CCC5 CONTINUING COOKIE CHRONICLE
(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
(b)
General Journal
Date
Account Titles and Explanation
Credit
Jan. 4
Inventory ……………………………………………
Accounts Payable …………………………
2,750
6
Inventory ……………………………………………
Cash …………………………………………….
100
7
Accounts Payable [($2,750 ÷ 5) + $20] ….
Inventory ………………………………………
570
8
Cash …………………………………………………..
Accounts Receivable …………………….
450
12
Accounts Receivable…………………………..
Sales Revenue ………………………………
3,300
12
Cost of Goods Sold ($570 X 3) …………….
Inventory ………………………………………
1,710
13
Accounts Payable ……………………………….
Cash …………………………………………….
14
Cash …………………………………………….
CONTINUING COOKIE CHRONICLE (Continued)
(b) (Continued)
General Journal
Date
Account Titles and Explanation
Credit
Jan. 14
Inventory ……………………………………………..
Accounts Payable ………………………….
2,200
17
Cash ……………………………………………………
Common Stock ………………………………
1,000
18
Inventory ……………………………………………..
Cash ……………………………………………..
20
Cash ……………………………………………………
Sales Revenue ……………………………….
2,200
20
Cost of Goods Sold ($570 X 2) ………………
Inventory ……………………………………….
1,140
28
Salaries and Wages Expense (20 X $8) ….
Salaries and Wages Payable …………………
Cash ……………………………………………..
28
Cash ……………………………………………………
Accounts Receivable ……………………..
3,300
Cash ……………………………………………..
4,380
31
Dividends …………………………………………….
Cash ……………………………………………..
CONTINUING COOKIE CHRONICLE (Continued)
(b) and (d)
Cash
Date
Explanation
Debit
Balance
Jan. 1
Balance
1,340
6
1,240
8
450
1,690
13
1,615
14
1,540
17
2,540
18
2,460
20
4,660
28
4,444
28
7,744
31
3,364
31
2,614
Accounts Receivable
Date
Explanation
Debit
Balance
Jan. 1
Balance
1,450
8
1,000
12
3,300
4,300
28
1,000
Inventory
Date
Explanation
Debit
Balance
Jan. 4
2,750
2,750
6
100
2,850
7
2,280
12
14
2,200
2,770
18
2,850
20
1,710
CONTINUING COOKIE CHRONICLE (Continued)
(b) and (d) (Continued)
Supplies
Date
Explanation
Debit
Balance
Jan. 1
Balance
400
Prepaid Insurance
Date
Explanation
Debit
Balance
Jan. 1
Balance
1,100
Adjusting entry
1,000
Equipment
Date
Explanation
Debit
Balance
Jan. 1
Balance
1,200
Accumulated Depreciation—Equipment
Date
Explanation
Debit
Balance
Jan. 1
Balance
Adjusting entry
Website
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
575
Adjusting entry
550
CONTINUING COOKIE CHRONICLE (Continued)
(b) and (d) (Continued)
Accounts Payable
Date
Explanation
Debit
Balance
Jan. 1
Balance
75
4
2,825
7
570
2,255
13
75
2,180
14
4,380
31
0
31
Adjusting entry
75
Salaries and Wages Payable
Date
Explanation
Debit
Balance
Jan. 1
Balance
56
28
56
0
Interest Payable
Date
Explanation
Debit
Balance
Jan. 1
Balance
23
31
Adjusting entry
38
Date
Explanation
Debit
Balance
Jan. 1
Balance
Date
Explanation
Debit
Balance
Jan. 1
Balance
2,000
CONTINUING COOKIE CHRONICLE (Continued)
(b) and (d) (Continued)
Common Stock
Date
Explanation
Debit
Balance
Jan. 1
Balance
800
17
1,800
Retained Earnings
Date
Explanation
Debit
Balance
Jan. 1
Balance
2,711
Date
Explanation
Debit
Balance
Jan. 31
750
Sales Revenue
Date
Explanation
Debit
Balance
Jan. 12
3,300
20
5,500
Cost of Goods Sold
Date
Explanation
Debit
Balance
Jan. 12
1,710
1,710
20
1,140
2,850
Date
Explanation
Debit
Balance
Jan. 28
160
Utilities Expense
Date
Explanation
Debit
Balance
Jan. 31
Adjusting entry
75
75
Date
Explanation
Debit
Balance
Jan. 31
Adjusting entry
Date
Explanation
Balance
Jan. 14
75
75
Date
Explanation
Debit
Balance
Jan. 31
Adjusting entry
15
15
CONTINUING COOKIE CHRONICLE (Continued)
(b) and (d) (Continued)
Depreciation Expense
Date
Explanation
Debit
Credit
Balance
Jan. 31
Adjusting entry
20
20
Amortization Expense
Date
Explanation
Debit
Balance
Jan. 31
Adjusting entry
25
25
Sales Revenue ……………………………………………………….
