Week $5-$ Assignment: Mastering the Accounting Cycle, Part II

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After 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.

The following trial balance for November $30.$

COOKIE CREATIONS

Trial Balance

November $30$

Debit

Credit

Cash

$$1,080$

Supplies

$120$

Prepaid Insurance

$1,270$

Equipment

$1,200$

Unearned Service Revenue

$$30$

Notes Payable

$2,800$

Owners Capital

$780$

Service Revenue

$120$

Advertising Expense

$60$

Totals

$$3,730$

$$3,730$

Nov. $8$ Natalie cashes her U$.$S$.$ Savings Bonds and receives $$500,$ which she deposits in her personal bank account.

$8$ She opens a bank account under the name Cookie Creations and transfers $$480$ from her personal account to the new account.

$11$ Natalie pays $$60$ for advertising.

$13$ She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $$120$ cash. $($Hint: Use Supplies account.$)$

$14$ Natalie 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 $$720.$ Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $$300.$ She invests the equipment in the business.

$16$ Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $$2,800$ 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.$)$

$17$ She buys more baking equipment for $$900$ cash.

$20$ She teaches her first class and collects $$120$ cash.

$25$ Natalie books a second class for December $4$ for $$140.$ She receives $$30$ cash in advance as a down payment.

$30$ Natalie pays $$1,270$ for a one$-$year insurance policy that will expire on December $1,2022.$

It is the end of November, and Natalie has been in touch with her grandmother. Her grandmother asked Natalie how well things went in her first month of business. Natalie, too, would like to know if she has been profitable or not during November. Natalie realizes that in order to determine Cookie Creations income, she must first make adjustments.

Natalie puts together the following additional information.

$1.$ A count reveals that $$35$ of baking supplies were used during November.

$2.$ Natalie estimates that all of her baking equipment will have a useful life of $5$ years or $60$ months. $($Assume Natalie decides to record a full months worth of depreciation, regardless of when the equipment was obtained by the business.$)$

$3.$ Natalies grandmother has decided to charge interest of $6\%$ on the note payable extended on November $16.$ The loan plus interest is to be repaid in $24$ months. $($Assume that half a month of interest accrued during November.$)$

$4.$ On November $30,$ a friend of Natalies asks her to teach a class at the neighborhood school. Natalie agrees and teaches a group of $35$ first$-$grade students how to make gingerbread cookies. The next day, Natalie prepares an invoice for $$290$ and leaves it with the school principal. The principal says that he will pass the invoice along to the head office, and it will be paid sometime in December.

$5.$ Natalie receives a utilities bill for $$45.$ The bill is for utilities consumed by Natalies business during November and is due December $15.$

Using the information above, do the following.

$($a$1)$

Your answer is partially correct.

Prepare the adjusting journal entries. $($List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.$)$

No$.$

Date

Account Titles and Explanation

Debit

Credit

$1.$

Nov. $30$

enter an account title for the adjusting entry on November $30$

Supplies Expense

Correct answer

enter a debit amount

$35$

Correct answer

enter a credit amount

Correct answer

enter an account title for the adjusting entry on November $30$

Supplies

Correct answer

enter a debit amount

Correct answer

enter a credit amount

$35$

Correct answer

$2.$

Nov. $30$

enter an account title for the adjusting entry on November $30$

Depreciation Expense

Correct answer

enter a debit amount

$20$

Correct answer

enter a credit amount

Correct answer

enter an account title for the adjusting entry on November $30$

Accumulated Depreciation$-$Equipment

Correct answer

enter a debit amount

Correct answer

enter a credit amount

$20$

Correct answer

$3.$

Nov. $30$

enter an account title for the adjusting entry on November $30$

Interest Expense

Correct answer

enter a debit amount

Incorrect answer

enter a credit amount

$84$

Incorrect answer

enter an account title for the adjusting entry on November $30$

Interest Payable

Correct answer

enter a debit amount

$84$

Incorrect answer

enter a credit amount

Incorrect answer

$4.$

Nov. $30$

enter an account title for the adjusting entry on November $30$

Accounts Receivable

Correct answer

enter a debit amount

$290$

Correct answer

enter a credit amount

Correct answer

enter an account title for the adjusting entry on November $30$

Service Revenue

Correct answer

enter a debit amount

Correct answer

enter a credit amount

$290$

Correct answer

$5.$

Nov. $30$

enter an account title for the adjusting entry on November $30$

Utilities Expense

Correct answer

enter a debit amount

$45$

Correct answer

enter a credit amount

Correct answer

enter an account title for the adjusting entry on November $30$

Accounts Payable

Correct answer

enter a debit amount

Correct answer

enter a credit amount

$45$

Correct answer

eTextbook and Media

List of AccountsAssistance Used

Attempts: unlimited

$($a$2)$

Your answer is partially correct.

Post the adjusting journal entries. $($Post entries in the order of journal entries presented in the previous question.$)$

Cash

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$1,080$

Accounts Receivable

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

$0$

Incorrect answer

enter a credit amount

$0$

Incorrect answer

enter a balance amount

$0$

Incorrect answer

Supplies

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$120$

$30$

J$2$

enter a debit amount

Incorrect answer

enter a credit amount

$35$

Correct answer

enter a balance amount

$35$

Incorrect answer

Prepaid Insurance

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$1,270$

Equipment

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$1,200$

Accumulated DepreciationEquipment

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

enter a debit amount

$20$

Incorrect answer

enter a credit amount

Incorrect answer

enter a balance amount

$20$

Correct answer

Accounts Payable

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

$23\mathrm{.}33$

Incorrect answer

enter a credit amount

Incorrect answer

enter a balance amount

$23\mathrm{.}33$

Incorrect answer

Interest Payable

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

$23\mathrm{.}33$

Incorrect answer

enter a credit amount

Incorrect answer

enter a balance amount

$23\mathrm{.}33$

Incorrect answer

Unearned Service Revenue

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$30$

Notes Payable

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$2,800$

Owners Capital

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$780$

Service Revenue

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

Balance

$120$

$30$

J$2$

enter a debit amount

Incorrect answer

enter a credit amount

$120$

Incorrect answer

enter a balance amount

$120$

Incorrect answer

Utilities Expense

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

$45$

Correct answer

enter a credit amount

Correct answer

enter a balance amount

$45$

Correct answer

Advertising Expense

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

$60$

$60$

Supplies Expense

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

$35$

Correct answer

enter a credit amount

Correct answer

enter a balance amount

$35$

Correct answer

Depreciation Expense

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

Incorrect answer

enter a credit amount

$20$

Incorrect answer

enter a balance amount

$20$

Correct answer

Interest Expense

Date

Explanation

Ref.

Debit

Credit

Balance

Nov. $30$

J$2$

enter a debit amount

Incorrect answer

enter a credit amount

$23\mathrm{.}33$

Incorrect answer

enter a balance amount

$23\mathrm{.}33$

Incorrect answer

eTextbook and Media

List of Accounts

Attempts: unlimited

$($b$)$

Prepare an adjusted trial balance.

COOKIE CREATIONS

Adjusted Trial Balance

choose the accounting period

For the Month Ended November $30,2021$

Debit

Credit

enter an account title

$enter a debit balance

$enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

enter an account title

enter a debit balance

enter a credit balance

Totals

$enter a total for the debit column

$enter a total for the credit column

eTextbook and Media

List of AccountsAssistance Used

Accounts Payable

Accounts Receivable

Accumulated Depreciation$-$Buildings

Accumulated Depreciation$-$Equipment

Advertising Expense

Buildings

Cash

Depreciation Expense

Equipment

Insurance Expense

Interest Expense

Interest Payable

Land

Maintenance and Repairs Expense

Mortgage Payable

No Entry

Notes Payable

Owner's Capital

Owner's Drawings

Prepaid Advertising

Prepaid Insurance

Prepaid Rent

Rent Expense

Rent Revenue

Salaries and Wages Expense

Salaries and Wages Payable

Sales Revenue

Service Revenue