COOKIE CREATIONS

(Note: This is a continuation of the Cookie Creations from Chapter 1.)

CC2After researching the different forms of business organization. Natalie Koebel decides to operate Cookie Creations as a proprietorship. She then starts the process of getting the business running. In November 2021, the following activities take place.

Nov.8Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.

8She opens a bank account under the name Cookie Creations and transfers $500 from her personal account to the new account.

11Natalie pays $65 for advertising.

13She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. (Hint: Use Supplies account.)

14Natalie starts to gather some baking equipment to take with her when teaching the cookie classes. She has an excellent top-of-the-line food processor and mixer that originally cost her $750. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300. She invests the equipment in the business.

16Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 cash, for which Natalie signs a note payable in the name of the business. Natalie deposits the money in the business bank account. (Hint: The note does not have to be repaid for 24 months. As a result, the note payable should be reported in the accounts as the last liability and also on the balance sheet as the last liability.)

17She buys more baking equipment for $900 cash.

20She teaches her first class and collects $125 cash.

25Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down payment.

30Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2022.

Instructions

(a)Prepare journal entries to record the November transactions.

(b)Post the journal entries to general ledger accounts.

(c)Prepare a trial balance at November 30.