5,500
Cost of Goods Sold ………………………………………………..
Salaries and Wages Expense ………………………………….
160
$12,434
(c)
COOKIE CREATIONS INC.
Trial Balance
January 31, 2018
Debit
Credit
Cash ………………………………………………………………………
$ 2,614
Accounts Receivable ……………………………………………..
Inventory ……………………………………………………………….
Supplies …………………………………………………………………
400
Prepaid Insurance ………………………………………………….
Equipment ……………………………………………………………..
Accumulated Depreciation—Equipment ………………….
Website …………………………..……………………………………..
575
Accounts Payable …………………………………………………..
Salaries and Wages Payable …………………………………..
Interest Payable ……………………………………………………..
Unearned Service Revenue …………………………………….
360
Notes Payable ………………………………………………………..
2,000
Common Stock ………………………………………………………
1,800
Retained Earnings ………………………………………………….
2,711
Dividends ………………………………………………………………
750
31
Interest Expense ………………………………………
15
Interest Payable ……………………………………
15
31
Insurance Expense …………………………………..
Prepaid Insurance ………………………………..
31
Utilities Expense ………………………………………
75
Accounts Payable …………………………………
75
CONTINUING COOKIE CHRONICLE (Continued)
(d)
General Journal
Date
Account Titles and Explanation
Debit
Credit
Jan.
31
Depreciation Expense ………………………………
20
Accumulated Depreciation—
Equipment ………………………………………..
20
31
Amortization Expense ………………………………
25
Website ………………………………………………..
25
Utilities Expense ………………………………………………….
Depreciation Expense ………………………………………….
Amortization Expense ………………………………………….
Insurance Expense ………………………………………………
100
Interest Expense ………………………………………………….
15
$12,544
CONTINUING COOKIE CHRONICLE (Continued)
(e)
COOKIE CREATIONS INC.
Adjusted Trial Balance
January 31, 2018
Debit
Credit
Cash ……………………………………………………………………
$ 2,614
Accounts Receivable …………………………………………..
1,000
Inventory …………………………………………………………….
1,710
Supplies ……………………………………………………………..
400
Prepaid Insurance ……………………………………………….
1,000
Equipment …………………………………………………………..
1,200
Accumulated Depreciation—Equipment ……………….
Website ……………………………………………………………….
550
Accounts Payable………………………………………………..
Salaries and Wages Payable ………………………………..
Interest Payable …………………………………………………..
Unearned Service Revenue ………………………………….
Notes Payable ……………………………………………………..
2,000
Common Stock ……………………………………………………
1,800
Retained Earnings ……………………………………………….
2,711
Dividends ……………………………………………………………
750
Sales Revenue …………………………………………………….
5,500
Cost of Goods Sold ……………………………………………..
2,850
Salaries and Wages Expense ……………………………….
160
CONTINUING COOKIE CHRONICLE (Continued)
(f)
COOKIE CREATIONS INC.
Income Statement
For the Month Ended January 31, 2018
Sales revenue ……………………………………………………
$5,500
Cost of goods sold ……………………………………………
2,850
Gross profit ………………………………………………………
2,650
Operating expenses
Salaries and wages expense ………………………..
$160
Insurance expense ………………………………………
100
Utilities expense ………………………………………….
75
Freight-out ………………………………………………….
75
Amortization expense ………………………………….
25
Depreciation expense ………………………………….
Total operating expenses …………………………………..
455
Income from operations …………………………………….
2,195
Other expenses and losses
Interest expense ……………………………………………
15
Net income ………………………………………………….
$2,180
(Sal. rev. – COGS – tot. oper. exp. – int. exp.)
COOKIE CREATIONS INC.
Retained Earnings Statement
For the Month Ended January 31, 2018
Retained earnings, January 1 …………………………….
$2,711
Add: Net income ……………………………………………..
Less: Dividends ……………………………………………….
Retained earnings, January 31 …………………………..
$4,141
CONTINUING COOKIE CHRONICLE (Continued)
(g)
COOKIE CREATIONS INC.
Balance Sheet
January 31, 2018
Assets
Current assets
Cash …………………………………………………………
$2,614
Accounts receivable ………………………………….
1,000
Inventory ………………………………………………….
1,710
Supplies ……………………………………………………
Prepaid insurance …………………………………….
1,000
Total current assets ……………………………..
Property, plant, and equipment
Equipment ………………………………………………..
1,200
Less: Accumulated depr.—equip. ……………..
60
Intangible asset
Website …………………………………………………….
Total assets …………………………………………………….
$8,414
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………………..
$ 75
Unearned service revenue …………………………
360
Total current liabilities ………………………………
$ 435
Long-term liabilities
Notes payable …………………………………………..
2,000
Interest payable ………………………………………..
38
Total long-term liabilities …………………………..
Total liabilities …………………………………………………
Common stock ………………………………………….
1,800
Retained earnings ……………………………………..
4,141
$8,414