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 2019, the following activities take place.

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 2019, the following activities take place. 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 $65 for advertising. 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. (Hint: Use Supplies account.) 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 $1320 for a one-year insurance policy that will expire on December 1, 2019. 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 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 years or 60 months. (Assume Natalie decides to record a full month's worth of depreciation, regardless of when the equipment was obtained by the business.) 3. Natalie's 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 Natalie's asks her to teach a class at the neighborhood school. Natalie agrees and teaches a group of 35 first-grade students how to make gingerbread 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 along to the head office, and it will be paid sometime in December. 5. Natalie receives a utilities bill for $45. The bill is for utilities consumed by Natalie's business during November and is due December 15. Prepare the adjusting journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit 1. Nov. 30 2. Nov. 30 3. Nov. 30 4. Nov. 30 5. Nov. 30 Post the adjusting journal entries. (Post entries in the order of journal entries presented in the previous question.) Cash Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 245 Accounts Receivable Date Explanation Ref. Debit Credit Balance Nov. 30 J2 Supplies Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 125 30 J2 Balance 1,320 Prepaid Insurance Date Explanation Ref. Debit Credit Nov. 30 Balance Equipment Date Explanation Ref. Debit Credit Nov. 30 Balance Accumulated Depreciation Equipment Date Explanation Ref. Debit Credit Balance 1,200 Balance Nov. 30 Accounts Payable Debit Credit Date Explanation Ref. Balance Nov. 30 J2 Interest Payable Debit Date Explanation Ref. Credit Balance Nov. 30 J2 Balance 30 Unearned Service Revenue Date Explanation Ref. Debit Credit Nov. 30 Balance Notes Payable Date Explanation Ref. Debit Credit Nov. 30 Balance Balance 2,000 Owner's Capital Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 800 Service Revenue Debit Credit Balance Date Explanation Ref. Nov. 30 Balance 125 30 J2 Utilities Expense Debit Date Explanation Ref. Credit Balance Nov. 30 J2 Balance Advertising Expense Date Explanation Ref. Debit Credit Nov. 30 65 Supplies Expense Date Explanation Ref. Debit Credit 65 Balance Nov. 30 J2 Depreciation Expense Date Explanation Ref. Debit Credit Balance Nov. 30 12 Interest Expense Debit Credit Date Explanation Ref. Balance Nov. 30 J2 Prepare an adjusted trial balance. COOKIE CREATIONS Adjusted Trial Balance Debit Credit $ $ Totals $ Using the adjusted trial balance, calculate Cookie Creations' net income or net loss for the month of November. 4 $ Natalie 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. COOKIE CREATIONS Adjusted Trial Balance December 31, 2019 Debit Credit Cash $1,130 Accounts Receivable 840 340 1,160 1,200 $40 Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable Interest Payable Unearned Service Revenue 70 54 15 290 1,900 Notes Payable Owner's Capital Owner's Drawings 770 480 Service Revenue 4,407 966 120 160 Salaries and Wages Expense Utilities Expense Advertising Expense Supplies Expense Depreciation Expense Insurance Expense Interest Expense 985 40 110 15 $7,546 $7,546 $7,546 $7,546 Using the information in the adjusted trial balance, do the following. Prepare an income statement for the 2 months ended December 31, 2019. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) COOKIE CREATIONS Income Statement $ $ Prepare an owner's equity statement for the 2 months ended December 31, 2019. (List items that increase owner's equity first.) COOKIE CREATIONS Owner's Equity Statement $ $ Prepare a classified balance sheet at December 31, 2019. The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2021. (List Current Assets in order of liquidity.) COOKIE CREATIONS Balance Sheet Assets $ Liabilities and Owner's Equity Natalie has decided that her year-end will be December 31, 2019. Prepare closing entries as of December 31, 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 (To close revenue account) Dec. 31 (To close expense accounts) Dec. 31 (To close net income / (loss)) Dec. 31 (To close drawings) Prepare a post-closing trial balance. COOKIE CREATIONS Post-Closing Trial Balance Debit Credit A ta Totals $