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 2013, the following activities take place.
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8 |
Natalie cashes her U.S. Savings Bonds and receives $520, which she deposits in her personal bank account. |
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8 |
She opens a bank account under the name “Cookie Creations” and transfers $500 from her personal account to the new account. |
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11 |
Natalie pays $65 for advertising. |
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13 |
She buys baking supplies, such as flour, sugar, butter, and chocolate chips, for $125 cash. (Hint: Use Supplies account.) |
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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 $750. 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. |
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16 |
Natalie realizes that her initial cash investment is not enough. Her grandmother lends her $2,000 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.) |
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17 |
She buys more baking equipment for $900 cash. |
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20 |
She teaches her first class and collects $125 cash. |
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25 |
Natalie books a second class for December 4 for $150. She receives $30 cash in advance as a down payment. |
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30 |
Natalie pays $1,320 for a one-year insurance policy that will expire on December 1, 2014. |
Instructions
(a) Prepare journal entries to record the November transactions.
(b) Post the journal entries to general ledger accounts.
(c) Prepare a trial balance at November 30.