Question 2 After establishing their company's fiscal year-end to be October 31, Natalie and Curtis begin operating Cookie & Coffee Creations Inc. on November 1, 2020. On that date, after the issuance of shares, the paid-in capital section of the company's balance sheet is as follows. Paid-in capital Preferred stock, $0.50 noncumulative, no par value, 10,000 shares authorized, 2,000 issued Common stock, no par value, 100,000 shares authorized, 25,930 issued $10,000 25,930 Cookie & Coffee Creations then has the following selected transactions during its first year of operations. Dec. 1 Issues an additional 800 preferred shares to Natalie's brother for $4,000. Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1. June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets. Oct. 31 The company has had a very successful first year of operations. It earned revenues of $462,500 and incurred operating expenses of $370,000 (including $750 legal fee, but excluding income tax). 31 Records income tax expense. (The company has a 20% income tax rate.) 31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1. Your answer is partially correct. Try again. Prepare the journal entries to record the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account tities and enter o for the amounts. Record journal entries in the order displayed in the problem statement.) Debit Credit Date Dec. 1 Account Titles and Explanation cash 4000 Preferred Stock 4000 Apr. 30 + | Cash Dividends Dividends Payable T June 1 + Dividends Payable Cash 1.oundHNH0cl !! didelined! June 30 | Treasury Stock Cash TOct. 31 cash Sales Revenue 462500 (To record income tax expense) TOct. 31 Operating Expenses 370000 Cash JUL 37000 370000 (To record dividend declared) Your answer is partially correct. Try again. Prepare the statement of retained earnings for the year. (List items that increase retained earnings first. If answer is zero, please enter 0, do not leave any field blank.) COOKIE & COFFEE CREATIONS INC. Statement of Retained Earnings Year Ended October 31, 2021 A T Balance, November 1, 2020 | $ 0 Add AT Net Income / (Loss) - T. 74000 74000 Less 3. I Dividends Dividends LE 700 T Balance, October 31, 2021 A 72600 SHOW LIST OF ACCOUNTS LINK TO TEXT Your answer is partially correct. Try again. Prepare the stockholders' equity section of the balance sheet as of October 31, 2021. (Enter account name only and do not provide descriptive information.) COOKIE & COFFEE CREATIONS INC. Partial Balance Sheet October 31, 2021 Stockholders' Equity T Stockholders' Equity | Common Stock 25,180 Preferred Stock 140000 Current Liabilities Paid-in Capital in Excess of Stated Value-Common St Retained Earnings 72600 7 Less 500 Treasury Stock T Total Stockholders' Equity 111,280 Your answer is partially correct. Try again. Prepare closing entries. (Use Operating Expenses and Income Tax Expense as the only expense accounts.) (Credit account titles are automatically indented when amount is entered. Do not ndent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit Credit Oct. 31 Sales Revenue 462,500 Income Summary 462500 (To close revenue account) Oct. 31 | Income Summary 370,00 000 Operating Expenses 370,000 Income Tax Expense OU (To close expense accounts) Oct. 31 | Income Summary 1400 | Retained Earnings 1400 (To close net income / (loss)) Click if you would like to Show Work for this question: Open Show Work
