CCC3 In November 2014, after having incorporated Cookie Creations Inc.

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 and 2.)

CCC3 In November 2014, after having incorporated Cookie Creations Inc., Natalie begins operations. She has decided not to pursue the offer to supply cookies to Biscuits. Instead, she will focus on offering cooking classes. The following events occur.

Nov. 8 Natalie cashes in her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account.

8 Natalie opens a bank account for Cookie Creations Inc.

8 Natalie purchases $500 of Cookie Creations’ common stock.

11 Cookie Creations purchases paper and other office supplies for $95. (Use Supplies.)

14 Cookie Creations pays $125 to purchase baking supplies, such as flour, sugar, butter, and chocolate chips. (Use Supplies.)

15 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 $550. Natalie decides to start using it only in her new business. She estimates that the equipment is currently worth $300, and she transfers the equipment into the business in exchange for additional common stock.

16 The company needs more cash to sustain its operations. Natalie’s grandmother lends the company $2,000 cash, in exchange for a two-year, 9% note payable. Interest and the principal are repayable at maturity.

17 Cookie Creations pays $900 for additional baking equipment.

18 Natalie schedules her first class for November 29. She will receive $100 on the date of the class.

25 Natalie books a second class for December 5 for $150. She receives a $60 cash down payment, in advance.

29 Natalie teaches her first class, booked on November 18, and collects the $100 cash.

30 Natalie’s brother develops a website for Cookie Creations Inc. that the company will use for advertising. He charges the company $600 for his work, payable at the end of December. (Because the website is expected to have a useful life of two years before upgrades are needed, it should be treated as an asset called Website.)

30 Cookie Creations pays $1,200 for a one-year insurance policy.

30 Natalie teaches a group of elementary school students how to make Santa Claus cookies. At the end of the class, Natalie leaves an invoice for $300 with the school principal. The principal says that he will pass it along to the business office and it will be paid some time in December.

30 Natalie receives a $50 invoice for use of her cell phone. She uses the cell phone exclusively for Cookie Creations Inc. business. The invoice is for services provided in November, and payment is due on December 15.

Instructions

(b) Post the journal entries to the general ledger accounts.

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 3.)

CCC4 Cookie Creations is gearing up for the winter holiday season. During the month of December 2014, the following transactions occur.

Dec. 1 Natalie hires an assistant at an hourly wage of $8 to help with cookie making and some administrative duties.

5 Natalie teaches the class that was booked on November 25. The balance outstanding is received.

8 Cookie Creations receives a check for the amount due from the neighborhood school for the class given on November 30.

9 Cookie Creations receives $750 in advance from the local school board for five classes that the company will give during December and January.

15 Pays the cell phone invoice outstanding at November 30.

16 Issues a check to Natalie’s brother for the amount owed for the design of the website.

19 Receives a deposit of $60 on a cookie class scheduled for early January.

23 Additional revenue during the month for cookie-making classes amounts to $4,000. (Natalie has not had time to account for each class individually.) $3,000 in cash has been collected and $1,000 is still outstanding. (This is in addition to the December 5 and December 9 transactions.)

23 Additional baking supplies purchased during the month for sugar, flour, and chocolate chips amount to $1,250 cash.

23 Issues a check to Natalie’s assistant for $800. Her assistant worked approximately 100 hours from the time in which she was hired until December 23.

28 Pays a dividend of $500 to the common shareholder (Natalie).

As of December 31, Cookie Creations’ year-end, the following adjusting entry data are provided.

1. A count reveals that $45 of brochures and posters were used.

2. Depreciation is recorded on the baking equipment purchased in November. The baking equipment has a useful life of 5 years. Assume that 2 months’ worth of depreciation is required.

3. Amortization (which is similar to depreciation) is recorded on the website. (Credit the Website account directly for the amount of the amortization.) The website is amortized over a useful life of 2 years and was available for use on December 1.

4. Interest on the note payable is accrued. (Assume that 1.5 months of interest accrued during November and December.) Round to nearest dollar.

