Acc280 Financial Accounting: Continuing Cookie Chronicles 2 (CCC2) - as proprietorship

Acc280 Financial Accounting

Continuing Cookie Chronicle 2 (CCC2)

After researching the different forms of business organization, Natalie Koebel decides to operate “Cookie Creations” as a proprietorship. She then starts the process of getting the business running. In November 2009, the following activities take place.

November Transactions

Nov. 8 Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.

8 She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account.

11 Natalie pays $165 to have advertising brochures and posters printed. She plans to distribute these as opportunities arise. (Hint: Use Advertising Supplies.)

13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash.

14 Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business.

16 Natalie 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 note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)

17 She buys more baking equipment for $900 cash.

20 She teaches her first class and collects $125 cash.

25 Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down payment.

30 Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2010.

Instructions

(a) Use the journal template provided and prepare journal entries to record the November transactions. Remember to use correct journal entry formatting.

(b) Post the journal entries to general ledger accounts. Remember to use correct posting references. Also, note that we do not use descriptions in the ledger account "description" column for regular journal entry postings.

(c) Prepare a trial balance at November 30. Be sure to total the columns of your trial balance. Do NOT include accounts that do not have a ledger balance.
Powered by