Because Natalic has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European mixers. The owner of Kzinski Supply Co. has approached Natalie to become the exclusive distributor of these fine mixers in her state. The current cost of a mixer is approximately $575, and Natalie would sell each one for $1,150. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified. The trial balance for Continuing Cookie Chronicle as on December 31, 2011 is as follows: Continuing Cookie Chronicle Trial Balance December 31, 2011 Account Debit Credit Cash $1,180 Accounts Receivable 875 n 350 1,210 1.200 $40 Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable Unearned Service Revenue Interest Payable 75 56 300 15 Notes Payable 2,000 2,000 Notes Payable Owner's Capital 2,329 $4,815 $4,815 In the end, Natalie decides to use the perpetual inventory system. The following transactions happen during the month of January Jan. 4 6 7 8 12 14 Bought five deluxe mixers on account from Kzinski Supply Co. for $2,875, FOB shipping point, terms 1/30. Paid $100 freight on the January 4 purchase. Returned one of the mixers to Kzinski because it was damaged during shipping, Kzinski issues Continuing Cookie Chronicle credit for the cost of mixer plus $20 for the cost of freight that was paid on January 6 for one mixer. Collected $375 of the accounts receivable hom December 2015. Three deluxe mixers are sold on account for $3,450, FOB destination, terms n/30. (Cost of goods sold is $595 per mixer.) Paid the $75 of delivery charges for the three mixers that were sold on January 12. Bought four deluxe mixers on account from Krinski Supply Co. for $2,300. FOB shipping point, terms 1/30. Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She invests an additional $1,000 cash in Continuing Cookie Chronicle Paid $80 freight on the January 14 purchase. Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is $595 per mixer) Natalie issued a check to her assistant for all the help the assistant has given her during the month. Her assistant worked 20 hours in January and is also paid the $56 owed at December 31, 2016. (Natalie's assistant earns $8 an hour.) 14 17 18 20 28 Jan. 4 6 7 8 12 14 14 17 Bought five deluxe mixers on account from Kzinski Supply Co. for $2,875, FOB shipping point, terms /30. Paid $100 freight on the January 4 purchase, Returned one of the mixers to Kzinski because it was damaged during shipping, Kzinski issues Continuing Cookie Chronicle credit for the cost of mixer plus $20 for the cost of freight that was paid on January 6 for one mixer. Collected $375 of the accounts receivable from December 2015. Three deluxe mixers are sold on account for $3,450, FOB destination, terms n/30. Cost of goods sold is $595 per mixer.) Paid the $75 of delivery charges for the three mixers that were sold on January 12. Bought four deluxe mixers on account from Kzinski Supply Co. for $2,300, FOB shipping point, terms n/30. Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She invests an additional $1,000 cash in Continuing Cookle Chronicle. Paid $80 freight on the January 14 purchase. Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is $595 per mixer.) Natalie issued a check to her assistant for all the help the assistant has given her during the month. Her assistant worked 20 hours in January and is also paid the $56 owed at December 31, 2016. (Natalie's assistant carns $8 an hour.) Collected the amounts due from customers for the January 12 transaction. Paid a $145 utility bill ($75 for the December 2016 accounts payable and $70 for the month of January). Paid Kzinski all amounts due. Natalie withdrew $750 for personal use. 18 20 28 28 30 31 31 Cash Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 1,180 6 01 100 1,080 8 J1 375 1,455 14 J1 75 1,380 17 J1 1.000 2,380 18 31 80 2,300 20 1 2.300 4,600 28 JI 216 4,384 28 JI 3,450 7,834 30 31 145 7.689 31 JI 4,580 3,109 31 31 750 2,359 Accounts Receivable Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 875 8 J1 375 500 24 Accounts Receivable Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 875 8 J1 375 500 12 31 3,450 3.950 28 J1 3,450 500 Merchandise Inventory Date Explanation Ref. Debit Credit Balance Jan. 4 31 2,875 2.875 6 31 100 2,975 7 31 595 2,380 12 31 1,785 595 14 J1 2.300 2,895 18 31 80 2,975 20 J1 1.190 