages Expense …………….. 856
31 Income Summary ………………………………………. 3,211
Retained Earnings …………………………….. 3,211
(h) COOKIE CREATIONS INC.
Post-Closing Trial Balance
December 31, 2014
Debit Credit
Cash …………………………………………………………………. $1,340
Accounts Receivable …………………………………………. 1,450
Supplies……………………………………………………………. 400