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 2022, the following activities take place. Nov. 8 8 11 13 14 Natalie cashes her U.S. Savings Bonds and receives $500, which she deposits in her personal bank account She opens a bank account under the name "Cookie Creations" and transfers $480 from her personal account to the new account Natalie pays $80 for advertising She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $170 cash. (Hint: Use Supplies account.) 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 $620. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $395. She invests the equipment in the business, Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,400 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.) She buys more baking equipment for $800 cash. She teaches her first class and collects $180 cash. Natalie withdraws $105 from the business for personal expenditures. Natalie pays $1.410 for a one-year Insurance policy that will expire on December 1, 2023. 16 17 20 25 30 It is the end of November and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if she has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations' income, she must first prepare adjusting entries. Natalie puts together the following additional information 1. 2 3. 4. A count reveals that $30 of baking supplies were used during November. Natalie estimates that baking equipment depreciates at $50 per month Natalie's grandmother has decided not to charge any interest on the note until Natalie's business is more established. The loan plus any future interest is to be repaid in 24 months. On November 30, a friend of Natalie's asked her to teach a class at the neighborhood school. Natalie agreed and taught a group of 35 first-grade students how to make gingerbread cookies. The next day, Natalie prepared an invoice for $430 and left it with the school principal. The principal said that he will pass the invoice along to the head office, and it will be paid sometime in December. Natalie did not yet record this transaction (HINT: Since this transaction has not been recorded yet, accrue the services provided on account.) Natalie had a friend help her with the November 30 class. She agreed to pay the friend $45. The payment will be made on December 15. 5. The trial balance from earlier chapters is presented below. COOKIE CREATIONS Trial Balance November 30, 2022 Debit Credit Cash $495 Supplies 170 Prepaid Insurance 1,410 Equipment 1,195 Notes Payable 2,400 Owner's Capital 875 Owner's Drawing 105 Service Revenue 180 Advertising Expense 80 $3,455 $3,455 Using this trial balance and based on the new information above, do the following Prepare the adjusting journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) No. Date Account Tities and Explanation Debit Credit 1. Nov. 30 2 Nov. 30 3. Nov. 30 Nov. 30 5. Nov. 30 Cash Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 495 Accounts Receivable Debit Credit Date Explanation Ref. Balance Nov. 30 12 Supplies Date Debit Credit Balance Explanation Ref. 170 Nov. 30 Balance 30 J2 Prepaid Insurance Debit Credit Balance Date Explanation Ref. 1.410 Nov. 30 Balance Equipment Date Explanation Ref. Debit Credit Balance Nov. 30 Balance 1,195 Accumulated Depreciation-Equipment Debit Credit Date Explanation Ref. Balance Nov. 30 J2 Salaries and Wages Payable Date Explanation Ref. Debit Credit Balance Nov. 30 J2 Notes Payable Date Explanation Ref. Debit Credit Balance Nov. 30 Balance 2,400 Owner's Capital Date Explanation Ref. Debit Credit Balance Nov. 30 Balance 875 Owner's Drawings Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 105 Service Revenue Date Explanation Ref. Debit Credit Balance Nov. 30 Balance 180 30 J2 Advertising Expense Debit 80 Credit Date Explanation Ref. Nov. 30 V Balance 80 Supplies Expense Date Explanation Ref. Debit Credit Balance Nov. 30 J2 Depreciation Expense Date Explanation Ref. Debit Credit Balance Nov. 30 J2 Salaries and Wages Expense Date Explanation Ref. Debit Credit Balance Nov. 30 J2 COOKIE CREATIONS Adjusted Trial Balance Debit Credit $ $ $ $ Totals and Media COOKIE CREATIONS Income Statement $ $ $