CCC5
CONTINUING COOKIE CHRONICLE
(a) Responses to Natalie’s questions 1. The mixe mixers rs shoul should d be classif classified ied as inve invento ntory ry as they they are are for resal resale. e. 2. A perpet perpetual ual inven inventory tory system system will will provid provide e better better contr control ol over over inventory. Because you are dealing with high-value items you should use the perpetual system. 3. You still still need need to to count count inven inventor tory y to ensur ensure e that that your your record records s are accurate and that the inventory that is supposed to be on hand is actually there. I suggest you should count the inventory once a month. (b) Date
GENERAL JOURNAL Account Titles and Explanation
Jan. Jan. 4 6 7 8 12 12
Debit
Merc Mercha hand ndis ise e Inve Invent ntor ory y ...................................... Accounts Payable.. e..........................................
2,87 2,875 5
Merc Mercha hand ndis ise e Inve Invent ntor ory y ...................................... Cash....................................................................
100 100
Accounts Payable [($2,875 ÷ 5) + $20] ......... Merchandise Inventory.................................
595
Cash Cash .... ...... .... .... ........ ...... .... .... .... .... .... .... .... ........ ...... .... .... .... .... .... .... .... ........ ...... .... .... .... .... .... ....... ... Accounts Receivable .. ....................................
375
Acco Accoun unts ts Rece Receiv ivab able le ......................................... Sales.. s...................................................................
3,450 3,450
Cost Cost of Go Good ods s Sol Sold d ($5 ($595 95 X 3) 3) ........................ Merchandise Inventory.................................
1,78 1,785 5
Copyright © 2009 John Wiley & Sons, Inc.
J1 Credit
2,875 100 595 375 3,450
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
1,785
(For Instructor Use Only)
5-1
CCC5 (Continued) (b) (Continued) Jan. 14 14 17 18 20 20 28
28 30
31
31
Freight-Out................................................... Cash..........................................................
75
Merchandise Inventory............................ Accounts Payable ................................
2,300
Cash............................................................... N. Koebel, Capital.................................
1,000
Merchandise Inventory ............................ Cash..........................................................
80
Cash............................................................... Sales .........................................................
2,300
Cost of Goods Sold ($595 X 2) .............. Merchandise Inventory.......................
1,190
Salaries Expense....................................... Salaries Payable ........................................ Cash..........................................................
160 56
Cash............................................................... Accounts Receivable ..........................
3,450
Accounts Payable ..................................... Telephone Expense .................................. Cash..........................................................
75 70
Accounts Payable ($2,875 – $595 + $2,300)...................... Cash..........................................................
75 2,300 1,000 80 2,300 1,190
216 3,450
145 4,580
N. Koebel, Drawings................................. Cash..........................................................
Copyright © 2009 John Wiley & Sons, Inc.
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
4,580 750 750
(For Instructor Use Only)
5-2
CCC5 (Continued) (b) and (d)
Date
Explanation
Jan. 1 Balance 6 8 14 17 18 20 28 28 30 31 31
Date
Explanation
Jan. 1 Balance 8 12 28
Date
Explanation
Jan. 4 6 7 12 14 18 20
Copyright © 2009 John Wiley & Sons, Inc.
Cash Ref.
Debit
Credit
J1 J1 J1 J1 J1 J1 J1 J1 J1 J1 J1
145 4,580 750
1,180 1,080 1,455 1,380 2,380 2,300 4,600 4,384 7,834 7,689 3,109 2,359
Credit
Balance
100 375 75 1,000 80 2,300 216 3,450
Accounts Receivable Ref. Debit
J1 J1 J1
J1 J1 J1 J1 J1 J1 J1
3,450
875 500 3,950 500
Credit
Balance
375 3,450
Merchandise Inventory Ref. Debit
Balance
2,875 100 595 1,785 2,300 80 1,190
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
2,875 2,975 2,380 595 2,895 2,975 1,785
(For Instructor Use Only)
5-3
CCC5 (Continued) (b) and (d) (Continued) Baking Supplies Ref. Debit
Date Explanation Jan. 1 Balance
Date
Balance 350
Credit
Balance
110
1,210 1,100
Prepaid Insurance Ref. Debit
Explanation
Jan. 1 Balance 31 Adjusting entry
Date Explanation Jan. 1 Balance
Credit
J2
Baking Equipment Ref. Debit
Credit
Accumulated depreciation—Baking Equipment Date Explanation Ref. Debit Credit Jan. 1 Balance 31 Adjusting entry J2 20
Date
Explanation
Jan. 1 Balance 4 7 14 30 31
Copyright © 2009 John Wiley & Sons, Inc.
Accounts Payable Ref. Debit
Credit
J1 J1 J1 J1 J1
2,875 595 2,300 75 4,580
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
Balance 1,200
Balance 40 60
Balance 75 2,950 2,355 4,655 4,580 0
(For Instructor Use Only)
5-4
CCC5 (Continued) (b) and (d) (Continued)
Date
Salaries Payable Ref. Debit
Explanation
Jan. 1 Balance 28
Date
J1
Explanation
Explanation
Jan. 1 Balance Date
Explanation
Jan. 1 Balance 17
Date
Explanation
Jan. 31
Copyright © 2009 John Wiley & Sons, Inc.
Credit
Balance
10
15 25
Credit
Balance
J2 Notes Payable Ref. Debit
2,000
N. Koebel, Capital Ref. Debit
Credit
Balance
1,000
2,329 3,329
Credit
Balance
J1 N. Koebel, Drawings Ref. Debit J1
Balance 300
Interest Payable Ref. Debit
Jan. 1 Balance 31 Adjusting entry
Date
Credit
Explanation
Balance 56 0
56
Unearned Revenue Ref. Debit
Jan. 1 Balance
Date
Credit
750
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
750
(For Instructor Use Only)
5-5
CCC5 (Continued) (b) and (d) (Continued)
Date
Sales Ref.
Explanation
Jan. 12 20
Date
J1 J1 Cost of Goods Sold Ref. Debit
Explanation
Jan. 12 20
Date
J1 J1
Explanation
J1
Jan. 30
J1
Explanation
Jan. 31
Adjusting entry
Explanation
Jan. 31
Adjusting entry
J2
3,450 5,750
Credit
Balance 1,785 2,975
Credit
Balance 160
Credit
Balance 70
Credit
20
Insurance Expense Ref. Debit
Date
Copyright © 2009 John Wiley & Sons, Inc.
J2
3,450 2,300
70
Depreciation Expense Ref. Debit
Date
Balance
160
Telephone Expense Ref. Debit
Explanation
Credit
1,785 1,190
Salaries Expense Ref. Debit
Jan. 28
Date
Debit
Balance 20
Credit
110
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
Balance 110
(For Instructor Use Only)
5-6
CCC5 (Continued) (b) and (d) (Continued)
Date
Freight Out Ref.
Explanation
Jan. 14
Date Jan. 31
J1
Adjusting entry
J2
Credit
75
Interest Expense Ref. Debit
Explanation
Copyright © 2009 John Wiley & Sons, Inc.
Debit
Balance 75
Credit
10
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
Balance 10
(For Instructor Use Only)
5-7
CCC5 (Continued) (c) Cookie Creations Trial Balance January 31, 2010 Cash......................................................................................... Accounts Receivable......................................................... Merchandise Inventory...................................................... Baking Supplies................................................................... Prepaid Insurance............................................................... Baking Equipment .............................................................. Accumulated Depreciation—Baking Equipment ...... Accounts Payable ............................................................... Salaries Payable .................................................................. Unearned Revenue ............................................................. Interest Payable................................................................... Notes Payable ...................................................................... N. Koebel, Capital................................................................ N. Koebel, Drawings........................................................... Sales........................................................................................ Cost of Goods Sold ............................................................ Salaries Expense................................................................. Telephone Expense............................................................ Depreciation Expense ....................................................... Insurance Expense ............................................................. Freight Out ............................................................................ Interest Expense..................................................................
Debit $ 2,359 500 1,785 350 1,210 1,200
$
40 300 15 2,000 3,329
750 5,750 2,975 160 70 75 $11,434
Copyright © 2009 John Wiley & Sons, Inc.
Credit
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
$11,434
(For Instructor Use Only)
5-8
CCC5 (Continued) (d) Date
GENERAL JOURNAL Account Titles and Explanation
J2 Debit
Jan. 31 Depreciation Expense................................. Accumulated Depreciation— Baking Equipment.............................. ($1,200 ÷ 60 months)
20
31 Interest Expense........................................... Interest Payable ....................................... ($2,000 X 6% X 1/12)
10
31 Insurance Expense ...................................... Prepaid Insurance...................................
110
Copyright © 2009 John Wiley & Sons, Inc.
Credit
20
10
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
110
(For Instructor Use Only)
5-9
CCC5 (Continued) (e) Cookie Creations Adjusted Trial Balance January 31, 2010 Cash........................................................................................ Accounts Receivable........................................................ Merchandise Inventory..................................................... Baking Supplies.................................................................. Prepaid Insurance.............................................................. Baking Equipment ............................................................. Accumulated Depreciation—Baking Equipment ..... Accounts Payable .............................................................. Unearned Revenue ............................................................ Interest Payable .................................................................. Notes Payable ..................................................................... N. Koebel, Capital............................................................... N. Koebel, Drawings.......................................................... Sales....................................................................................... Cost of Goods Sold ........................................................... Salaries Expense................................................................ Telephone Expense........................................................... Depreciation Expense ...................................................... Insurance Expense ............................................................ Freight-Out ........................................................................... Interest Expense.................................................................
Copyright © 2009 John Wiley & Sons, Inc.
Debit $ 2,359 500 1,785 350 1,100 1,200
Credit
$
60 300 25 2,000 3,329
750 5,750 2,975 160 70 20 110 75 10 $11,464
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
$11,464
(For Instructor Use Only)
5-10
CCC5 (Continued) (f) COOKIE CREATIONS Income Statement Month ended January 31, 2010 Sales............................................................................................... Cost of goods sold .................................................................... Gross profit .................................................................................. Operating expenses Salaries expense................................................................... Insurance expense ............................................................... Freight-out............................................................................... Telephone expense .............................................................. Depreciation expense.......................................................... Total operating expenses ............................................. Income from operations........................................................... Other expenses Interest expense.................................................................... Net income ...................................................................................
Copyright © 2009 John Wiley & Sons, Inc.
Weygandt, Accounting Principles , 9/e, Continuing Cookie Chronicles
$5,750 2,975 2,775 $160 110 75 70 20 435 2,340 10 $2,330
(For Instructor Use Only)
5-11