General Journal Date Nov-09 Description 8 Cash a/c N Koebel Capital a/c Post. Ref.

301 101 Debit 500

Page 1 Credit 500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

11 Advertising Supplies Cash a/c

101 104

65 65

13 Baking Supplies Cash a/c

101 105

125 125

14 Baking Equipment N Koebel Capital a/c

301 107

300 300

16 Cash a/c Notes Payable

204 101

2000 2000

17 Baking Equipment Cash a/c 20 Cash a/c Teaching Revenue

101 107 401 101

900 900 125 125

25 Cash a/c Unearned Revenue

203 101

30 30

30 Prepaid Insurance Cash a/c 30 Advertising Supplies Expense Baking Supplies 30 Depreciation Expense Accumulated Depreciation - Baking Equipment 30 Interest Expense Interest Payable 30 Accounts Receivable Teaching Revenue 30 Telephone Expense Accounts payable A/c

101 106 105 503 108 504 202 507 401 102 201 509

1320 1320 35 35 20 20 5 5 300 300 45 45

General Journal Date Jan-10 Description 4 Merchandise Inventory Accounts Payable 6 Merchandise Inventory Cash 7 Accounts Payable Merchandise Inventory 8 Cash Accounts Receivable 12 Accounts Receivable Sales 12 Cost of good Sold Merchandise Inventory 14 Freight Out Cash 14 Merchandise Inventory Accounts Payable 17 Cash A/c N Koebel Capital 18 Merchandise Inventory Cash 20 Cash Sales 20 Cost of good Sold Merchandise Inventory 28 Salaries Expense Accounts Payable Cash 28 Cash Accounts Receivable 30 Telephone Expenses A/c Accounts Payable Cash 31 Accounts Payable Cash Post. Ref. 201 103 101 103 103 201 102 101 402 102 103 501 101 505 201 103 301 101 101 103 402 101 103 501 101 101 508 102 101 101 101 509 101 201 Debit 2875

Page 2 Credit 2875 100 100 120 120 375 375 3450 3450 1785 1785 75 75 2300 2300 1000 1000 80 80 2300 2300 1190 1190 160 56 216 3450 3450 70 75 145 5055 5055

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49

31 N Koebel Drawings Cash Adjusting Entries 31 Depreciation Expense Accumulated Depreciation - Baking Equipment (Depreciation Charge on Baking Material) 31 Interest Expense Interest Payable (6% Int due on Notes Payable) 31 Insurance Expense Prepaid Insurance (Being Insurance Expired)

101 302 108 504

750 750 20 20

202 507

10 10

106 506

110 110

General Ledger Account: Cash

Date Item Post. Ref. Debit

Account Number: 101

Credit BALANCE Debit Credit

Nov-09 Nov-09 Nov-09 Nov-09 Nov-09 Nov-09 Nov-09 Nov-09

8 11 13 16 17 20 25 30

N Koebel Capital Advertising Supplies Baking Supplies Notes Payable Baking Equipment Teaching Revenue Unearned Revenue Prepaid Insurance

