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 COOKIE CREATIONS INC. Income Statement For the Month Ended January 31, 2021 $ Prepare a retained earnings statement for the month ended January 31, 2021. (List items that increase retained earnings first.) COOKIE CREATIONS INC. Retained Earnings Statement For the Month Ended January 31, 2021 Prepare a classified balance sheet as of January 31, 2021. (List current assets in order of liquidity.) COOKIE CREATIONS INC. Balance Sheet Assets $ M Liabilities and Stockholders' Equity $ $
