Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 10.) CCC11 Part 1 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 other's 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 supplier. Natalie's 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 Natalie will save on travel, and the coffee shop will provide Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture. local the premises one central location for selling the mixers. on The current market values of the assets of both businesses are as follows Curtis' Coffee Cookie Creations Description $ 7.500 Cash S12,000 Accounts receivable 100 500 Merchandise inventory 450 1,130 Equipment 2.500 1.000 $14.630 $10.550 Curtis and Natalie meet with a lawyer and form their corporation, called Cookie & Coffee Creations Inc., on November 1, 2018. The new stock and 10,000 shares of no par, $6 cumulative preferred stock. corporation is authorized to issue 50,000 shares of $1 par common 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 Natalie and Curtis are very excited about this new business venture. They come to you with the following questions. 1. Curtis' dad and Natalie's grandmother are interested in investing $5,000 each in the new business venture. Curtis and Natalie are considering issuing them preferred shares. What would be the advantage of issuing them preferred stock instead of common? 2. What would be the advantages and disadvantages of issuing cumulative preferred? 3. "Our lawyer sent us a bill for $750. When we talked the bill over with her, she said she would be willing to receive common stock in our corporation instead of cash. We would be happy to issue her stock, but we're worried about accounting for this transaction. Can we do this? If so, how do we determine how many shares to give her? Instructions (a) Answer Natalie and Curtis' questions