CC5 COOKIE CREATIONS
(a) Responses to Natalie’s questions
1. The mixers should be classified as inventory as they are for resale.
2. A perpetual inventory system will provide better control over
inventory. Because you are dealing with high-value items you should
use the perpetual system.
(b)
GENERAL JOURNAL
J1
Date
Account Titles and Explanation
Debit
Credit
Jan. 4 Inventory ………………………………………………. 2,875
Accounts Payable ……………………………… 2,875
6 Inventory ………………………………………………. 100
Cash ………………………………………………… 100
CC5 (Continued)
(b) (Continued)
Jan. 14 Freight-Out …………………………………… 75
Cash ………………………………………… 75
14 Inventory ………………………………………. 2,300
Accounts Payable ……………………… 2,300
20 Cost of Goods Sold ($595 X 2) ……….. 1,190
Inventory ………………………………….. 1,190
28 Salaries and Wages Expense …………. 160
Salaries and Wages Payable ………….. 56
Cash ………………………………………… 216
Cash ………………………………………… 4,580
31 Owner’s Drawings …………………………. 750
Cash ………………………………………… 750
CC5 (Continued)
(b) and (d)
Cash
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 1,180
6 J1 100 1,080
8 J1 375 1,455
14 J1 75 1,380
30 J1 145 7,689
31 J1 4,580 3,109
Accounts Receivable
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 875
8 J1 375 500
Inventory
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 4 J1 2,875 2,875
6 J1 100 2,975
CC5 (Continued)
(b) and (d) (Continued)
Supplies
Date
Explanation
Ref.
Debit
Credit
Balance
Prepaid Insurance
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 1,210
Equipment
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 1,200
Accumulated Depreciation—Equipment
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 40
Accounts Payable
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 75
4 J1 2,875 2,950
CC5 (Continued)
(b) and (d) (Continued)
Salaries and Wages Payable
Date
Explanation
Ref.
Debit
Credit
Balance
Unearned Service Revenue
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 300
Interest Payable
Date
Explanation
Ref.
Debit
Credit
Balance
Notes Payable
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1 Balance ✓ 2,000
Common Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Owner’s Drawings
Date
Explanation
Ref.
Debit
Credit
Balance
CC5 (Continued)
(b) and (d) (Continued)
Sales Revenue
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 12 J1 3,450 3,450
20 J1 2,300 5,750
Cost of Goods Sold
Date
Explanation
Ref.
Debit
Credit
Balance
Salaries and Wages Expense
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 28 J1 160 160
Utilities Expense
Date
Explanation
Ref.
Debit
Credit
Balance
Depreciation Expense
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 31 Adjusting entry J2 20 20
Insurance Expense
Date
Explanation
Ref.
Debit
Credit
Balance
CC5 (Continued)
(b) and (d) (Continued)
Freight Out
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 14 J1 75 75
Interest Expense
Date
Explanation
Ref.
Debit
Credit
Balance
CC5 (Continued)
(c) COOKIE CREATIONS
Trial Balance
January 31, 2017
Debit Credit
Cash ………………………………………………………………… $ 2,359
Accounts Receivable …………………………..……………. 500
Accumulated Depreciation—Equipment …………….. $ 40
Accounts Payable ……………………………………………..
Salaries and Wages Payable ………………………………
Unearned Service Revenue ……………………………….. 300
Sales Revenue …………………………………………………. 5,750
Cost of Goods Sold ………………………………………….. 2,975
Salaries and Wages Expense …………………………….. 160
CC5 (Continued)
(d)
GENERAL JOURNAL
J2
Date
Account Titles and Explanation
Debit
Credit
Jan. 31 Depreciation Expense ………………………. 20
31 Interest Expense ……………………………… 10
Interest Payable …………………………... 10
CC5 (Continued)
(e)
COOKIE CREATIONS
Adjusted Trial Balance
January 31, 2017
Debit Credit
Cash ……………………………………………………………….. $ 2,359
Accounts Receivable …………………………..…………… 500
Accumulated Depreciation—Equipment ……………. $ 60
Accounts Payable …………………………………………….
Unearned Service Revenue ………………………………. 300
Interest Payable ………………………………………………. 25
Notes Payable …………………………………………………. 2,000
Cost of Goods Sold …………………………………………. 2,975
Salaries and Wages Expense ……………………………. 160
Utilities Expense ……………………………………………… 70
CC5 (Continued)
(f) COOKIE CREATIONS
Income Statement
For the Month ended January 31, 2017
Sales revenue …………………………………………………………. $5,750
Operating expenses
Salaries and wages expense ……………………………….. $160
Insurance expense ……………………………………………… 110
Freight-out …………………………………………………………. 75