1.785 Supplies Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 350 Ref. Debit Credit Balance 350 Supplies Date Explanation Jan. 1 Balance Prepaid Insurance Date Explanation Jan. 1 Balance Ref. Debit Balance Credit 1.210 Adjusting J2 Ref. Debit Credit Balance 1.200 Equipment Date Explanation Jan. 1 Balance Accumulated Depreciation- Equipment Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 40 Adjusting J2 Accounts Payable Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 75 Accounts Payable Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 75 4 J1 2.875 2,950 7 J1 595 2.355 14 01 2,300 4,655 30 J1 75 4,580 31 01 4.580 0 Ref. Debit Credit Balance 56 31 56 Salaries and Wages Payable Date Explanation Jan. 1 Balance 28 Unearned Service Revenue Explanation Jan. 1 Balance Interest Payable Date Explanation Date Ref. Debit Credit Balance 300 Ref. Debit Credit Balance Jan. 1 Balance 15 Credit Balance Debit Ref. 2.000 Balance Credit Ref. Debit Notes Payable Date Explanation Jan. 1 Balance Owner's Capital Date Explanation Jan. 1 Balance 17 Owner's Drawings Date Explanation 2,329 1,000 3,329 J1 Balance Ref. Credit Debit 750 Jan. 31 1 750 Sales Revenue Date Jan. 12 Balance Explanation Ref. Debit Credit 3,450 3,450 31 20 5,750 2,300 J1 Cost of Goods Sold Date Explanation Ref. Debit Balance Credit 1.785 Jan. 12 1,785 J1 20 31 1.190 2.975 Ref. Debit Credit Balance 31 1,785 1.785 J1 1.190 2.975 Cost of Goods Sold Date Explanation Jan. 12 20 Salaries and Wages Expensec Date Explanation Jan. 28 Utilities Expense Date Explanation Jan. 31 Depreciation Expense Date Explanation Ref. Debit Credit Balance 31 160 160 Ref. Debit Credit Balance J1 70 70 Ref. Debit Credit Balance Adjusting 32 Insurance Expense Date Explanation Ref. Debit Credit Balance Adjusting J2 Balance Ref. Debit Credit Date Explanation 70 J1 70 Jan. 31 Depreciation Expense Credit Balance Debit Date Explanation Ref. Adjusting J2 Insurance Expense Credit Balance Debit Date Explanation Ref. Adjusting J2 Freight-out Balance Date Credit Explanation Ref. Debit 75 Jan. 14 31 75 Interest Expense Date Explanation Balance Ref. Debit Credit Adjusting J2 Because Natalic has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European mixers. The owner of Kzinski Supply Co. has approached Natalie to become the exclusive distributor of these fine mixers in her state. The current cost of a mixer is approximately $575, and Natalie would sell each one for $1,150. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified. The trial balance for Continuing Cookie Chronicle as on December 31, 2011 is as follows: Continuing Cookie Chronicle Trial Balance December 31, 2011 Account Debit Credit Cash $1,180 Accounts Receivable 875 n 350 1,210 1.200 $40 Supplies Prepaid Insurance Equipment Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable Unearned Service Revenue Interest Payable 75 56 300 15 Notes Payable 2,000 2,000 Notes Payable Owner's Capital 2,329 $4,815 $4,815 In the end, Natalie decides to use the perpetual inventory system. The following transactions happen during the month of January Jan. 4 6 7 8 12 14 Bought five deluxe mixers on account from Kzinski Supply Co. for $2,875, FOB shipping point, terms 1/30. Paid $100 freight on the January 4 purchase. Returned one of the mixers to Kzinski because it was damaged during shipping, Kzinski issues Continuing Cookie Chronicle credit for the cost of mixer plus $20 for the cost of freight that was paid on January 6 for one mixer. Collected $375 of the accounts receivable hom December 2015. Three deluxe mixers are sold on account for $3,450, FOB destination, terms n/30. (Cost of goods sold is $595 per mixer.) Paid the $75 of delivery charges for the three mixers that were sold on January 12. Bought four deluxe mixers on account from Krinski Supply Co. for $2,300. FOB shipping point, terms 1/30. Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She invests an additional $1,000 cash in Continuing Cookie Chronicle Paid $80 freight on the January 14 purchase. Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is $595 per mixer) Natalie issued a check to her assistant for all the help the assistant has given her during the month. Her assistant worked 20 hours in January and is also paid the $56 owed at December 31, 2016. (Natalie's assistant earns $8 an hour.) 14 17 18 20 28 Jan. 4 6 7 8 12 14 14 17 Bought five deluxe mixers on account from Kzinski Supply Co. for $2,875, FOB shipping point, terms /30. Paid $100 freight on the January 4 purchase, Returned one of the mixers to Kzinski because it was damaged during shipping, Kzinski issues Continuing Cookie Chronicle credit for the cost of mixer plus $20 for the cost of freight that was paid on January 6 for one mixer. Collected $375 of the accounts receivable from December 2015. Three deluxe mixers are sold on account for $3,450, FOB destination, terms n/30. Cost of goods sold is $595 per mixer.) Paid the $75 of delivery charges for the three mixers that were sold on January 12. Bought four deluxe mixers on account from Kzinski Supply Co. for $2,300, FOB shipping point, terms n/30. Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She invests an additional $1,000 cash in Continuing Cookle Chronicle. Paid $80 freight on the January 14 purchase. Sold two deluxe mixers for $2,300 cash. (Cost of goods sold is $595 per mixer.) Natalie issued a check to her assistant for all the help the assistant has given her during the month. Her assistant worked 20 hours in January and is also paid the $56 owed at December 31, 2016. (Natalie's assistant carns $8 an hour.) Collected the amounts due from customers for the January 12 transaction. Paid a $145 utility bill ($75 for the December 2016 accounts payable and $70 for the month of January). Paid Kzinski all amounts due. Natalie withdrew $750 for personal use. 18 20 28 28 30 31 31 Cash Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 1,180 6 01 100 1,080 8 J1 375 1,455 14 J1 75 1,380 17 J1 1.000 2,380 18 31 80 2,300 20 1 2.300 4,600 28 JI 216 4,384 28 JI 3,450 7,834 30 31 145 7.689 31 JI 4,580 3,109 31 31 750 2,359 Accounts Receivable Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 875 8 J1 375 500 24 Accounts Receivable Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 875 8 J1 375 500 12 31 3,450 3.950 28 J1 3,450 500 Merchandise Inventory Date Explanation Ref. Debit Credit Balance Jan. 4 31 2,875 2.875 6 31 100 2,975 7 31 595 2,380 12 31 1,785 595 14 J1 2.300 2,895 18 31 80 2,975 20 J1 1.190 1.785 Supplies Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 350 Ref. Debit Credit Balance 350 Supplies Date Explanation Jan. 1 Balance Prepaid Insurance Date Explanation Jan. 1 Balance Ref. Debit Balance Credit 1.210 Adjusting J2 Ref. Debit Credit Balance 1.200 Equipment Date Explanation Jan. 1 Balance Accumulated Depreciation- Equipment Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 40 Adjusting J2 Accounts Payable Date Explanation Ref. Debit Credit Balance Jan. 1 Balance 75 Accounts Payable Date Explanation Jan. 1 Balance Ref. Debit Credit Balance 75 4 J1 2.875 2,950 7 J1 595 2.355 14 01 2,300 4,655 30 J1 75 4,580 31 01 4.580 0 Ref. Debit Credit Balance 56 31 56 Salaries and Wages Payable Date Explanation Jan. 1 Balance 28 Unearned Service Revenue Explanation Jan. 1 Balance Interest Payable Date Explanation Date Ref. Debit Credit Balance 300 Ref. Debit Credit Balance Jan. 1 Balance 15 Credit Balance Debit Ref. 2.000 Balance Credit Ref. Debit Notes Payable Date Explanation Jan. 1 Balance Owner's Capital Date Explanation Jan. 1 Balance 17 Owner's Drawings Date Explanation 2,329 1,000 3,329 J1 Balance Ref. Credit Debit 750 Jan. 31 1 750 Sales Revenue Date Jan. 12 Balance Explanation Ref. Debit Credit 3,450 3,450 31 20 5,750 2,300 J1 Cost of Goods Sold Date Explanation Ref. Debit Balance Credit 1.785 Jan. 12 1,785 J1 20 31 1.190 2.975 Ref. Debit Credit Balance 31 1,785 1.785 J1 1.190 2.975 Cost of Goods Sold Date Explanation Jan. 12 20 Salaries and Wages Expensec Date Explanation Jan. 28 Utilities Expense Date Explanation Jan. 31 Depreciation Expense Date Explanation Ref. Debit Credit Balance 31 160 160 Ref. Debit Credit Balance J1 70 70 Ref. Debit Credit Balance Adjusting 32 Insurance Expense Date Explanation Ref. Debit Credit Balance Adjusting J2 Balance Ref. Debit Credit Date Explanation 70 J1 70 Jan. 31 Depreciation Expense Credit Balance Debit Date Explanation Ref. Adjusting J2 Insurance Expense Credit Balance Debit Date Explanation Ref. Adjusting J2 Freight-out Balance Date Credit Explanation Ref. Debit 75 Jan. 14 31 75 Interest Expense Date Explanation Balance Ref. Debit Credit Adjusting J2