Balance Sheet and Cookie Creations Essay

CCC1Natalie Koebel worn-out(a) much of her childhood learning the art of cookie-making from her nanna. They passed many happy hours know every type of cookie imaginable and later creating sweet recipes that were twain healthy and delicious. right off at the start of her second year in college, Natalie is investigating various possibilities for starting her own business as violate of the requirements of the entrepreneurship program in which she is enrolled. A long-time friend insists that Natalie has to somehow include cookies in her business plan. After a series of brainstorming sessions, Natalie settles on the vagary of operating a cookie-making school.She will start on a temporary basis and offer her services in peoples homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on vacation cookies. She will offer individual lessons and group sessions (which will probably be more entertainment than education for the participants). Natalie also decides to include children in her bulls eye market. The first difficult decision is coming up with the perfect lean for her business. In the end, she settles on biscuit Creations and then moves on to more measurable issues.Instructions(a)What form of business organizationproprietorship, partnership, or corporation do you recommend that Natalie use for her business? Discuss the benefits and weaknesses of each form and endue the reasons for your choice.(b)Will Natalie need peckering information? If yes, what information will she need and why? How often will she need this information?(c)Identify specific asset, liability, and equity accounts that Cookie Creations will carely use to record its business transactions.(d)Should Natalie open a separate bank account for the business? Why or why non? CCC2After researching the different forms of business organization, Natalie Koebel decides to operate Cookie Creations as a corporation. She then starts th e process of getting the business running. In November 2014, the succeeding(a) activities school place.Nov.8Natalie speciees her government bonds and receives $520, which she deposits in her personal bank account. 8She opens a bank account under the name Cookie Creations and transfers $500 from her personal account to the new account in exchange for ordinary shares.11Natalie pays $65 to have denote brochures and posters printed. She plans to distribute these as opportunities arise. (Hint Use Advertising Expense.)13She buys bake hot supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.14Natalie starts to gather some baking equipment to take with her when teach the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally exist her $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently outlay $ccc. She invests the equipment in the business in exchange for ordinary shares.16Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint The note does not have to be repaid for 24 months. As a result, the notes payable should be reported in the accounts as the last liability and also on the statement of financial position as a non-current liability.)17She buys more baking equipment for $900 cash.20She teaches her first class and collects $125 cash.25Natalie books a second class for declination 4 for $150. She receives $30 cash in advance as a down payment.30Natalie pays $1,320 for a one-year insurance policy that will pass away on celestial latitude 1, 2015.Instructions(a)Prepare journal entries to record the November transactions.(b)Post the journal entries to ecumenical ledger accounts.(c)Prepare a trial balance at November 30.CCC3It is the end of November and Natalie ha s been in touch with hergrandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if the company has been profitable or not during November. Natalie realizes that in tack to determine Cookie Creations income, she must first make adjustments.Natalie puts together the following additional information.1.A count reveals that $35 of baking supplies were used during November.2.Natalie estimates that all of her baking equipment will have a useful life of 5 eld or 60 months and no salvage value. (Assume Natalie decides to record a total months worth of depreciation, regardless of when the equipment was obtained by the business.)3.Natalies grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)4.On November 30, a friend of Natalies asks her to teach a class at the r esemblance school. Natalie agrees and teaches a group of 35 first-grade students how to make Santa Claus cookies. The next day, Natalie prepares an invoice for $300 and leaves it with the school principal. The principal says that he will pass the invoice on to the head office, and it will be paid sometime in declination.5.Natalie receives a utilities bill for $45. The bill is for utilities consumed by Natalies business during November and is due December 15.InstructionsUsing the information that you have gathered through Chapter 2, and found on the new information above, do the following.(a)Prepare and post the adjusting journal entries.(b)Prepare an change trial balance.(c)Using the adjusted trial balance, calculate Cookie Creations net income or net loss for the month of November. Do not prepare an income statement. CCC4Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance.