SWEET TREATS PRACTICE SET Madison Carter spent much of her childhood learning the art of cookie-making from her grandmother. They spent many enjoyable 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, Madison 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 Madison has to somehow include cookies in her business plan. After a series of brainstorming sessions, Madison settles on the idea of operating a cookie-making school called "Sweet Treats". She will start on a part-time basis and offer her services "in-house". 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. Madison decides to operate Sweet Treats as a sole proprietorship beginning on October 8th, with her year end at December 31s! She purchased a new cell phone to use only for business operations. She also created a checklist to help her remember which elements of the accounting cycle need to be completed daily, monthly, and yearly. Daily: (October) Record transactions in the general journal and post to the general ledger. (November & December) Record transactions in the four special journals, as needed -cash receipts journal, cash payments journal, purchases journal, and sales journal. Use the general journal to record anything that does not go into the special journals. (November & December) Post transactions into the two subsidiary ledgers, as needed - the accounts receivable subsidiary ledger and accounts payable subsidiary ledger. Use the general ledger to post anything that comes directly from the general journal. Monthly Journalize and post adjusting entries. Complete a worksheet for each month. (November & December) Post special journals totals to the necessary general ledger accounts. Yearly: Create financial statements for the year end December 31st - multi-step income statement, owner's equity statement, balance sheet, and statement of cash flows. Journalize and post closing entries. Prepare a post-closing trial balance. . . Madison continues to stay in touch with her grandmother during the first few months of operation. She appreciates that her grandmother has been so supportive of her. Madison has dreams of opening up a local Sweet Treats shop when she graduates from college. She wants to hire more employees and start offering more classes. INSTRUCTIONS 1. Record the followir transactions according to Madison's checklist above. Be sure to read any new details given prior to each months' transactions. 2. Prepare any necessary worksheets or forms according to Madison's checklist above. 3. Record all information in the provided spreadsheets. Be sure to include headers, dates, explanations, and totals when appropriate. Add rows as needed. 4. Follow all recording, journalizing, and posting rules provided in your textbook. The following transactions occurred during the month of October. Oct. 8 Madison cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name Sweet Treats and transfers $500 from her personal account to the new account. 11 Madison pays $65 for advertising. Check 153. 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. Check 154. 14 Madison 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. Madison decides to start using it only in her new business. She estimates that the food processor is currently worth $300. She invests the food processor in the business. (Record the asset at current worth.) 16 Madison realizes that her initial cash investment is not enough. Her grandmother lends her $5,000 cash, for which Madison signs a note payable in the name of the business. Madison deposits the money in the business bank account. The note will be repaid in 24 months. 17 She buys more baking equipment for $900 cash. Check 155. 20 She teaches her first class and collects $125 cash. 25 30 Madison withdraws $100 from the business for personal expenditures. Check 156. Madison pays $1,320 for a one-year insurance policy that will expire on November 1 of the next year. Check 157. 30 A friend of Madison's asked her to teach a class at the neighborhood school, Newbury Elementary School. Madison agreed and taught a group of 35 first-grade students how to make gingerbread cookies. The next day, Madison prepared an invoice for $300 and left it with the school principal. The principal said that he will pass the invoice along to the head office, and it will be paid sometime in November. As of October 31, the following adjusting entry data is available. 1. A count reveals that $35 of baking supplies were used during October. 2. Madison estimates that her baking equipment depreciates $20 per month. 3. Madison's grandmother has decided to charge 8.4% interest on the note, and the loan plus interest is to be repaid in 24 months. Madison has decided to accrue the interest each month just to be sure her books correctly reflect what needs to be repaid. She will accrue a full month's interest in October, since she wouldn't even be off the ground without her grandma's help. 4. Madison had a friend assist her with the Newbury Elementary School class. She decides to hire her friend as an employee. She owes her $45 for the October 30 class, that she will pay on November 15. SWEET TREATS PRACTICE SET Madison Carter spent much of her childhood learning the art of cookie-making from her grandmother. They spent many enjoyable 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, Madison 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 Madison has to somehow include cookies in her business plan. After a series of brainstorming sessions, Madison settles on the idea of operating a cookie-making school called "Sweet Treats". She will start on a part-time basis and offer her services "in-house". 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. Madison decides to operate Sweet Treats as a sole proprietorship beginning on October 8th, with her year end at December 31s! She purchased a new cell phone to use only for business operations. She also created a checklist to help her remember which elements of the accounting cycle need to be completed daily, monthly, and yearly. Daily: (October) Record transactions in the general journal and post to the general ledger. (November & December) Record transactions in the four special journals, as needed -cash receipts journal, cash payments journal, purchases journal, and sales journal. Use the general journal to record anything that does not go into the special journals. (November & December) Post transactions into the two subsidiary ledgers, as needed - the accounts receivable subsidiary ledger and accounts payable subsidiary ledger. Use the general ledger to post anything that comes directly from the general journal. Monthly Journalize and post adjusting entries. Complete a worksheet for each month. (November & December) Post special journals totals to the necessary general ledger accounts. Yearly: Create financial statements for the year end December 31st - multi-step income statement, owner's equity statement, balance sheet, and statement of cash flows. Journalize and post closing entries. Prepare a post-closing trial balance. . . Madison continues to stay in touch with her grandmother during the first few months of operation. She appreciates that her grandmother has been so supportive of her. Madison has dreams of opening up a local Sweet Treats shop when she graduates from college. She wants to hire more employees and start offering more classes. INSTRUCTIONS 1. Record the followir transactions according to Madison's checklist above. Be sure to read any new details given prior to each months' transactions. 2. Prepare any necessary worksheets or forms according to Madison's checklist above. 3. Record all information in the provided spreadsheets. Be sure to include headers, dates, explanations, and totals when appropriate. Add rows as needed. 4. Follow all recording, journalizing, and posting rules provided in your textbook. The following transactions occurred during the month of October. Oct. 8 Madison cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. 8 She opens a bank account under the name Sweet Treats and transfers $500 from her personal account to the new account. 11 Madison pays $65 for advertising. Check 153. 13 She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. Check 154. 14 Madison 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. Madison decides to start using it only in her new business. She estimates that the food processor is currently worth $300. She invests the food processor in the business. (Record the asset at current worth.) 16 Madison realizes that her initial cash investment is not enough. Her grandmother lends her $5,000 cash, for which Madison signs a note payable in the name of the business. Madison deposits the money in the business bank account. The note will be repaid in 24 months. 17 She buys more baking equipment for $900 cash. Check 155. 20 She teaches her first class and collects $125 cash. 25 30 Madison withdraws $100 from the business for personal expenditures. Check 156. Madison pays $1,320 for a one-year insurance policy that will expire on November 1 of the next year. Check 157. 30 A friend of Madison's asked her to teach a class at the neighborhood school, Newbury Elementary School. Madison agreed and taught a group of 35 first-grade students how to make gingerbread cookies. The next day, Madison prepared an invoice for $300 and left it with the school principal. The principal said that he will pass the invoice along to the head office, and it will be paid sometime in November. As of October 31, the following adjusting entry data is available. 1. A count reveals that $35 of baking supplies were used during October. 2. Madison estimates that her baking equipment depreciates $20 per month. 3. Madison's grandmother has decided to charge 8.4% interest on the note, and the loan plus interest is to be repaid in 24 months. Madison has decided to accrue the interest each month just to be sure her books correctly reflect what needs to be repaid. She will accrue a full month's interest in October, since she wouldn't even be off the ground without her grandma's help. 4. Madison had a friend assist her with the Newbury Elementary School class. She decides to hire her friend as an employee. She owes her $45 for the October 30 class, that she will pay on November 15