Continuing Cookie Creations 05 b-g Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is to become the exclusive distributor of a line of fine European mixers. The current cost of a mixer is approximately $550, and Natalie would sell each one for $1,100. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified. In the end, Natalie decides to use the perpetual method of accounting for inventory, and the following transactions happen during the month of January. Jan. 4 6 7 8 12 13 14 14 17 18 20 28 She buys five deluxe mixers on account from Kzinski Supply Co. for $2,750, terms n/30. She pays $100 freight on the January 4 purchase. Natalie returns one of the mixers to Kzinski because it was damaged during shipping. Kzinski issues Cookie Creations credit for the cost of the mixer plus $20 for the cost of freight that was paid on January 6 for one mixer. She collects the amount due from the neighborhood community center that was accrued at the end of December 2020. She sells three deluxe mixers on account for $3,300, FOB destination, terms n/30. The mixers cost $570 each (including freight). Natalie pays her cell phone bill previously accrued in the December adjusting journal entries. She pays $75 of delivery charges for the three mixers that were sold on January 12. She buys four deluxe mixers on account from Kzinski Supply Co. for $2,200, terms n/30. Natalie is concerned that there is not enough cash available to pay for all of the mixers purchased. She issues additional common stock for $1,000. She pays $80 freight on the January 14 purchase. She sells two deluxe mixers for $2,200 cash. Natalie issues a check to her assistant. Her assistant worked 20 hours in January and is also paid for the amount accrued at December 31, 2020. Recall that Natalie's assistant earns $8 an hour. Natalie collects amounts due from customers from the January 12 transaction. She pays Kzinski all amounts due. Cash dividends of $750 are paid. 28 31 31 The adjusted trial balance from December is presented below. COOKIE CREATIONS INC. Adjusted Trial Balance December 31, 2020 Debit Credit Cash $1,340 Accounts Receivable 1,450 Supplies 400 Prepaid Insurance 1,100 Equipment 1,200 Accumulated Depreciation-Equipment $40 Website 575 Accounts Payable 75 Interest Payable 23 Salaries and Wages Payable 56 Unearned Service Revenue 360 Notes Payable 2,000 Common Stock 800 Dividends 500 Service Revenue 5,450 Utilities Expense 125 Salaries and Wages Expense 856 Supplies Expense 1,070 Depreciation Expense 40 Amortization Expense 25 Interest Expense 23 Insurance Expense 100 $8,804 $8,804 Post the adjusting journal entries required. Cash Date Debit Credit Explanation Jan.1 Balance 6 100 8 450 13 75 14 75 17 1,000 Balance 1,340 1,240 1,690 1,615 1,540 2,540 2,460 4,660 4,444 7,744 3,364 2,614 18 80 20 2,200 28 216 28 3,300 4,380 750 31 31 Accounts Receivable Date Explanation Jan. 1 Balance Debit Credit Balance 1,450 8 450 12 3,300 1,000 4,300 1,000 28 3,300 Inventory Date Credit Explanation Jan. 4 Debit 2,750 100 Balance 2,750 6 2,850 2,280 7 570 12 1,710 570 14 2,200 18 80 2,770 2,850 1,710 1,140 Debit Credit Balance 400 Debit Credit Balance 1,100 20 Supplies Date Explanation Jan. 1 Balance Prepaid Insurance Date Explanation Jan. 1 Balance Adjusting Equipment Date Explanation Jan. 1 Balance Accumulated Depreciation Equipment Date Explanation Jan. 1 Balance Debit Credit Balance 1,200 Debit Credit Balance 40 Adjusting Website Date Debit Credit Explanation Jan. 1 Balance Balance 575 Adjusting Accounts Payable Date Explanation Jan. 1 Balance 4 Debit Credit Balance 75 2,750 7 570 2,825 2,255 2,180 4,380 13 75 14 2,200 31 4,380 0 Debit Credit Balance 56 56 0 Adjusting Salaries and Wages Payable Date Explanation Jan. 1 Balance 28 Interest Payable Date Explanation Jan. 1 Balance Adjusting Unearned Service Revenue Date Explanation Jan. 1 Balance Debit Credit Balance 23 Debit Credit Balance 360 Debit Credit Balance 2,000 Debit Credit Balance 800 1,800 1,000 Debit Credit Balance 2,711 Notes Payable Date Explanation Jan. 1 Balance Common Stock Date Explanation Jan. 1 Balance 17 Retained Earnings Date Explanation Jan. 1 Balance Dividends Date Explanation Jan. 31 Sales Revenue Date Explanation Jan. 12 20 Cost of Goods Sold Date Explanation Jan. 12 Credit Debit 750 Balance 750 Debit Credit 3,300 2,200 Balance 3,300 5,500 Credit Debit 1,710 1,140 Balance 1,710 2,850 20 Salaries and Wages Expense Date Explanation Jan. 28 Debit Credit Balance 160 160 Debit Credit Balance Debit Credit Balance Debit Credit Balance Utilities Expense Date Explanation Adjusting Depreciation Expense Date Explanation Adjusting Amortization Expense Date Explanation Adjusting Insurance Expense Date Explanation Adjusting Freight-out Date Explanation Jan. 14 Interest Expense Date Explanation Debit Credit Balance Debit Credit Balance 75 75 Debit Credit Balance Adjusting