Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they

Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each others business expertise. Curtis and Natalie next evaluate the different types of business organization, and because of the advantage of limited personal liability, decide to form a new corporation. Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalies business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents as a location for her cookie-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff hired to bake cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel, and the coffee shop will provide one central location for selling the mixers. Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture. The current market values of the assets of both businesses are as follows.

Description Curtis Coffee Cookie Creations

Cash

$7,500 $12,000

Accounts receivable

100 500

Inventory

450 1,130

Equipment

2,500 1,000
$10,550 $14,630

Curtis and Natalie meet with a lawyer and form their corporation, called Cookie & Coffee Creations Inc., on November 1, 2021. The new corporation is authorized to issue 50,000 shares of $1 par common stock and 10,000 shares of no par, $6 cumulative preferred stock. The assets held by each business will be transferred into the corporation at current market value of $1 per share. Curtis will receive 10,550 common shares, and Natalie will receive 14,630 common shares in the corporation.

Prepare the opening balance sheet for Cookie & Coffee Creations Inc. as of November 1, 2021, including the journal entries in (b) and (c) above. (List Current assets in order of liquidity. For preferred stock and common stock enter the account name only and do not provide the descriptive information provided in the question.)

COOKIE & COFFEE CREATIONS INC. Balance Sheet choose the accounting period For the Year Ended November 1, 2021For the Month Ended November 1, 2021November 1, 2021

Assets

select an opening name for subsection one Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

enter a balance sheet item

$enter a dollar amount

enter a balance sheet item

enter a dollar amount

enter a balance sheet item

enter a dollar amount

select a closing name for subsection one Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$enter a total amount for subsection one

select an opening name for subsection two Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

enter a balance sheet item

enter a dollar amount

select a closing section name for this part of the balance sheet Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$enter a total amount for this part of the balance sheet

Stockholders' Equity

select an opening subsection name Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

enter a balance sheet item

$enter a dollar amount

enter a balance sheet item

enter a dollar amount

select a closing subsection name Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$enter a subtotal of the two previous amounts

enter a dollar amount

select a closing section name for this part of the balance sheet Capital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRetained EarningsStockholders' EquityTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity

$enter a total amount for this part of the balance sheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Quest For A Science Of AccountingAn Anthology Of The Research Of Robert R. Sterling

Authors: Thomas A. Lee, Peter W. Wolnizer

1st Edition

0367698196, 9780367698195

More Books

Students also viewed these Accounting questions

Question

Did you include SEC required financial data?

Answered: 1 week ago