PART 1. Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of her second year in college, Natalie is investigating various possibilities for starting her own business as part of the requirements of the entrepreneurship program in which she is enrolled. A long-time friend insists that Natalie has to somehow include cookies in her business plan. After a series of brainstorming sessions, Natalie settles on the idea of operating a cookie-making school. She will start on a part-time basis and offer her services in people's homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on holiday cookies. She will offer individual lessons and group sessions (which will probably be more entertainment than education for the participants). Natalie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on "Cookie Creations" and then moves on to more important issues. Instructions: a) Discuss the form of business organization (proprietorship, partnership, or corporation) do you recommend that Natalie will use for her business? Discuss the advantages and disadvantages of each form and give the reasons for your choice. (5 marks) b) Describe why Natalie need accounting information? If yes, what information will she need and why? How often will she need this information? (5 marks) o Predict specific asset, liability, and owner's equity accounts that Cookie Creations will likely use to record its business transactions. (5 marks) .) Explain why should Natalie open a separate bank account for the business? (5 marks) Marking scheme -d) 1) Relevance of the answer to the question 2) Completeness of we 3) Organization and logiese PART 2. Angela Duffy opens her own law office on July, 1 2018. During the first month of operations, the following transactions occurred. 1. Invested BHD 10,000 in cash in the law practice. 2. Paid BHD 800 for July rent expense on office space. 3. Purchased office equipment on account BHD 3,000. 4. Provided legal services to clients for cash BHD 1,500. 5. Borrowed BHD 700 cash from a bank. 6. Performed legal services for a client on account BHD 2,000. 7. Paid monthly expenses: salaries BHD 500, utilities BHD 300, and telephone BHD 100. Instructions a) Use a tabular summary (worksheet) to record the previous transactions. (Marking Scheme: 1 mark each entry = 7 Marks) b) Produce the income statement for the month of July (5 marks) c) Produce the balance sheet at July 31. (5 marks) d) Demonstrate the usefulness of income statement and balance sheet in making decisions.( 5 marks) Marking scheme for preparing Income statement & Balance Sheet o Unsatisfactory-Shows little to no understanding of the principles in journalizing transactions 1-2 Partially Proficient-Shows basic understanding of the principles in journalizing transactions. 3-4 Proficient-Shows good understanding of the principles in joumalizing transactions. Advanced-Shows well developed understanding of the principles in journalizing transactions PART 3. A good fixed asset system will provide for quick and efficient asset entry at the time of purchase, accurate tracking, customized depreciation calculations, and user-friendly reports for quick analysis. Required: Illustrate the features of a good fixed asset system. (5 marks) Marking scheme:( a-d) 1) Relevance of the answer to the question 2) Completeness of answer 3) Organization and logic answer 2 marks -2 marks -1 mark PART 4. ARAMCO Company purchases factory machine at a cash price of $ 100,000. Related expenditures are sales taxes $ 3000, Insurance after the installation is $ 6000 and Installation and testing $ 1,500. The machine has an estimated useful life of 6 years and salvage value is $2,000. 1. Compute the cost component of the machine. Marking Scheme: .5 mark for every cost component x 4 = 2 Marks 2. Compute the total costs of the machine. Marking Scheme: Correct formula & answer = 2 marks 3. Using straight line method, how much will be the annual depreciation cost? Marking Scheme: Correct formula & answer = 2 marks 4. Compute the book value of the machine at the end of the 4th year? Marking Scheme: Correct Presentation-2 marks; Correct Amount-1 mark; Total 3 marks PART 5. Prepare a Cash flow statement by using the below data of the Cash account 31.12.2017 50 Payment to suppliers 2,000 Beginning Balance 31.1.2017 Equity shares Receipt from customers Sale of fixed asset 300 Purchase of fixed assets 200 12,800 Overhead expenses 200 100 100 250 50 Wages and salaries taxation Dividend Repayment of Loan Ending Balance (31.12.2017) 300 150 3.2501 3.250 Direction: Using the above details 1. Compute the operating activities Marking Scheme: Computation: 2 Marks, Correct Answer: 1 Mark, Total: 3 Marks 2. Compute the Investment Activities Marking Scheme: Computation: 2 Marks, Correct Answer: 1 Mark, Total: 3 Marks 3. Compute the Financial Activities Marking Scheme: Computation: 2 Marks, Correct Answer: 1 Mark, Total: 3 Marks