Accounting Cycle Project - Part 2 Continuing Case: Cookie Creations This is a continuation of the Accounting Cycle Project Part 1. Recall that Natalie began operations of Cookie Creations Inc. in November 2025. Cookie Creations Inc. is a cookie-making school. Natalie offers individual and group cookic-making lessons and also sells mixers as part of her main operations. The trial balance from December 2025 is shown below. The following transactions occurred in January 2026. Jan. I Natalie sells a mixer to Curtis on credit, terms n/30, for $1,100 (cost of mixer $600 ). Note: Service Revenue is to be used when a cookie class is performed. Sales Revenue is to be used when a mixer is sold. 1 Natalie purchases a used van that will be used only for business. The initial cost of the van is $38,500. Natalie spends an additional $2,500 to have the van painted and $1,500 to have the back seat removed to install shelving units. To finance the van and these additional costs, Natalie signs a ten year 5% note payable for $42,500 with Badger bank. 3) Natalie teaches 13 classes in January. Seven classes were paid for in cash, $1,050; the other six classes were paid for by Visa credit cards, $900. The credit card service charge is 3%. Use the service eharge expense account for the 3% fee. 31 Curtis calls Natalie. He is unable to pay the amount outstanding for another month, so he signs a onemonth, 6% note receivable. Instructions (a) Prepare journal entries for the transactions that occurred in January above. The company uses a perpetual inventory system. If no entry is needed, please enter "N/A" in the space provided for that date. (b) Post the January transactions. Do not forget to enter the December 31, 2025 Balance for the applicable accounts. Notes Receivable Accounts Receivable \begin{tabular}{l|l} \multicolumn{2}{c}{ Accounts Receivable } \\ \hline 12311,450 & \\ \hline \end{tabular} Accumulated Depreciation - Baking Equipment Allowance for Doubtful Accounts \begin{tabular}{l|l} \multicolumn{2}{c}{ Equipment } \\ \hline & 12/31 \\ \hline \end{tabular} \begin{tabular}{ll|l} \multicolumn{2}{c}{ Supplies } \\ \hline 12/31 & 400 & \\ & & \\ \hline & \end{tabular} Accounts Payable \begin{tabular}{l|ll} \hline & 1231 & 3,375 \\ \hline \end{tabular} Retained Earnings Service Revenue Sales Revenue Notes Payable Common Stock Cost of Goods Sold Amortization Expense Depreciation Expense Supplies Expense Interest Expense Service Charge Expense Bad Debt Expense Utilities Expense Income Summary (c) Prepare a trial balance at January 31, 2026. Check Figure: The cotal of all debits should be S54.9IS, which should equal the fotal of credits of \$54.915. (d) Prepare a bank reconciliation for January 31, 2026 using the following information. Check Figure: The adjusted cash balance per the bank should be $2,96I which should equal the adjusted cash balance per the books of $2.961. GENERAL LEDGER-COOKIE CREATIONS INC. Statement of Account-Cookic Creations Inc. January 31, 2026 Additional information: 1. On December 31,2025 , there were two outstanding checks: \#595 for $238 and \#599 for $361. 2. Premier Bank made a posting error to the bank statement: check H603 was issued for $425, not 5452 . 3. Note the bank service charge on January 30 for \$13. Use the service charge expense account. 4. The deposit made January 20 was for $125 that Natalie received for teaching a class. Natalie made an error in recording this transaction. Note: The journal entry originally recorded on January 20 was a debit to Cush \$155 and a eredit to Service Revenue S155. 5. The electronic funds transfer (EFT) was for Natalie's cell phone use. Remember that she uses this phone only for business. Note the Utilities Expense account should be used for these charges. 6. The NSF check was from Ron Black. Natalie received this check for teaching a class to Ron's children. Natalie contacted Ron and he assured her that she will receive a check in the mail for the outstanding amount of the invoice and the NSF bank charge. COOKIF CREATINME IMIn (e) Prepare any necessary general journal entrics associated with the bank reconciliation. Use the table below for the joumal entries. (f) In addition to the bank reconciliation journal entries prepare the following adjusting journal entries in the table on the next page: a. January depreciation of $20 is recorded on the banking equipment purchased in November 2025 . b. A count reveals that $25 of supplies was used. c. Amortization (which is similar to depreciation) of $25 is recorded on the website. (Credit the Website account and debit Amortization Expense for the amount of the amortization.) d. Interest on the 5% note payable with Badger Bank is accrued. (Assume 1 month of interest acerued during January.) Round to nearest dollar. Interest will not be paid until the note is due. 5. One month's worth of insurance has expired. Insurance expires at a rate of $100 a month. 6. An analysis of the Unearned Service Revenue account reveals that $120 of the December 31 , 2025 balance in Uneamed Service Revenue has not been earned as of January 31,2026 . In other words, $240 of Uneamed Service Revenue was eamed during the month of January 2026. 7. Record January depreciation on the van assuming the van is expected to last for 5 years and the estimated salvage value is $6,500. 8. Bad debt expense for the month of January is estimated to be 87. (4) Jan 31 (5) Jan31 (6) Jan31 (7) Jan31 (8) Jan31 (g) Post adjusting journal entries for the month ending January 31, 2026 in the T-Accounts from part (b). Make sure you post the adjusting journal entries for part (e) and part (f). (h) Prepare an adjusted trial balance as of January 31, 2026. Check Figure: The total of all debits should be $55,769, which should equal the total of credits of $55,769. COOKIE CREATIONS INC. Adjusted Trial Balance January 31, 2026 (i) Prepare an income statement and a retained earnings statement for the 1 -month period ending January 31 , 2026. You DO NOT need to prepare a balance sheet. Assume no dividends were paid out in January 2026. Check Figure: Net Income = 1,501; Ending Retained Earnings =6,291. COOKIE CREATIONS INC. Income Statement For the Month Ended January 31,2026 COOKIE CREATIONS INC. Retained Earnings Statement For the Month Ended January 31, 2026 (j) Prepare and post closing entries as of January 31, 2026. Assume no dividends were paid out in January 2026. (2) Dec 31