5. One month’s worth of insurance has expired.

6. Natalie is unexpectedly telephoned on December 28 to give a cookie class at the neighborhood community center on December 31. In early January Cookie Creations sends an invoice for $450 to the community center.

7. A count reveals that $1,025 of baking supplies were used.

8. A cell phone invoice is received for $75. The invoice is for services provided during the month of December and is due on January 15.

9. Because the cookie-making class occurred unexpectedly on December 31 and is for such a large group of children, Natalie’s assistant helps out. Her assistant worked 7 hours at a rate of $8 per hour.

10. An analysis of the unearned revenue account reveals that two of the five classes paid for by the local school board on December 9 still have not been taught by the end of December. The $60 deposit received on December 19 for another class also remains unearned.

Instructions

Using the information that you have gathered and the general ledger accounts that you have prepared through Chapter 3, plus the new information above, do the following.

(a) Journalize the above transactions.

(b) Post the December transactions. (Use the general ledger accounts prepared in Chapter 3.)

(c) Totals $8,160

(c) Prepare a trial balance at December 31, 2014.

(d) Prepare and post adjusting journal entries for the month of December.

(e) Prepare an adjusted trial balance as of December 31, 2014.

(f ) Prepare an income statement and a retained earnings statement for the 2-month period ending December 31, 2014, and a classified balance sheet as of December 31, 2014.

(g) Prepare and post closing entries as of December 31, 2014.

(h) Prepare a post-closing trial balance.

(c) Totals $8,160

(e) Totals $8,804

(f) Net income $3,211

(h) Totals $6,065

Next Part

Continuing Cookie Chronicle

(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 12.)

CCC13 The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2018 for the years 2018 and 2017, and the income statements for the years ended October 31, 2017 and 2018, are presented below.

COOKIE & COFFEE CREATIONS INC.

Balance Sheet

October 31

COOKIE & COFFEE CREATIONS INC.

Income Statement

Year Ended October 31

Additional information:

Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more kitchen equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance.

Instructions

(a) Calculate the following ratios for 2017 and 2018.

1. Current ratio

2. Debt to total assets

3. Gross profit rate

4. Profit margin

5. Return on assets (Total assets at November 1, 2016, were $33,180.)

6. Return on common stockholders’ equity (Total common stockholders’ equity at November 1, 2016, was $23,180. Dividends on preferred stock were $16,800 in 2017 and $18,000 in 2018).

(b) Prepare a horizontal analysis of the income statement for Cookie & Coffee Creations Inc. using 2017 as a base year.

Final Project Instructions and Templates
Name: ___________________________________
Final Project
Due by Day 7 of Week 6

This project is worth _20_ points

MAKE SURE TO COMPLETE ALL GRADED REQUIREMENTS LISTED BELOW.
It is recommended that you complete the non-graded requirements for additional practice
All of the templates you need for the project are located in this Workbook.
The instructions and data for the problem is in your Textbook (the "Continuing Cookie Chronicle" at the end of the chapter).
Use the arrow buttons (lower left corner of the window) to navigate through the tabs.
Submit the ENTIRE Workbook (file) to your instructor for the Week 6 Final Project

Requirements
Week One
Chapter 1 and 2 "Continuing Cookie Chronicle" - Review the problem and make notes of your answers.
Week Two
Chapter 3, Part A, prepare journal entries to record the November transactions
Chapter 3, Part B, post the journal entries to the general ledger accounts
Chapter 3, Part C, prepare a trial balance at November 30, 2014
Week Three
Chapter 4, Part A, journalize the transactions
Chapter 4, Part B, post the December transactions to the general ledger accounts
Chapter 4, Part C, prepare a trial balance at December 31, 2014
Chapter 4, Part D, prepare and post adjusting journal entries for December
Chapter 4, Part E, prepare adjusted trial balance at December 31, 2014
Chapter 4, Part F, prepare an income statement, retained earning statement and balance sheet
Chapter 4, Part G, prepare and post closing entires as of December 31, 2014
Chapter 4, Part H, prepare a post-closing trial balance
Week Six
Chapter 13 - Part A, prepare a horizontal and vertical analysis
Chapter 13 - Part B, Calculate several financial ratios as indicated

