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. During the months of November and December 2013, the following activities take place:

Nov. 12 Natalie cashes her Canada Savings Bonds and receives $980, which she deposits in her personal bank account.

12 She opens a bank account under the name "Cookie Creations" and transfers $900 from her personal account to the new account.

18 Natalie pays $325 to advertise in the November 29 issue of her community newspaper. Natalie hopes that this ad will generate revenue during the months of November and December.

20 She buys supplies, such as fl our, sugar, butter, and chocolate chips, for $198 cash.

25 Natalie starts to gather some 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 $825. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $550.

26 Natalie teaches her first class, a group of Grade 2 students, how to make sugar cookies. At the end of the class, Natalie leaves an invoice for $300 with the school principal. The principal says that she will pass the invoice along to the school board and the invoice will be paid sometime in December.

27 A $98 invoice is received for the use of Natalie's cell phone. The cell phone is used exclusively for Cookie Creations' business. The invoice is for services provided in November and is due on December 13.

29 Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $3,000 cash, for which Natalie signs a one-year, 3% note payable in the name of the business. Natalie deposits the money in the business bank account.

Dec. 2 Natalie teaches a class and collects $250 cash.

3 Natalie buys more equipment for $1,000 cash.

9 The school where Natalie taught her fi rst class is in touch and wishes for Natalie to teach all of the Grade 3 and 4 students how to make sugar cookies. Natalie is thrilled! She anticipates teaching at least five classes at the school. She receives $125 in advance as a down payment.

13 Natalie pays the amount outstanding on her cell phone bill.

16 Natalie receives and deposits the amount outstanding from the November 26 transaction.

17 Natalie receives an unexpected invitation to teach a cookie-making class at a children's Christmas party. At the end of the class, she prepares an invoice for $500 and leaves it with the organization's corporate controller. The controller indicates that the invoice will likely be paid in the next 30 days.

30 A $76 invoice is received for the use of Natalie's cell phone. The invoice is for services provided in December and is due on January 15, 2014.

Instructions

(a) Prepare journal entries to record the transactions.

(b) Post the journal entries to ledger accounts. Use T accounts.

(c) Prepare a trial balance as at December 31, 2013.