Natalie's friend, Curtis Lesperance, decides to meet with Natalie after hearing that her discussions about a possible business partnership with her friend Katy Peterson have failed. (Natalle had decided that forming a partnership with Katy, a high school friend, would hurt their friendship. Natalie had also concluded that she and Katy were not compatible to operate a business venture together Because Natalie has been so successful with Continuing Cookie Chronice 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. Because of the advantage of limited personal ability, they decide to form a corporation Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier, Natalie's business consists of giving cookie-making desses and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents to give her cooking-making classes and demonstrations of the mixers that she sells Natalie will also hire, train, and supervise staff to bake the cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel time going from one place to another. Another advantage is that the coffee shop will have one central cation for selling the mixer The current market values of the assets of both businesses are as follows. Curtis's Coffee Continuing Cookie Chronicle Cash $12.000 Accounts receivabi 100 Inventory 450 1.200 Equipment 2.500 1.000- Cookie Chronicle decided not to buy the delivery van considered in Chapter 10 Combining forces will also allow Natalie and Curtis to poor their resources and buy a few more asset to run their new business venture, Curtis and Natalie then meet with a lawyer and form a corporation on November 1, 2020, caled Cookies Coffee Creation Inc. The articles of corporation Materat there will be two one of shares that the corporation is authored to me common shares and preferred shares. The authorize 100,000 na shares of common ock, 10,000 na par shares of preferred stock with # $0.50 noncumulative dividend, The assets held by each of the sole proprietorships will be transferred into the corporation at current market value Curtis will receive 10.180 common shares, and Nature will receive 15,000 common shares in the corporation. Therefore, the shares have a fair value of 51 per share Natalie and Curtis are very excited about this new business venture. They come to you with the following questions 300 Assume that Cookie & Coffee Creations Inc. Issues 1,000 $0.50 noncumulative preferred shares to Curtis's dad and the same number to Natalie's grandmother, in both cases for $5,000. Also assume that Cookie & Coffee Creations Inc, issues 750 common shares to its lawyer. Prepare the journal entries for each of these transactions. They all occurred on November 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Nov. 1 (To record issue of preferred stock) Nov. 1 (To record issue of common shares to lawyer HOW T OF ACCOUNTS