Sheet in Workbook

Chapter 1 & 2 Notes

(PRACTICE)

Journal Entries
General Ledger
Trial Balance

(PRACTICE)
(PRACTICE)
(PRACTICE)

Journal Entries
General Ledger
Trial Balance
Adjusting Entries
Adjusted Trial Balance
Financial Statements
Closing Entries
Post Closing TB

(GRADED)
(GRADED)
(GRADED)
(GRADED)
(GRADED)
(GRADED)
(GRADED)
(GRADED)

Horiz. & Vert. Analysis
Financial Ratios

(GRADED)
(GRADED)

Make any notes from Chapters 1 or 2 here.
NOTE: These notes will NOT be included in your grade for the project. They are for your own reference.

Use the following template for the journal entries from Chapter 3: Continuing Cookie Chronicle.
NOTE: This is for your practice only - it will NOT be graded (solutions are found on the last tab marked "Solutions").

a) Prepare journal entries to record the November transactions

Date

General Journal
Description(Account Name)

Debit

Credit

This sheet will be used for Part B of Chapter 3.
NOTE: This is for your practice only - it will NOT be graded (solutions are found on the last tab marked "Solutions")
b) Post the journal entries to the following general ledger accounts and compute the account balances

Cash

Equipment

Accounts Receivable

Website

Accounts Payable

Supplies

Unearned Service Revenue

Prepaid Insurance

Notes Payable

Common Stock

Servcice Revenue

Utilities Expense

Part C (Chapter 3)
c) Prepare a trial balance for November 30, 2014
NOTE: This is for your practice only - it will NOT be graded (solutions are found on the last tab marked "Solutions")
Cookie Creations, Inc.
Trial Balance
November 30, 2014

Debit

Total

Credit

0

0

*Remember debits MUST equal credits - if they do not, then there is an error somewhere. Double-check your calculations and entries.

Use the following template for the journal entries from Chapter 4: Continuing Cookie Chronicle.
a) Prepare journal entries to record the December transactions.
NOTE: This sheet WILL be graded when you submit your assignment.

Date

General Journal
Description (Account Name)

Debit

Credit

This sheet will be used for Part B of Chapter 3.
REQUIREMENT #2:
Post the journal entries to the following general ledger accounts and compute the account balances.
NOTE: This sheet WILL be graded when you submit your assignment.
Cash

Dividends

Unearned Service Revenue

Retained Earnings

Accounts Receivable

Income Summary

Supplies Expense

Amortization Expense

Service Revenue

Supplies

Utilities Expense

Prepaid Insurance

Salaries & Wages Expense

Equipment

Accumulated Depreciation Equipment

Website

Insurance Expense

Interest Expense

Accounts Payable

Depreciation Expense

Interest Payable

Notes Payable

Common Stock

Salaries & Wages Payable

Part C (Chapter 4)
NOTE: This sheet WILL be graded when you submit your assignment.
c) Prepare a trial balance for December 31, 2014.

Cookie Creations, Inc.
Trial Balance
December 31, 2014

Debit

Total

Credit

0

0

*Remember debits MUST equal credits - if they do not, then there is an error somewhere. Double-check your calculations and entries.

Chapter 4, Part D: Prepare and post adjusting entries for December.
NOTE: This part WILL be graded when you submit your assignment to the instructor.

Date

General Journal
Description (Account Name)
Debit

Credit

Chapter 4, Part E: Prepare an adjusted trial balance.
Note: This part WILL be graded when you submit your assignment to the instructor.

Cookie Creations Inc
Adjusted Trial Balance
December 31, 2014

0

0

*Remember debits MUST equal credits - if they do not, then there is an error somewhere. Double-check your calculations and entries.

Chapter 4, Part F: Prepare financial statement.
Note: This part WILL be graded when you submit your assignment to the instructor.
You will only be preparing the income statement, statement of retained earning and the balance sheet.

Cookie Creations, Inc.
Income Statement
For the Month Ending December 31, 2014
Revenues:

Cookie Creations
Statement of Retained Earnings
For the Month Ending December 31, 2014
Retained Earnings, December 1
Add: Net Income
Subtotal
Less: Dividends
Retained Earnings, December 31

Operating Expenses:

Cookie Creations
Balance Sheet
December 31, 2014
Current Assets

Total Current Assets
Property, Plant & Equipment

0

Intangible Assets
Total Operating Expenses
Net Income

0
$

-

Total Assets

0

Liabilities & Stockholder's Equity

Total Current Liabilities
Long- Term Liabilities

0

Total Liabilities
Stockholder's Equity

0

Total Stockholder's Equity
Total Liabilities & Stockholder's Equity

0
-

*Remember, assets and liabilities MUST be the same amount. If they are different, then there is an error somewhere. Double-check your calculations and entries.

$

Chapter 4 - Part G: Prepare closing entries.
Note: This part WILL be graded when you submit your assignment to the instructor.
Hint: Use the balances for each account which appear on the adjusted trial balance for your closing entries.

Date

General Journal
Description (Account Name)

Debit

Credit

Chapter 4 - Part H: Prepare post-closing trial balance.
Note: This part WILL be graded when you submit your assignment to the instructor.

Cookie Creations, Inc.
Post-Closing Trial Balance
December 31, 2014

Chapter 13, Part A of the Continuing Cookie Chronicle: Prepare a horizontal and vertical analysis
Note: This part WILL be graded when you submit your assignment to the instructor

Instructions: Prepare a horizontal analysis of the income statement for Cookie & Coffee Creations Inc. using 2013 as a base year (which is a continuation of the Co
Note: Do not use the information presented on the Textbook website, it is different from what is required below. You may refer to the information within Chapter 1

COOKIE & COFFEE CREATIONS INC.
Income Statement
For the Year Ended October 31

Sales
Cost of goods sold
Gross profit
Operating expenses
Salaries & wages expense
Depreciation expense
Other operating expenses
Total operating expenses
Income from operations
Other expenses
Interest expense
Loss on sale of computer
equipment
Total other expenses
Income before income tax
Income tax expense
Net income

2014
$485,625
222,694
262,931

2013
$462,500
208,125
254,375

147,979
17,600
48,186
213,765
49,166

146,350
9,100
42,925
198,375
56,000

413

0

2,500
2,913
46,253
9,251
$37,002

Horizontal
Difference Analysis

0
0
56,000
14,000
$42,000

Prepare a vertical analysis of the income statement for Cookie & Coffee Creations for 2014 and 2013
COOKIE & COFFEE CREATIONS INC.
Income Statement
For the Year Ended October 31
Vertical
2014
Analysis
$485,625
222,694
262,931

Sales
Cost of goods sold
Gross profit
Operating expenses
Salaries & wages expense
Depreciation expense
Other operating expenses
Total operating expenses
Income from operations
Other expenses
Interest expense
Loss on sale of computer
equipment
Total other expenses
Income before income tax
Income tax expense
Net income

2013
$462,500
208,125
254,375

147,979
17,600
48,186
213,765
49,166

146,350
9,100
42,925
198,375
56,000

413

0

2,250
2,663
46,253
9,251
$37,002

0
0
56,000
14,000
$42,000

Vertical
Analysis

e Continuing Cookie Chronicle)
r 13 (week 6) for assistance in completing this tab.

Chapter 13, Part B of the Continuing Cookie Chronicle: Calculate the following financial ratios using the information from the financial statements below.

Note: This part WILL be graded when you submit your assignment to the instructor
Note: Do not use the information presented on the Textbook website, it is different from what is required below. You may refer to the information within Chapter 13 (week 6) for assistance in completi
Instructions: Using the financial statements below, compute the following ratios for 2014 only: Current Ratio, Debt
to total Assets, Gross Profit Rate, Profit Margin, Return on Assets, and Return on Common Stockholder's Equity.
Enter your computations in the yellow boxes following the format in the example.
COOKIE & COFFEE CREATIONS INC.
Income Statement
For the Year Ended October 31

EXAMPLE:
Name of Ratio
Ratio
2014
$485,625
222,694
262,931

Sales
Cost of goods sold
Gross profit
Operating expenses
Salaries & wages expense
Depreciation expense
Other operating expenses
Total operating expenses
Income from operations
Other expenses
Interest expense
Loss on sale of computer
equipment
Total other expenses
Income before income tax
Income tax expense
Net income

147,979
17,600
48,186
213,765
49,166

2013
$462,500
208,125
254,375
146,350
9,100
42,925
198,375
56,000

413

0

2,500
2,913
46,253
9,251
$37,002

0
0
56,000
14,000
$42,000

COOKIE & COFFEE CREATIONS INC.
Balance Sheet
October 31, 2012
Assets
Cash
Accounts Receivable
Inventory
Prepaid Expenses
Equipment
Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts Payable
Income taxes payable
Salaries payable
Interest payable
Note payable - current portion
Note payable - long-term portion
Preferred stock, no par, $6 cumulative - 3,000 and 2,800
shares issued, respectively
Common stock, $1 par - 25,180 shares issued
Additional paid-in capital - treasury stock
Retained earnings
Total liabilities and stockholders' equity

=

Your Answers (2014):
Current
Ratio

=

=

Debt to
Total Assets

=

=

Gross Profit
Rate

=

=

Profit
Margin

=

=

Return on
Assets

=

=

Return on common
Stockholder's Equity

=

=

1,234
1,234

=

NOTE: Dividends on preferred stock were $18,000 in 2014

$

2014
2013
22,324 $
5,550
3,250
2,710
7,897
7,450
5,800
6,050
102,000
75,500
(25,200)
(9,100)
116,071 $ 88,160

$

9,251
27,000
7,250
188
4,000
6,000
15,000
25,180
250
20,802
116,071 $

$

7,200
27,000
1,280
0
0
0
14,000
25,180
250
10,800
88,160

1.00

ting this tab.

Final Project Grading Rubric - 20 points total (20% of overall course grade)
Criteria
Parts:

Excellent
90% to 100%

Good
70% to 89%

Part A & B - Journal
Entries (4pts)

Journal Entries use accurate
accounts and amounts; and
debits and credits are used
correctly.

Chapter 4

Part C - Unadjusted
Trial Balance. (1pt)

Posting is correct leading to Posting is mostly correct
an accurate trial balance.
leading to a mostly correct
trial balance.

Posting has several errors
Posting is done poorly or not at all,
leading to a trial balance with leading to inaccurate or no trial
several errors.
balance.

Chapter 4

Part D - Adjusting
Journal Entries (2pts)

Journal Entries use accurate
accounts and amounts; and
debits and credits are used
correctly.

Journal Entries have some
errors in use of accounts and
amounts; and debits and
credits are only somewhat
used correctly.

Chapter 4

Part E - Posted Adjusted Posting is correct leading to Posting is mostly correct
Trial Balance. (2pts)
an accurate trial balance.
leading to a mostly correct
trial balance.

Posting has several errors
Posting is done poorly or not at all,
leading to a trial balance with leading to inaccurate or no trial
several errors.
balance.

Chapter 4

Part F - Financial
Statements (4pts)

Two of three Financial
Statements are prepared
accurately and mostly in an
appropriate format, one
statement has some errors.

One of three Financial
One or fewer of three Financial
Statements are prepared
Statements are prepared accurately
accurately and mostly in an and mostly in an appropriate format,
appropriate format, two
three or all statements have some
statements have some errors. errors.

Chapter 4

Part G - Closing Journal Journal Entries use accurate
Entries (2pts)
accounts and amounts; and
debits and credits are used
correctly.

Journal Entries mostly use
accurate accounts and
amounts; and debits and
credits are used correctly.

Journal Entries have some
errors in use of accounts and
amounts; and debits and
credits are only somewhat
used correctly.

Chapter 4

Part H- Posted and
Post-closingTrial
Balance. (1pt)

Chapter 13 Horizontal & Vertical
Analysis (2pts)

Journal Entries mostly use
accurate accounts and
amounts; and debits and
credits are used correctly.

Posting is correct leading to Posting is mostly correct
an accurate trial balance.
leading to a mostly correct
trial balance.
Horizontal and Vertical
analysis is 90% to 100%
correct

Journal Entries have some
errors in use of accounts and
amounts; and debits and
credits are only somewhat
used correctly.

Very Poor
Less than 50%

Chapter 4

All three Financial
Statements are prepared
accurately and in an
appropriate format.

Journal Entries mostly use
accurate accounts and
amounts; and debits and
credits are used correctly.

Poor
50% to 69%

Journal Entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

Journal Entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

Journal Entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

Posting has several errors
Posting is done poorly or not at all,
leading to a trial balance with leading to inaccurate or no trial
several errors.
balance.

Horizontal and Vertical
Horizontal and Vertical
analysis is 70% to 89% correct analysis is 50% to 69%
correct

Horizontal and Vertical analysis has
less than 50% correct answers.

Chapter 13 Financial Ratios (2pts) All ratios are properly
There are more than four errors in
calculated with none or only Most of the ratios are
the calculation of the financial ratios.
properly calcluated with only There are three or four errors
one ratio being incorrect.
two or three ratios being
in the calculation of financial
incorrect.
ratios

Solutions for the Practice Exercise (From Chapter 3 of Continuing Cookie Chronicles)
Solutions

a) Prepare journal entries to record the December transactions.

Date

General Journal
Description (Account Name)

Nov. 8

No journal entry required

Nov. 8

Cash
Common Stock

Credit

No journal entry required

Nov 8.

Debit

Nov. 11

Nov. 14

Nov. 15

Nov. 16

Nov. 17

500
500

Supplies
Cash

95

Supplies
Cash

125

Equipment
Common Stock

300

Cash
Notes Payable
Equipment
Cash

Nov. 18

Cash
Unearned Service Revenue

125

300
2,000
2,000
900
900

No journal entry required

Nov. 25

95

Nov. 29

Nov. 30

Nov. 30

Nov. 30

Nov. 30

60
60

Cash
Service Revenue

100

Website
Accounts Payable

600

Prepaid Insurance
Cash

100

600
1,200
1,200

Accounts Receivable
Servcie Revenue

300

Utilities Expense
Accounts Payable

50

Total

300

50

6,230

6,230

This sheet will be used for Part B of Chapter 3.
Solutions
Post the journal entries to the following general ledger accounts and compute the account balances.

Cash
Nov. 8 500
Nov. 11
Nov. 16 2,000 Nov. 14
Nov. 25 60
Nov. 17
Nov. 29 100 Nov. 30
Nov. 30 Bal. 340

95
125
900
1,200

Accounts Receivable
Nov. 30 300
Nov. 30 Bal. 300

Accounts Payable
Nov. 30 600
Nov. 30 50
Nov. 30. Bal 650

Unearned Service Revenue
Nov. 25 60
Nov. 30. Bal. 60

Notes Payable
Nov. 16 2,000
Nov. 30. Bal. 2,000

Service Revenue
Nov. 29 100
Nov. 30 300
Nov. 30 Bal. 400

Equipment
Nov. 15 300
Nov. 17 900
Nov. 30 Bal 1,200

Website
Nov. 30 600
Nov. 30 Bal. 600

Supplies
Nov. 11 95
Nov. 11 125
Nov. 30 Bal 220

Prepaid Insurance
Nov. 30 1,200
Nov. 30 Bal. 1,200

Common Stock
Nov. 8 500
Nov. 15 300
Nov. 30. Bal 800

Utilities Expense
Nov. 30 50
Nov. 30 Bal. 50

Part C (Chapter 3)
Solutions
Prepare a trial balance for November 30, 2014.
Cookie Creations, Inc.
Trial Balance
November 30, 2014

Debit
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Website
Accounts Payable
Unearned Service Revenue
Notes Payable
Common Stock
Service Revenue
Utilities Expense
Total
*Note that debits equal credits.

$

Credit

340
300
220
1,200
1,200
600
$

$

50
3,910 $

650
60
2,000
800
400
3,910