2 5 9 18 21 26 30 33

500 65 125 2000 900 125 30 1320

500 435 310 2,310 1,410 1,535 1,565 245

Account: Accounts Receivable

Post. Date Item Ref. Debit

Account Number:
Credit Debit

102
Credit

BALANCE

Nov-09

30

Teaching Revenue

300

300

Account: Merchandise Inventory

Post. Date Item Ref. Debit Credit

Account Number: 103

BALANCE Debit Credit

Account: Advertising Supplies

Post. Date Item Ref. Debit Credit

Account Number: 104

BALANCE Debit Credit

Nov-09 Nov-09

11 Cash a/c 30 Advertising Supplies Expense A/c

6 39

65 105

65 60

Account: Baking Supplies

Post. Date Item Ref. Debit Credit

Account Number: 105

BALANCE Debit Credit

Nov-09 Nov-09

13 Cash a/c 30 Baking Supplies Expense

10 43

125 35

125 90

Account: Prepaid Insurance

Post. Date Item Ref. Debit Credit

Account Number: 106

BALANCE Debit Credit

Nov-09

30 Cash a/c

34

1320

1320

Account: Baking Equipment

Post. Date Item Ref. Debit Credit

Account Number: 107

BALANCE Debit Credit

Nov-09 Nov-09

14 N Koebel Capital a/c 17 Cash a/c

14 22

300 900

300 1200

Account: Accumulated Depreciation - Baking Equipment

Post. Date Item Ref. Debit Credit

Account Number: 108

BALANCE Debit Credit

Nov-09

30 Depreciation Expense

47

20

20

Account: Accounts Payable

Post. Date Item Ref. Debit Credit

Account Number: 201

BALANCE Debit Credit

Nov-09

30 Telephone Expense

10

45

45

Account: Interest Payable

Post. Date Item Ref. Debit Credit

Account Number: 202

BALANCE Debit Credit

Nov-09

30 Interest Expense

Account: Unearned Revenue

Post.

Account Number: 203

BALANCE

Date

Item

Ref.

Debit

Credit

Debit

Credit

Nov-09

25 Cash A/c

29

30

30

Account: Notes Payable

Post. Date Item Ref. Debit

Account Number: 204

BALANCE Credit Debit Credit

Nov-09

16 Cash A/c

17

2000

2000

Account: Warranty Liability

Post. Date Item Ref. Debit

Account Number: 205

BALANCE Credit Debit Credit

Account: N Koebel Capital

Post. Date Item Ref. Debit

Account Number: 301

BALANCE Credit Debit Credit

Nov-09 Nov-09

8 Cash a/c 14 Baking Equipment

1 13

500 300

500 800

Account: N Koebel Drawings

Post. Date Item Ref. Debit

Account Number: 302

BALANCE Credit Debit Credit

Account: Teaching Revenue

Post. Date Item Ref. Debit

Account Number: 401

BALANCE Credit Debit Credit

Nov-09 Nov-09

Cash a/c 30 Teaching Revenue

25 7

125 300

125 425

Account: Sales
Post. Date Item Ref. Debit

Account Number: 402

BALANCE Credit Debit Credit

Account: Cost of Goods Sold

Post. Date Item Ref. Debit

Account Number: 501

BALANCE Credit Debit Credit

Account: Advertising Supplies Expense

Post. Date Item Ref. Debit

Account Number: 502

BALANCE Credit Debit Credit

Account: Baking Supplies Expense

Post. Date Item Ref. Debit

Account Number: 503

BALANCE Credit Debit Credit

Nov-09

30

Baking Supplies

44

35

35

Account: Depreciation Expense

Post. Date Item Ref. Debit

Account Number: 504

BALANCE Credit Debit Credit

Nov-09

30

Accumulated Depreciation - Baking Equipment 48

20

20

Account: Freight Out

Post. Date Item Ref. Debit

Account Number: 505

BALANCE Credit Debit Credit

Account: Insurance Expense

Post. Date Item Ref. Debit

Account Number: 506

BALANCE Credit Debit Credit

Account: Interest Expense

Post. Date Item Ref. Debit

Account Number: 507

BALANCE Credit Debit Credit

Nov-09

30

Interest Payable

56

Account: Salaries Expense

Post. Date Item Ref. Debit

Account Number: 508

BALANCE Credit Debit Credit

Account: Telephone Expense

Post. Date Item Ref. Debit

Account Number: 509

BALANCE Credit Debit Credit

Nov-09

30

Accounts payable

11

45

45

CCC1 a - d

(c) COOKIE CREATIONS Trial Balance November 30, 2007 Cash Advertising Supplies Baking Supplies Prepaid Insurance Baking Equipment Unearned Revenue Note Payable N. Koebel, Capital Teaching Revenue Debit 245 65 125 1320 1200 Credit

30 2000 800 125 2955 2955

(b) COOKIE CREATIONS Adjusted Trial Balance November 30, 2008 Account Cash Accounts Receivable Advertising Supplies Baking Supplies Prepaid Insurance Baking Equipment Accumulated Depreciation - Baking Equipment Accounts Payable Interest Payable Unearned Revenue Note Payable N. Koebel, Capital Teaching Revenue Telephone Expense Baking Supplies Expense Depreciation Expense Interest Expense Totals

Debit 245 300 65 90 1320 1200

Credit

20 45 5 30 2000 800 425 45 35 20 5 3325

3325

Net Income/Loss Calculation Revenue Expenses Net Income/Loss 425 105 320

Cookie Creations Balance Sheet December 31, 2007

Assets Current Assets Cash Accounts Receivable Baking Supplies Prepaid Insurance Total Current Assets Property, Plant, and Equipment Baking Equipment Accumulated Depreciation - Baking Equipment Total Assets

1180 875 350 1210 3615 1200 -40

1160 4775

Liabilities and Owner's Equity Current Liabilities Accounts Payable Interest Payable Unearned Revenue Total Current Liabilities Long-Term Liabilities Notes payable Total long-term liabilities Total liabilities Owner's Equity Total liablities and owners equity

131 15 300 446 2000 2000 2446 2329 4775

COOKIE CREATIONS Income Statement For the Two Months Ended December 31, 2007

REVENUE
Teaching Revenue

4,515 1,006 125 165 1,025 40 110 15 Total

2,486 2,029

EXPENSE
Salaries Expense Telephone Expenses Advertising Supplies Expense Baking Supplies Expense Depreciation Expense Insurance Expense Interest Expense

Net Income
COOKIE CREATIONS Statement of Owner's Equity For the Two Months Ended December 31, 2007 N. Koebel Capital, Opening Net Income N. Koebel Capital, Drawing N. Koebel Capital, Closing

800 2,029 (500) 2,329

COOKIE CREATIONS Post-Closing Trial Balance December 31, 2007 Debit Cash Accounts Receivable Baking Supplies Prepaid Insurance Baking Equipment Accumulated Depreciation - Baking Equipment Accounts Payable Interest Payable Unearned Revenue Note Payable N. Koebel, Capital Credit

1,180 875 350 1,210 1,200 40 131 15 300 2,000

2329

4,815

4,815

CCC5 Responses to Natalie's questions 1.

2.

3.

(c) COOKIE CREATIONS Trial Balance January 31, 2008 Debit Credit

CCC5 (e) COOKIE CREATIONS Adjusted Trial Balance January 31, 2008 Debit Credit

CCC5 (f) COOKIE CREATIONS Income Statement For the Month Ended January 31, 2008

(a) COST OF GOODS AVAILABLE FOR SALE Explanation Units

Date Feb 1

Unit Cost Total Cost

May 4

(b) Date Feb. 1 2

LIFO Ending Inventory Units Unit Cost Total Cost

Cost of Goods Sold

Gross Profit

Gross Profit Rate = FIFO Ending Inventory Date Feb. 1 2 Units Unit Cost Total Cost

Cost of Goods Sold

Gross Profit

Gross Profit Rate = Average Cost Ending 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 Reconciliation June 30, 2008

(c)

CCC9 (a) 1

(a) Cost of Van

(b)

Year 2008 2009 2010

Straight-line Depreciation Depreciable Depreciation Depreciation Cost Rate Expense

Accumulated Depreciation

Book Value

Year 2008 2009 2010

Double-declining-balance Depreciation Depreciable Depreciation Depreciation Cost Rate Expense

Accumulated Depreciation

Book Value

Year 2008 2009 2010

Units-of-activity Depreciation Units of Depreciation Depreciation Activity Cost per Unit Expense

Accumulated Depreciation

Book Value

(c)

Impact on Cookie Creations' balance sheet and income statement in 2008: DoubleDeclining Balance

Straight-line Cost of asset Accumulated depreciation Book value Depreciation expense

Units-ofActivity

(d)

(e)

(a) Warranty Liability for Shipping Costs, 12-31-2008

(d)

Estimated liability, Dec. 31, 2009: