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General Journal Page 1
Date Description Debit Credit1 Nov-09 8 Cash a/c 301 5002 N Koebel Capital a/c 101 5003
4
5 11 Advertising Supplies 101 656 Cash a/c 104 657
8
9 13 Baking Supplies 101 12510 Cash a/c 105 12511
12
13 14 Baking Equipment 301 30014 N Koebel Capital a/c 107 30015
16
17 16 Cash a/c 204 200018 Notes Payable 101 200019
20
21 17 Baking Equipment 101 90022 Cash a/c 107 90023
24 20 Cash a/c 401 12525 Teaching Revenue 101 12526
27
28 25 Cash a/c 203 3029 Unearned Revenue 101 3030
31
32 30 Prepaid Insurance 101 132033 Cash a/c 106 132034
35 30 Advertising Supplies Expense 105 3536 Baking Supplies 503 3537
38 30 Depreciation Expense 108 2039 Accumulated Depreciation - Baking Equip 504 2040
41 30 Interest Expense 202 542 Interest Payable 507 543
44 30 Accounts Receivable 401 30045 Teaching Revenue 102 30046
47 30 Telephone Expense 201 4548 Accounts payable A/c 509 45
Post.Ref.
49
General Journal Page 2
Date Description Debit Credit1 Jan-10 4 Merchandise Inventory 201 28752 Accounts Payable 103 28753
4 6 Merchandise Inventory 101 1005 Cash 103 1006
7 7 Accounts Payable 103 1208 Merchandise Inventory 201 1209
10 8 Cash 102 37511 Accounts Receivable 101 37512
13 12 Accounts Receivable 402 345014 Sales 102 345015
16 12 Cost of good Sold 103 178517 Merchandise Inventory 501 178518
19 14 Freight Out 101 7520 Cash 505 7521
22 14 Merchandise Inventory 201 230023 Accounts Payable 103 230024
25 17 Cash A/c 301 100026 N Koebel Capital 101 100027
28 18 Merchandise Inventory 101 8029 Cash 103 8030
31 20 Cash 402 230032 Sales 101 230033
34 20 Cost of good Sold 103 119035 Merchandise Inventory 501 119036
37 28 Salaries Expense 101 16038 Accounts Payable 101 5639 Cash 508 21640
41 28 Cash 102 345042 Accounts Receivable 101 345043
44 30 Telephone Expenses A/c 101 7045 Accounts Payable 101 7546 Cash 509 14547
Post.Ref.
48 31 Accounts Payable 101 505549 Cash 201 5055
31 N Koebel Drawings 101 750 Cash 302 750
Adjusting Entries31 Depreciation Expense 108 20
Accumulated Depreciation - Baking Equip 504 20(Depreciation Charge on Baking Material)
31 Interest Expense 202 10 Interest Payable 507 10(6% Int due on Notes Payable)
31 Insurance Expense 106 110 Prepaid Insurance 506 110(Being Insurance Expired)
General Ledger
Account: Cash Account Number: 101 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 8 N Koebel Capital 2 500 500Nov-09 11 Advertising Supplies 5 65 435Nov-09 13 Baking Supplies 9 125 310Nov-09 16 Notes Payable 18 2000 2,310Nov-09 17 Baking Equipment 21 900 1,410Nov-09 20 Teaching Revenue 26 125 1,535Nov-09 25 Unearned Revenue 30 30 1,565Nov-09 30 Prepaid Insurance 33 1320 245
Account: Accounts Receivable Account Number: 102 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Teaching Revenue 7 300 300
Account: Merchandise Inventory Account Number: 103Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Advertising Supplies Account Number: 104Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 11 Cash a/c 6 65 65Nov-09 30 Advertising Supplies Expense A/c 39 105 60
Account: Baking Supplies Account Number: 105Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 13 Cash a/c 10 125 125Nov-09 30 Baking Supplies Expense 43 35 90
Account: Prepaid Insurance Account Number: 106Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Cash a/c 34 1320 1320
Account: Baking Equipment Account Number: 107Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 14 N Koebel Capital a/c 14 300 300Nov-09 17 Cash a/c 22 900 1200
Account: Accumulated Depreciation - Baking Equipment Account Number: 108Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Depreciation Expense 47 20 20
Account: Accounts Payable Account Number: 201Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Telephone Expense 10 45 45
Account: Interest Payable Account Number: 202Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Interest Expense 2 5 5
Account: Unearned Revenue Account Number: 203 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 25 Cash A/c 29 30 30
Account: Notes Payable Account Number: 204 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 16 Cash A/c 17 2000 2000
Account: Warranty Liability Account Number: 205 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: N Koebel Capital Account Number: 301 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 8 Cash a/c 1 500 500
Nov-09 14 Baking Equipment 13 300 800
Account: N Koebel Drawings Account Number: 302 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Teaching Revenue Account Number: 401 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 Cash a/c 25 125 125Nov-09 30 Teaching Revenue 7 300 425
Account: Sales Account Number: 402 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Cost of Goods Sold Account Number: 501 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Advertising Supplies Expense Account Number: 502 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Baking Supplies Expense Account Number: 503 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Baking Supplies 44 35 35
Account: Depreciation Expense Account Number: 504
Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Accumulated Depreciation - B 48 20 20
Account: Freight Out Account Number: 505 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Insurance Expense Account Number: 506 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Interest Expense Account Number: 507 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Interest Payable 56 5 5
Account: Salaries Expense Account Number: 508 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Account: Telephone Expense Account Number: 509 Post. BALANCE
Date Item Ref. Debit Credit Debit Credit
Nov-09 30 Accounts payable 11 45 45
CCC1 a - d
a
b
c
d
(c)COOKIE CREATIONS
Trial BalanceNovember 30, 2007
Debit CreditCash 245Advertising Supplies 65Baking Supplies 125Prepaid Insurance 1320Baking Equipment 1200Unearned Revenue 30Note Payable 2000N. Koebel, Capital 800Teaching Revenue 125
2955 2955
(b)COOKIE CREATIONSAdjusted Trial Balance
November 30, 2008
Account Debit CreditCash 245Accounts Receivable 300Advertising Supplies 65Baking Supplies 90Prepaid Insurance 1320Baking Equipment 1200Accumulated Depreciation - Baking Equipment 20Accounts Payable 45Interest Payable 5Unearned Revenue 30Note Payable 2000N. Koebel, Capital 800Teaching Revenue 425Telephone Expense 45Baking Supplies Expense 35Depreciation Expense 20Interest Expense 5 Totals 3325 3325
Net Income/Loss Calculation
Revenue 425Expenses 105Net Income/Loss 320
Cookie CreationsBalance Sheet
December 31, 2007
AssetsCurrent AssetsCash 1180Accounts Receivable 875Baking Supplies 350Prepaid Insurance 1210
Total Current Assets 3615Property, Plant, and EquipmentBaking Equipment 1200Accumulated Depreciation - Baking Equipment -40 1160
Total Assets 4775
Liabilities and Owner's EquityCurrent LiabilitiesAccounts Payable 131Interest Payable 15Unearned Revenue 300
Total Current Liabilities 446Long-Term LiabilitiesNotes payable 2000
Total long-term liabilities 2000Total liabilities 2446
Owner's Equity 2329
Total liablities and owners equity 4775
COOKIE CREATIONSIncome Statement
For the Two Months Ended December 31, 2007
REVENUETeaching Revenue 4,515 EXPENSESalaries Expense 1,006 Telephone Expenses 125 Advertising Supplies Expense 165 Baking Supplies Expense 1,025 Depreciation Expense 40 Insurance Expense 110 Interest Expense 15
Total 2,486
Net Income 2,029
COOKIE CREATIONSStatement of Owner's Equity
For the Two Months Ended December 31, 2007
N. Koebel Capital, Opening 800 Net Income 2,029 N. Koebel Capital, Drawing (500)N. Koebel Capital, Closing 2,329
COOKIE CREATIONSPost-Closing Trial Balance
December 31, 2007
Debit Credit
Cash 1,180 Accounts Receivable 875 Baking Supplies 350 Prepaid Insurance 1,210 Baking Equipment 1,200 Accumulated Depreciation - Baking Equipment 40 Accounts Payable 131 Interest Payable 15 Unearned Revenue 300 Note Payable 2,000 N. Koebel, Capital 2329
4,815 4,815
CCC5
Responses to Natalie's questions
1.
2.
3.
(c)COOKIE CREATIONS
Trial BalanceJanuary 31, 2008
Debit Credit
CCC5
(e)COOKIE CREATIONSAdjusted Trial Balance
January 31, 2008Debit Credit
CCC5
(f)COOKIE CREATIONS
Income StatementFor the Month Ended January 31, 2008
(a)
COST OF GOODS AVAILABLE FOR SALEDate Explanation Units Unit Cost Total Cost
Feb 1
May 4
(b) LIFOEnding Inventory
Date Units Unit Cost Total Cost Feb. 1
2
Cost of Goods Sold
Gross Profit
Gross Profit Rate =FIFO
Ending InventoryDate Units Unit Cost Total Cost Feb. 1
2
Cost of Goods Sold
Gross Profit
Gross Profit Rate =Average CostEnding Inventory
Units Unit Cost Total Cost
Cost of Goods Sold
Gross Profit
Gross Profit Rate =
Part I
The weaknesses in internal accounting controls in the system recommended by John are:
Improvements should include the following:
Part 2 (a)COOKIE CREATIONS
Bank ReconciliationJune 30, 2008
(c)
CCC9 (a)
1
2
3
(a)Cost of Van
(b)
Straight-line DepreciationDepreciable Depreciation Depreciation Accumulated
Year Cost Rate Expense Depreciation200820092010
Double-declining-balance DepreciationDepreciable Depreciation Depreciation Accumulated
Year Cost Rate Expense Depreciation200820092010
Units-of-activity DepreciationUnits of Depreciation Depreciation Accumulated
Year Activity Cost per Unit Expense Depreciation200820092010
Cost of Van
Straight-line DepreciationBookValue
Double-declining-balance DepreciationBookValue
Units-of-activity DepreciationBookValue
(c)
Impact on Cookie Creations' balance sheet and income statement in 2008:
Double-Declining Units-of-
Straight-line Balance ActivityCost of assetAccumulated depreciationBook value
Depreciation expense
(d)
(e)
(a)Warranty Liability for Shipping Costs, 12-31-2008
(d)
Estimated liability, Dec. 31, 2009: